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  • Understanding the Catalonian Crisis through the Relative Deprivation theory

    Understanding the Catalonian Crisis through the Relative Deprivation theory

    On 1st October 2017, people in Catalonia, a semi-autonomous region in Spain, held a referendum in which 90 percent of those who participated sought to break away from the Spanish state and create the independent Republic of Catalonia. This referendum which endorsed independence was declared illegal by the Spanish government. This declaration was based on a ruling by the Constitutional Court, and the results of the referendum were also not taken seriously by the international community. Since then, Catalonia has remained politically deadlocked. While the Spanish government and the leaders of the separatist movement in Catalonia have participated in discussions and formal talks have been opened in 2020, there has been no resolution to this festering political crisis.

    A deep sense of relative deprivation has entered the minds of the Catalan people wherein they feel that the Spanish identity has been given more prominence in comparison to their Catalan identity.

    This desire for independence as expressed by the people of Catalonia did not emerge suddenly but had been simmering for an extended period. The social mobilisation occurred because of the frustration that they have as a result of a lack of representation of their culture and language within the Spanish state. The hostility shown to demands of more autonomy and representation has also led to more anger. A deep sense of relative deprivation has entered the minds of the Catalan people wherein they feel that the Spanish identity has been given more prominence in comparison to their Catalan identity.

    While there is a long history of oppression and centralisation, the recent turmoil, however, started in 2010 when the Spanish Constitutional Court quashed a law passed by the regional parliament of Catalonia which updated the autonomous government’s statute. This statute dating to 1979 mapped the relations between Catalonia and the rest of Spain. The court rejected articles in the statute that put the Catalan language above the Spanish language and any articles that referred to Catalonia as a nation rather than as a region.

    This article seeks to understand the reason behind the Catalonian crisis using the relative deprivation model put forth by Ted Gurr. This model has been used to clarify how cultural and linguistic suppression of the Catalan people has led to collective turmoil.

    Relative Deprivation Model of Gurr

    Gurr’s relative deprivation model states that when a sense of deprivation emerges in a group in relation to another group, then it can lead to collective violence or dissatisfaction. Gurr uses a psychological approach to explain why anger or frustration caused by a sense of deprivation is a motivating instrument that can make people more inclined towards aggression.

    The term relative deprivation is used by Gurr who defines it as “actor’s perception of discrepancy between their value expectations (the goods and conditions of the life to which they believe they are justifiably entitled) and their value capabilities (the amounts of those goods and conditions that they think they can get and keep)”. Thus, if there is a discrepancy between what people in a group believe they should get and what they do get then, it leads to frustration, disturbance, and a sense of deprivation. The greater the gap between the expectations of the people and reality, the higher the magnitude for aggression and civil strife. One important thing to note here is that the sense of deprivation is always in relation or comparison to another group.

    Gurr further states that the magnitude of the civil strife or dissatisfaction is dependent on the intensity of the sense of deprivation among the people of the group. As per the relative deprivation theory, there are certain factors or societal variables that have an impact on the relationship between deprivation and the ensuing civil strife. These societal variables include:  (a) coercive potential (of the government to put off the conflict), (b) institutionalisation (the extent to which societal structures may offer non-violent means for expressing dissatisfaction to the social group with the perceived deprivation), (c) social facilitation (that further facilitate strife) and lastly, (d) legitimacy of the political regime in which all this occurs.

    Applying the Relative Deprivation Model to the Catalonian situation

     By applying this theory to the Catalonian crisis, it is easy to see how the deprivation of the Catalan culture, language, and history frustrated the Catalan people and led to the unprecedented social mobilisation for independence from the Spanish state. The people of Catalonia are unsatisfied and angry with the way their culture and particularly, their language, is being slowly eroded as compared to the relevance and status accorded to the Spanish language.

    The Catalan people consider their language to be the principal element of their identity and believe that it is the ‘rallying cry of their solidarity’. The sidelining of their language is seen as an affront to their identity.

    Language is seen as a crucial distinguishing feature by the Catalan people and the speakers of Castilian Spanish. Many people living in Catalonia also want the Catalan language to be officially recognised by the European Union and put on par with the Spanish language even outside the country settings, which has not happened. The reversal of the statute that allowed for the exercise of Catalan language over the Spanish language in the region has brought the identity discord in the open. The Catalan people consider their language to be the principal element of their identity and believe that it is the ‘rallying cry of their solidarity’. The sidelining of their language is seen as an affront to their identity.

    The economic state of affairs further accentuates their anger over the under-representation of their language in museums, government offices, libraries, and all official channels of the central government in Madrid. Catalonia is one highly prosperous part of Spain but many in Catalonia feel that they are bearing the brunt of the high taxes and austerity measures for the rest of the country’s needs with whom they have little in common.

    Conclusion:

    Ted Gurr’s relative deprivation theory states that when a group of people feel that they are deprived of something, whether economically, socially or politically, in comparison to another group of people, they will feel frustrated and that frustration can lead to violence. The Catalonian crisis, when understood using this model, provides an incredibly accurate picture of how the suppression of one’s language and history can result in political strife.

    The Catalonian situation is quite similar to that of Scotland in the United Kingdom. People in Scotland are also quite proud of their distinct language (Gaelic), traditions and also have a strong sense of independent spirit which they believe is curtailed by the Westminster government. Scotland’s Prime Minister, Nicola Sturgeon, recently indicated that she would pursue another referendum for independence in the coming year as support for an independent government has increased steadfastly in 2020 with the pandemic exposing the cracks in the current system.

    For both Catalonia and Scotland, the model followed in the erstwhile USSR in terms of accommodation of identities can provide a way forward or represent a comparatively better model of governance. Under Lenin’s leadership, striking flexibility with respect to the various countries encompassed within the Soviet Union in terms of expression of their individual nationalities was displayed. Lenin used a degree of accommodation towards peripheral nationalist tendencies displayed by the non-Russian states as he believed it to be a pragmatic solution. While political autonomy remained elusive to the non-Russian states, the accommodation of their national identities meant that they were somewhat satisfied. The Soviet state itself encouraged the use of local languages in schools and universities and even in the local administrative offices.

     

    References:

    “A Year Later: An Update on the Catalonian Independence Movement.” Columbia Journal of Transnational Law, 27 Nov. 2018, jtl.columbia.edu/a-year-later-an-update-on-the-catalonian-independence-movement/.

    “Catalonia: From Secessionism to Secession?” E-International Relations, www.e-ir.info/2016/01/15/catalonia-from-secessionism-to-secession/.

    “Catalonia: Past and Future.” Jacobin, www.jacobinmag.com/2017/10/catalonia-independence-franco-spain-nationalism.

    Gurr, Ted. “A causal model of civil strife: A comparative analysis using new indices.” American political science review 62.4 (1968): 1104-1124.

    Gurr, Ted Robert. “Why Men Rebel Redux: How Valid Are Its Arguments 40 Years On?” E-international Relations 17 (2011).

    Huddleston, R. Joseph. “The Roots of the Catalan Independence Crisis.” Foreign Affairs, Foreign Affairs Magazine, 30 Oct. 2017, www.foreignaffairs.com/articles/spain/2017-10-30/roots-catalan-independence-crisis.

    Marinzel, Anastazia. “Catalonia: The quest for independence from Spain.” (2014).

    “Scotland: Nicola Sturgeon Aims for 2021 Independence Vote.” The Indian Express, 1 Dec. 2020, indianexpress.com/article/world/scotland-nicola-sturgeon-aims-for-2021-independence-vote-7075166/

     

    Image Credit: “Catalonia is not Spain” by SBA73 is licensed under CC BY-SA 2.0

  • Quad 2.0: Can it be a win-win for the four Democracies

    Quad 2.0: Can it be a win-win for the four Democracies

    China’s GDP expanded from USD 6 trillion in 2010 to USD 14.3 trillion in 2019. It has had exponential growth over the last three decades, with an average GDP growth rate of 9.23% from 1989 to 2020. Although the impact of the COVID pandemic pushed its GDP into decline and negative (-6.80%) in the first quarter of 2020, it has rebounded with a growth of 5% in the third quarter. It’s military spending, officially, is more than three times that of India, unofficially maybe five times or more. China has become one of the key players in the Indo-Pacific as a significant part of its economic activities depend on this region.

    The Indo-Pacific has replaced the Trans-Atlantic as the epicentre of global politics. Its importance to the global order is multifarious. In economic terms, one half of the world’s commercial influx goes through the Indo-Pacific sea routes and the Indian Ocean carries two-thirds of global oil shipments. Besides, a few of the biggest military spenders are part of the region. China’s hostile actions and policies have agitated the US, Japan, Australia and India. A shared concern over the expansion of China’s political and military clout was fundamental to the revival of the Quadrilateral Security Dialogue (Quad 2.0), on the sidelines of the ASEAN summit in Manila, in 2017.

    Quad is seen as cooperation between four large democracies that share the idea of an open and inclusive Indo-Pacific

    There is growing speculation over what the re-emergence of the Quad means. On the one hand, it is seen as cooperation between four large democracies that share the idea of an open and inclusive Indo-Pacific; on the other, a strategic alliance towards keeping China’s assertive actions in check.

    The Quad: Overcoming Intransigence

    The Quad is a mechanism that enables a dialogue on regional security issues between the four countries. Its revival, this year, reflects an intersection of strategic interests: that of an open and inclusive Indo-Pacific and a rules-based international order. The Quad came together in November for the naval exercise – Exercise Malabar – in two phases, in the Bay of Bengal and the Arabian Sea. The exercise, in its 24th edition, is the biggest so far and has sent significant strategic signalling to China.

    The Quad should be considered less as a formal alliance and more as a mechanism built on existing bilateral and trilateral partnerships between the four countries. It first emerged as a cooperative response to the 2004 tsunami, when the four navies were involved in providing humanitarian and disaster relief. Despite strong support from Japan and the US to formalise the group, it disbanded with Australia and India backing out in 2007, due to concerns about China’s reaction to the grouping. This gave rise to multilateral partnerships among the four countries.

    Between the four democracies, there are three trilateral and six bilateral partnerships. Trilaterally, Japan, India and Australia first came together in 2015 to discuss shared concerns over maritime security in the Indo-Pacific Region and freedom of navigation in the South China Sea. More recently, the three countries agreed to develop a supply chain resilience program for the Indo-Pacific Region amid growing recognition of their excessive, economic reliance on China.

    Bilaterally, the US and India signed the Basic Exchange and Cooperation Agreement (BECA) on October 27 that gives India access to American geospatial intelligence that will be useful for precision guidance of its missiles. Further, India-Australia ties have strengthened over the last few years with their initial 2+2 dialogue in 2017 and with Australian participation in India’s Milan exercise in 2018, focusing on interoperability between navies in the region.

    China and the Quad

    Over the years, the Indo-Pacific has emerged as a region of strategic importance. As China expands into the region, its actions have created tensions with the Quad members.

    Sino-Indian relations:  India-China relations have touched rock-bottom since the clashes on the LAC in Ladakh.  China’s intrusions and violations along the LAC have been backed up by significant massing of PLA forces, for the first time in 40 years. India’s strong actions at the LAC and subsequent sanctions and banning of Chinese IT applications have signalled that India is not shy of escalating its response. China’s actions are seen as part of its coercive strategy to India’s refusal to back China on BRI, and its vehement opposition to CPEC. It sees India’s closeness to the USA and its coordination in the Quad as a threat to China’s strategic interests.

    China’s increasing influence in the Indian Ocean Region (IOR) has raised India’s concerns. It has always been wary of ties between Beijing and Islamabad, which intensified with the launch of the China-Pakistan Economic Corridor (CPEC) in 2013. The Chinese-operated Gwadar port off the Arabian Sea in Pakistan, which can be used by the Chinese navy to establish a submarine presence in the region, did not rest well with India. Such a port would also help China with its ‘Malacca Dilemma’. Other ports of such concern are Hambantota in Sri Lanka and Kyaukphyu in Myanmar. Though China claims these ports are of economic significance, these are also militarily strategic ports that give it an advantage in the IOR.

    In light of these issues, a revived and active Quad will benefit India’s strategic interests. The partnership could affect China in two ways. First, China would face increased competition in the IOR from India that now works with strong allies. Second, with the recent imposition of the technology ban, China stands to lose a large market for its products.

     Japan-China relations: Over the past few years, the situation in the South China Sea (SCS) has worsened with China’s land reclamation activities and militarisation of islands. Japan sees the South China Sea as key to its security because of its crucial sea lanes vital to its trade and economic health. It is also wary of China’s ability to influence the energy supply chains, which East Asia is dependent on, and the PLA’s movement in the Indo-Pacific region that could affect regional security.

    Despite its renewed trade with China and the recent signing of the RCEP, increased tensions in the SCS has forced Japan to support revival of the Quad. China’s increased naval and air activities in the South China Sea makes the Quad and its possible expansion into Quad Plus even more relevant for Japan.

    China-Australia relations: Australia backed out of the Quad in 2007 primarily because it was concerned about how China would view it, and the possible impact it might have on their bilateral trade. By 2017, China became Australia’s top export destination, and this trend has continued through 2019, pushing Australia into a dangerous economic dependency with China. Further, Australia’s 2016 White Paper called out China for its coercive behaviour in the Indo-Pacific, identifying the South China Sea and the Southern Pacific as vital strategic regions.

    Australia’s economic dependence on China is high and this is unlikely to change despite the strong statements from prime minister Morrison.  Australia’s strong stand against China is also seen as emanating from American pressure. Australia actively supports Quad as it sees an increasingly powerful China working to change the world order. Australia is also a member of the newly signed RCEP, the new economic grouping that will be dominated by China. While Australia has hedged its economic interests by signing the RCEP, its strategic and security priorities are linked to the Quad.

    China-US relations:  China’s rising military power is now seen as a threat to American power and the liberal world order. Since 2011, American strategies and policies have focussed more on the Indo-Pacific. This shift in focus has strengthened its ties with Japan, Australia and India. Tensions between the US and China have increased since then and the 2018 trade war not only aggravated their relations but also kept the rest of the world on an edge.

    With a strong Quad partnership, the US expects to regain and strengthen its influence in the Indo-Pacific. For China already hit hard by the US trade war, more setbacks will accentuate the problems. Moreover, with a more focused Quad led by the US, China’s efforts to project its power and influence in the Indo-Pacific region will come under pressure.

     Conclusion

     A few aspects about the Quad remain unclear. First, its intent is still uncertain because the respective countries have to evaluate their relations with China if they want to make the bloc official. Second, if it were to be official, to what extent would it serve the interests of the member countries? Third, is the Quad a concert of democracies to contain China? Last, will it coordinate with other members in the Indo-Pacific region, that is will Quad translate into Quad Plus?

    China’s actions have managed to bring the four countries closer.  China, however, has scored a success when the RCEP (Regional Comprehensive Economic Partnership), the world’s largest plurilateral trade agreement was signed on November 15th. Both Japan and Australia are members of the RCEP. Many see this as a setback for India and America, and an important building block in a new world order, in which China calls the shots all over Asia. It puts in doubt the viability of SCRI (Supply Chain Resilience Initiative), an effort by Quad members to create an alternative to Chinese domination of supply chains.

    The nature of China’s challenge to the global order and the Indo-Pacific is geoeconomics in design, as evidenced by its Belt and Road Initiative and its recent success in RCEP. The Quad will need to go beyond security cooperation.

    While security and military cooperation will help in checking China’s aggressive approach, it must be recognised that this alone will be an incomplete strategy. The nature of China’s challenge to the global order and the Indo-Pacific is geoeconomics in design, as evidenced by its Belt and Road Initiative and its recent success in RCEP. The Quad will need to go beyond security cooperation.

    The conclusion of RCEP maybe China’s gain, but it is important to recognise the fact that ASEAN is the main driver of RCEP. In attempting to balance China, ASEAN and Japan have kept the door open for India to re-join the RCEP. It is possible that the US, under the Biden presidency, may revive the TPP (now proposed by Japan as CATPP, Comprehensive and Progressive Agreement on Trans-Pacific Partnership), which could balance the RCEP. The Quad, in this context, will continue to be very relevant for peace and security in the Indo-Pacific.

     

  • Sedition Law: Sensitivity and trepidations of the State

    Sedition Law: Sensitivity and trepidations of the State

    This article was published earlier in moneycontrol.com

    A few activists and intellectuals, some of them octogenarians, are in jail for varied periods having been arrested for sedition. A question being asked since then is: can intellectuals and activists who fight for the rights of the deprived, underprivileged and downtrodden be seditious and subversive? The law of sedition is a remnant from the days of colonial rule in India.

    Should the State feel helpless and orphaned if the law of sedition is to be repealed? The fact that for seven decades and more the State has staunchly held on to this law suggests so

    The (British) colonial administration was constantly apprehensive and on tenterhooks that the ‘natives’ (the dominated subjects) would rebel against it in conduct, speech, or action. Hence, the sedition law was introduced through Clause 113 of the Draft Indian Penal Code in 1837 by Thomas Macaulay.

    The colonialists wanted to guard themselves against any kind of protest. Any activity that was unpalatable to the colonialists was conceived of as ‘treason’ and ‘subversion’. In order to maintain an untrammeled stronghold on the populace, the colonial administration thought it essential to promulgate a sedition law; an overarching law to protect what it thought was its sovereignty and suzerainty.

    Interestingly, in the 1860 Indian Penal Code (IPC) the law of sedition was not included. However, due to an ‘increase’ in ‘revolutionary’ activities and ‘unrest’ on the part of the Indian ‘rebels’, in 1870, the British inserted Section 124A and amended the IPC to include the law.

    Suppression and subjugation through draconian measures were resorted to by the foreign power for its political and economic gains and ends, in a system that was tyrannical, authoritarian, and dictatorial, and ran through its course till 1947

    Though the Constitution of India (with its oft-quoted Preamble) was to come a bit later, India did become a sovereign, socialist, democratic republic when it got rid of the colonial yoke. So, how come the Law of Sedition got carried over into a republic that became a free country and a democratic political entity?

    On the one hand, why the need for a law of sedition in a free, sovereign country. On the other hand, a look at the way sedition is being interpreted currently.

    In 1929, Mahatma Gandhi called sedition a “rape of the word law” and asked the people to go in for a countrywide agitation to demand the repeal of Section 124A. He said, “In my humble opinion, every man has a right to hold any opinion he chooses, and to give effect to it also, so long as, in doing so, he does not use physical violence against anybody.”

    Subsequently, after Independence, during the debate on the first amendment to the Indian Constitution in 1951, then Prime Minister Jawaharlal Nehru, called the law of sedition fundamentally unconstitutional and declared “now so far as I am concerned [Section 124A] is highly objectionable and obnoxious and it should have no place both for practical and historical reasons. The sooner we get rid of it the better.”

    Intriguingly, the Law of Sedition was not repealed, as it should have been, ideally, during the first Parliament session itself; and has been retained during Nehru’s government and subsequent governments too.

    Should the State feel helpless and orphaned if the law of sedition is to be repealed? The fact that for seven decades and more the State has staunchly held on to this law suggests so; more so today as during the last nearly seven years the number of times that the State has resorted to the use of this law is disturbing, to say the least. Besides, the State is arming itself with yet another draconian handle in promulgating the Unlawful Activities (Prevention) Amendment Act (UAPA).

    Was there ever such a low in independent India in terms of lack of tolerance on the part of the State? Any sort of criticism against the government seems to automatically get interpreted as anti-national. This manufactured binary — anti-government equals anti-national — has been the dominant credo ever since the Bharatiya Janata Party (BJP) came to power in 2014.

    In a recent article, Amartya Sen says, ‘The confusion between “anti-government” and “anti-national” is typical of autocratic governance’.

    Intellectuals, opposition leaders, activists in different realms, are all swept into the hold-all like sedition law. Also, international voluntary organisations, as also Indian NGOs, have been targeted and attempts are made to stifle them whenever there has been any criticism of the government, however, legitimate or valid the censure be.

    The government’s actions have prompted UN Human Rights Chief Michelle Bachelet to raise issues of a crackdown on CAA protesters, UAPA, Hathras case, and marching orders given to Amnesty International. New Delhi’s response in its lame defence to the criticism has been: ‘The framing of laws is obviously a sovereign prerogative. Violations of law, however, cannot be condoned under the pretext of human rights.’

     

  • Revamping PSUs in India – is Disinvestment the only way forward?

    Revamping PSUs in India – is Disinvestment the only way forward?

    Back in 1948 when India’s first Public Sector Unit (Indian Telephone Industries) was established, India was a newly independent agrarian economy with a weak industrial base. It was clear that the country needed to embark on a path of rapid industrialization if it was to improve the economic status and standards of living. The need was felt for large scale investment from the public sector that private players could not provide. It was in this backdrop that PSUs were first established in the country. It was envisioned that these state-run entities would jumpstart industrialization and spearhead development.

    Today, almost 70 years later, the country itself has come a long way. Once seen as the knights in shining armour come to rescue India’s economy, the same PSUs have come under fire for squandering crores of taxpayer money today. Far removed from their past glories, PSUs today are a cesspool of unproductivity where taxpayer money dies a slow painful death. The sorry state of PSUs in India has even warranted nicknames in the likes of ‘Zombie Companies’ and ‘Zombieland of Taxpayer Money’. While these nomenclatures may seem extreme, they are not without merit.

    The combined loss of these PSU’s amounts to over Rs. 31,635 crores in taxpayer money [1]. What’s more, this number is not inclusive of the losses reported by the dozen public sector banks, which would only add to the already huge mountain of debt.

    Current State of PSU’s in India

    Back in 1951, there were only 5 public sector enterprises in existence. Since then the government has gone on a spending spree, entering more and more businesses over the years. Today the government runs more than 300 PSUs across a plethora of industries ranging from hotels & watches to telecom and steel. It doesn’t come as a surprise that over 70 of these entities are running a net loss. The combined loss of these PSU’s amounts to over Rs. 31,635 crores in taxpayer money [1]. What’s more, this number is not inclusive of the losses reported by the dozen public sector banks, which would only add to the already huge mountain of debt. If the central public sector enterprises have fared poorly, the state-level public enterprises (SLPE) paint a bleaker picture. Barring certain states, the SLPEs of almost all the states in India report a net loss. The losses reported by these SLPEs are almost 3 times greater than the amount reported by their central counterparts.

    The PSUs which have not reported a net loss has not escaped public scrutiny either, with almost all of them losing value over the last decade. While some do report profits, their returns have been dwindling, save a few. The rate of return on capital employed (ROCE), widely used as a measure of profitability and efficiency, has been on a downward trend for PSUs. It has been reported that PSU efficiency has fallen by over 50% in the last decade [2]. In the last six years alone the total market cap of all public sector firms and banks fell by 36% even as the market cap of all BSE and NSE listed companies have almost doubled in the same period [3]. 

    The bad news is that this dismal performance of PSUs is only going to get worse, especially given the current economic climate. Despite years of turnaround efforts and crores of bailout money, these state-run entities have shown no signs of recovery, save a few. In this light, much of the discourse around PSUs has been focused on disinvestment. The government too seems to echo this sentiment as it has chosen to embark upon a long-drawn journey of divesting its holdings. Several sectors in India are already heading towards 100% privatization. With the sale of Air India, the civil aviation industry will become fully private. In the power sector, there has been a growing emphasis on private generation, with the centre reducing its stake in NTPC and BHEL. Sooner or later this sector is also headed for 100% privatization. In other sectors like telecom and health, the government has just a token presence, with much of the market being dominated by private players.

    Push for Privatization

    This push for privatization is welcome and much needed in sectors like civil aviation which lack strategic importance. The sorry state of Air India has made clear that the government simply cannot compete with private players in a highly commercialised industry like aviation. Air India in particular has been languishing for years and has eroded crores of taxpayer money in the process. This has been the case not just for India but for other developing economies like Brazil and Malaysia as well. Malaysia has been trying to turn around Malaysia Airlines for decades altogether with no end in sight. After years of struggle, it seems the government has finally decided to change tracks as it is now looking to give up its majority stake in the airline to private investors. The case with Brazil is no different – the failing national aerospace conglomerate Embraer was revived just in time with a dose of privatization.

    The Embraer turnaround model in particular offers some interesting lessons for India. What started off as a government entity in 1969 was privatised in 1994 in order to avoid bankruptcy [4]. Embraer then went from near bankruptcy to becoming the third-largest aircraft manufacturer in the world. What’s striking here is that the Brazilian government played its cards to near perfection – while it completely privatized the airline, the Brazilian government still holds a ‘golden share’ in Embraer giving it veto power over strategic decisions involving military programs and any change in its controlling interest. This model ensured a win-win situation for the Brazilian government and the rest, of course, is history. 

    Instead of divesting its bleeding PSU’s, the government is currently in the process of selling its 100% stake in 3 large profitable companies (BPCL, CCI, and the Shipping Corporation). While it’s tempting to believe this is a part of an extensive government masterplan, the stark reality is that the government has let fiscal pressures dictate its divestment strategy.

    The problem with the centre’s current disinvestment strategy, however, is that it is focused merely on balancing government books and lacks a long-term strategic vision. Instead of divesting its bleeding PSU’s, the government is currently in the process of selling its 100% stake in 3 large profitable companies (BPCL, CCI, and the Shipping Corporation). While it’s tempting to believe this is a part of an extensive government masterplan, the stark reality is that the government has let fiscal pressures dictate its divestment strategy. It appears the government is simply selling its stake in PSUs to make quick money and ease the fiscal books. There are also concerns that 100% privatization of entities like BPCL and HPCL will feed private monopoly and leave India’s energy security purely in the hands of private players. Even in the sale of loss-making entities the government has lacked a systematic plan, with divestment being carried out in penny packets. This sort of disinvestment just to stop the bleeding is a short term stop-gap measure and will surely have long term repercussions. 

    The case for Public Sector Presence

    While privatization plays are much needed in sectors like civil aviation, the same cannot be said for strategic sectors such as power, pharma, and health. A diluted public sector presence in strategic industries may not bode well for the economy, especially for a developing country like India. As the COVID-19 pandemic has shown, strong public systems are essential to absorbing global shocks. While proponents of disinvestment seek to cut the economic costs of bleeding PSUs, they often ignore the social costs involved in the process and the impact it will have on a developing economy like ours.

    In light of the current global economic climate, as more and more countries turn inward, the role of state-run entities has become all the more important. The experiences of other Asian economies like China and Singapore have shown that state-run units could be tools of economic growth if utilised effectively. Most of China’s industrial push, including the recent ‘Made in China 2025’ plan has been heralded by State-Owned Enterprises (SOE’s). Among the 124 Chinese companies in the Fortune Global 500 list, more than half were SOE’s [5]. Out of these, 3 of the Chinese SOE’s feature in the top 5 globally, speaking volumes of the role they have played in the growth of the country. China has effectively put SOE’s at the core of its vision to combat the challenges it currently faces, including the escalating trade war with the USA. China’s model is also noteworthy given the level of collaborative investments between SOE’s and private players. India can take a leaf or two out of China’s book on the successful use of SOE’s to drive its growth story.

    Turning around existing PSU’s – success stories 

    It is clear that the government simply cannot take the easy way out of simply divesting and washing its hands off the bleeding PSUs. In certain critical sectors (that first need to be recognized in line with the long-term strategy) the government still needs to work on repairing the damage and turning around its existing underperformers. While the task seems impossible given the current state of affairs, policymakers can take heart from the fact that it has been done before both in India and globally.

    One such global success story is that of the Kiwi national carrier Air New Zealand. In a world of post-privatization success stories, Air NZ stands out as one of the few lone dissenters to buck this trend. The NZ based company, privatised by the government in 1989, had to be re-nationalised again in 2001 after it ran into financial troubles. The fortunes of the New Zealand economy have been closely tied to that of Air NZ, with the country being heavily dependent on local and international tourism. Within just two years of nationalisation Air NZ was able to fashion a comeback from near ruin, and today is one of the biggest revenue earners for the NZ government. That a company that failed in private hands was able to be revived by the government offers a beacon of hope for struggling public enterprises worldwide.

    Back home in India as well such success stories do exist, albeit in a bygone era. Aptly recognised as one of the greatest public sector managers of India, Dr. V. Krishnamurthy is the mastermind behind these success stories. His unparalleled contributions to the public sector have earned him several monikers such as ‘the helmsman’ and ‘the man with the golden touch’. He has been largely credited with successfully turning around public sector giants like BHEL, SAIL, GAIL, and Maruti. At a time when public sector turnarounds were unheard of in India, Dr. Krishnamurthy managed to increase profits of BHEL from 17 crore rupees to 57 crores during his five-year tenure [6]. He also came to be widely regarded as the ‘Steel Man of India’ after his successful turnaround of SAIL in the late 1980s. 

    At Maruti he decided to take a different approach, inviting private sector participation through a JV. While many skeptics were against this move initially, the helmsman had the last laugh as Maruti went on to dominate the automobile market in India for decades. Maruti’s turnaround story is also a shining example of the merits of public-private collaboration – something which today’s policymakers have chosen to largely overlook. Maruti today is a 100% private company and is widely credited with creating the automobile industry revolution in India. 

    Way Forward – a two-pronged approach to fix PSU’s

    While such success stories may be scant and the field is mired with accounts of public failure, it is evident that such turnarounds are not impossible. As we have seen from the examples in India and elsewhere, with the right leadership any enterprise can be pulled out of the mud. What is clear is that there is no simple one size fits all answer to the woes of PSU’s in India. Several countries have taken different approaches to tackle this issue. While China has followed a model of strong public presence in several industries, countries like the USA hardly have a public sector presence. The United States government rather exercises its presence by closely regulating and monitoring the industry through effective policy mechanisms.  Other countries like Singapore have chosen to manage PSUs through sovereign funds and holding companies. Singapore plays in the public sector via its two sovereign funds, Temasek and GIC. The companies owned by these funds operate as commercial entities and are no different from private players. Such a model has ensured that the companies get the best of both worlds – public ownership but with private, commercial management.

    countries like Singapore have chosen to manage PSUs through sovereign funds and holding companies. Singapore plays in the public sector via its two sovereign funds, Temasek and GIC.

    While there are many such different models that India can take inspiration from, the verdict is clear that the government must stop the bleeding in the public sector quickly or face the wrath of taxpayers. Going forward, the government must adopt a two-pronged approach to fix PSUs – some need to be killed, while others deserve a chance at resurrection.

    Firstly, the government needs to shut down bleeding enterprises in sectors that have no strategic relevance. The government is present in sectors like biofuel, airlines, hotels, and watches despite making heavy losses every year. Public entities simply cannot compete in these industries nor is there any strategic need to do so. The logical step for the government would be to send these entities to the graveyard and stop the bleeding.

    The top 10 loss making PSU’s account for over 94% of the overall losses reported by all PSU’s together.

    Secondly, efforts must be made to turnaround/transform remaining entities in strategic sectors. The top 10 loss making PSU’s account for over 94% of the overall losses reported by all PSUs together. These large offenders would be the best places to start – the government would do well to either transform these entities in-house through fresh leadership or by inviting private partnerships.

    The above tasks are easier said than done and may take years of policy reform to become a reality. While the problem does seem formidable, it is not unique to India alone. Several economies around the world, developing and developed alike, are grappling with the issue of falling public sector productivity and the need to stay relevant. Indian policymakers and public sector managers have a long road ahead of them, especially given the current global socio-economic scenario. But they can definitely take inspiration (and some valuable lessons) from the several public sector turnaround stories globally and from India’s great helmsman himself.

     

    References

    [1] Department of Public Enterprises. (2019). Public Enterprises Survey 2018-19 (Volume 1, Statement 1). Retrieved from https://dpe.gov.in/public-enterprises-survey-2018-19

    [2] Rai, D. (2019, September 11). PSU returns fell 50% in the past decade; 44 new entities created. Business Today. https://www.businesstoday.in/current/corporate/in-depth-government-companies-almost-lost-half-of-their-efficiency-in-last-10-years/story/378508.html

    [3] How PSU’s market cap fell by 36% in 6 years under Modi govt, while stock market doubled theirs. (2020, October 30). The Print. https://theprint.in/opinion/how-psus-market-cap-fell-by-36-in-6-years-under-modi-govt-while-stock-market-doubled-theirs/533743/

    [4] Haynes, B & Boadle, A. Boeing willing to preserve Brazil’s ‘golden share’ in Embraer deal. (2018, January 19). Reuters. https://www.reuters.com/article/us-embraer-m-a-boeing-idUSKBN1F72XB

    [5] Fortune. (2020). Fortune Global 500 2020. Retrieved from https://fortune.com/global500/

    [6] Nayar, L. V. Krishnamurthy, SAIL, BHEL, Maruti. (20187, March 23). Outlook India. https://magazine.outlookindia.com/story/v-krishnamurthy-sail-bhel-maruti/298634

     

  • Vietnam-US Relations under Biden Likely to Remain Unchanged

    Vietnam-US Relations under Biden Likely to Remain Unchanged

    Communist Party Chief and State President Nguyen Phu Trong and Prime Minister Nguyen Xuan Phuc have sent a congratulatory message to U.S. President-elect Joe Biden. Both leaders have also expressed hope that their comprehensive partnership will “continue to develop in a stable, effective manner, benefiting people of both countries and promoting peace, security, stability, cooperation and development in the region and the world”. Meanwhile, Vice President Dang Thi Ngoc Thinh sent a congratulatory message to the U.S. Vice president-elect Kamala Harris. The Vietnamese leaders also invited Biden and Harris to visit Vietnam.

    The Biden administration could even explore new “areas in which to deepen ties with Vietnam in the economic, political, military, and people-to-people spheres”.

    While these messages and invitations are part of customary diplomacy, strategic commentators across domains believe that US-Vietnam relations will continue as hitherto under President-elect Joe Biden’s Presidency. They argue that the US acknowledges Vietnam’s geopolitical and geostrategic heft, and the new administration will continue to give top priority to cooperation with Vietnam. The Biden administration could even explore new “areas in which to deepen ties with Vietnam in the economic, political, military, and people-to-people spheres”.

    As far as economic relations, the Vietnam-US bilateral trade has grown significantly from US$ 450 million in 1994 to US$ 75.7 billion in 2019. However, in the last few months, a thorny issue has come up. In October 2020, the U.S. Trade Representative announced an investigation of Vietnam for its large trade surplus with the US. The trade deficit widened to US$ 44.3 billion in the first nine months in 2020, as against US$ 33.96 billion in 2019. It has also been noted that some of it is because of US companies exiting China and setting up new supply chains in Vietnam. However, it is unlikely that trade deficit would have an adverse impact on bilateral relations, which would continue to remain “relatively good under Biden unless complicated by an unexpected upsurge in trade tensions.”

    As far as strategic issues, US-Vietnam defence diplomacy had received impetus under President Trump. The bilateral cooperation in security and defence matters between the two militaries has been at an all-time high. In particular, naval cooperation has been top of the agenda and USS Carl Vinson, a US aircraft carrier, made a historic port call to Da Nang in March 2018. This was significant, given that there had been no such port call by an aircraft carrier to Vietnamese ports since the end of the Vietnam War in 1975. Another visit of the aircraft carrier USS Theodore Roosevelt followed this in March 2020, clearly showcasing growing defence cooperation between the US and Vietnam.

    Perhaps what merits attention is that Vietnam strictly adheres to ‘three-no policy’ i.e. no military alliances; no foreign troops stationed on Vietnamese soil; and no partnering with a foreign power to combat another.

    It is important to keep in mind that such port visits are a significant element of naval diplomacy by any navy. Vietnam has welcomed naval, coast guard, and marine patrol vessels from friendly countries. For instance, in 2018 a Japanese submarine and in 2019 a Canadian warship visited Vietnamese ports; likewise, many other navies have made goodwill visits. It dispatches Vietnamese military personnel and vessels for International Fleet Reviews and other similar events. Also, in 2019, Vietnam signed the Framework Participation Agreement (FPA) with the European Union (EU) which will provide it “new opportunities for Vietnam to portray itself as a cooperative and pro-active power through land and maritime missions” and “participate and contribute to EU’s Common Security and Defence (CSDP) missions and operations”

    Perhaps what merits attention is that Vietnam strictly adheres to ‘three-no policy’ i.e. no military alliances; no foreign troops stationed on Vietnamese soil; and no partnering with a foreign power to combat another. In this context, it is useful to recall the visit to Hanoi by U.S. Secretary of State Mike Pompeo in October 2020. The surprise visit was labelled as an occasion to celebrate the 25th anniversary of diplomatic normalisation of bilateral relations, Pompeo’s tour was also to share with the Vietnamese leaders the US “Free and Open Indo-Pacific” (FOIP) strategy and seek their support.

    There is every reason to believe that Vietnam is unlikely to gravitate towards the US, notwithstanding the fact that its relations with China have been quite rancorous particularly over territorial disputes in the South China Sea, military-naval buildup on the reclaimed features and harassment by Chinese Coast Guard ships of Vietnamese fishing vessels operating in the Paracel Islands including intentional ramming. Vietnam is unlikely to offer affirmation to the US FOIP or the Quadrilateral Security Dialogue (QSD), a grouping of Australia, India, Japan and US to balance against China.

    We can expect Vietnam to exercise strategic autonomy and its position of ‘not taking sides’ pivoting on its ‘three-no policy’ could prove to be an incentive for the Biden Administration to pursue an enhanced and constructive engagement with Vietnam.

    There are clear signs of contestation between the US and China, which might create Blocks (with the US or with China) that might upset the peace and stability in the region. We can expect Vietnam to exercise strategic autonomy and its position of ‘not taking sides’ pivoting on its ‘three-no policy’ could prove to be an incentive for the Biden Administration to pursue an enhanced and constructive engagement with Vietnam.

    Image Credit: Atlantic Sentinel

  • As the US exits Afghanistan, who is there to tame Taliban?

    As the US exits Afghanistan, who is there to tame Taliban?

    Sometimes, the best way to triumph over an enemy is to quit the game. In an attempt to honour his election campaign promise of bringing the American soldiers back home, President Trump announced the complete withdrawal of American troops from Afghanistan and Iraq. About eight thousand six hundred remaining boys in boots will return from Afghanistan by Christmas this year. The Taliban, whom American forces have been fighting for the last two decades, is now a closed-door dialogue partner of the White House. The arch-rivals in the eerie battleground are now facing off each other in opulent hotels.

    In Doha, the Afghan government caught up with the Taliban at the much-awaited intra-Afghan peace talk, held in September. 

    In the two-decade-long war, America has paid enormously in currency, diplomacy, and defence. It has cost the US exchequer almost $2 trillion. Several efforts to bring peace have gone in vain. Ultimately, Washington has successfully brought the Taliban and the Afghan government to talk to each other. The two belligerent parties are now engaged in the tete-a-tete. In Doha, the Afghan government caught up with the Taliban at the much-awaited intra-Afghan peace talk, held in September. Despite several attempts, an agreement between the Taliban and the Afghan government could not take place earlier as the bellicose force never recognized the legitimacy of the elected government in Afghanistan. In the eyes of the Taliban, the incumbent in Kabul remains a puppet government of the Western powers. What contrasts the most between the present administration and the earlier Talibani rule is their diametrically opposite ideologies. Whereas the present system in Afghanistan runs democratically, the Taliban believes in the Islamic Sharia law. The battle is now between democracy and theocracy.

    The ongoing peace process is a continuum of American mediation between the Taliban and the Afghan government since February 2020.  White House is nearing an imminent peace deal with the Taliban as they are no longer deeply interested in Afghanistan. Washington’s priority is now countering China’s growing influence.

    In the previous peace talks, the western states sat with the Taliban, disdaining the Afghan government. Even Russia’s attempts failed to produce any fruitful results in favour of Afghanistan. One of the major reasons for the failure is about diluting the Afghan government authority. The Afghan government never endorsed the efforts of foreign nations in the Afghan peace negotiations, in which the Afghan government itself is side-lined. Afghan government affirmed that any kind of peace deal would not be entertained as the legitimate government was not a part of it as it was a clear violation of Afghan sovereignty.  Afghan government took the issue to the United Nations and accused Pakistan of bypassing it in peace talks with the Taliban.

    a large area of Afghanistan and its people are under the Taliban’s control. The Taliban is collecting taxes from the citizens to exercise their undisputed rule.

    Unlike the previous attempts, the intra-Afghan dialogue has raised much hope among the Afghans, the Government, and the international community. But both parties are likely to face many tough challenges to achieve the desired outcome.  The Taliban has already violated the agreement with the United States that resulted in the death of Afghan civilians and army personnel but stresses that it is continuing with the ceasefire. It is possible that by claiming to maintain the ceasefire the Taliban is trying to put pressure on the Afghan government. Despite this hostile situation, the Afghan government has agreed to negotiate with the Taliban mainly for two reasons. First, most of the International Security Assistance Forces and North Atlantic Treaty Organization (NATO) forces have left Afghanistan. The Afghan security forces have neither the training nor the institutional mechanism to provide security to its people. Second, a large area of Afghanistan and its people are under the Taliban’s control. The Taliban is collecting taxes from the citizens to exercise their undisputed rule.

    Unlike the previous peace processes, the current one does not rely much on foreign countries. But the peace deal is likely to affect Afghanistan’s external relations adversely. If the Taliban reverts to its Islamic radicalism, Afghanistan may lose billions of foreign aid it has been receiving since the last decade for the reconstruction of the country. The Afghan government worries that the premature departure of American troops may have a negative impact on international assistance.

    Although both parties agreed to negotiate on the peace deal, there is dissatisfaction within the cadres of the parties. In the recent elections, the two Presidential contestants each claimed electoral victory. A power-sharing arrangement was concluded where Ashraf Ghani is the President and Abdullah Abdullah exercises power as the chairperson of the High Council for National Reconciliation. On the Taliban side, many leaders do not support the peace process as they believe that they could win the Afghan war by military means. They consider  Pentagon’s departure from Afghanistan as a sign of their victory.

    The Taliban continues to maintain its contact with the Al-Qaeda, according to a UN security council report. The US -Taliban agreement of February demands a complete divorce between the Taliban and the Al-Qaeda.  UN reports and the violation of ceasefire show that the Taliban is not adhering to the agreement. Once the peace deal is completed, the Taliban could take advantage of the absence of US troops in Afghanistan and renege on their commitments by maintaining close ties with the Al Qaeda, Haqqani Network, and the other extremist groups. The training camps of these Islamist terrorist groups are being used by Pakistan based terror outfits like Lashkar and Jaish-e-Mohammed. When Soviet troops left Afghanistan in 1989, insurgency and terrorism increased in Kashmir. It saw a drastic fall when Washington waged war on Taliban and other Islamist extremist groups.

    If the Sharia law returns to Afghanistan, all the democratic rights and the freedom that the Afghan people have seen since the last decade, are likely to be lost.

    The consequences would be grave if the peace deal doesn’t fetch the desired results. The peace deal is necessary for the Afghan government in maintaining peace and stability in Afghanistan. If the Sharia law returns to Afghanistan, all the democratic rights and the freedom that the Afghan people have seen since the last decade, are likely to be lost. Even if a peace deal fructifies, it may not ensure peace for every section of society. During the previous Taliban rule, the fundamental rights of women- ranging from education to employment, were denied. Women had to live a sub-human life. At present, women hold 28 percent of the total seats in the parliament. So, if the Sharia law is enacted again, it will deny the basic rights of Afghan women. Millions of Afghan refugees in neighbouring Iran, Pakistan, and elsewhere in European countries cannot hope to return home. The host countries, however, have started sending back the Afghan refugees forcefully amid instability.

    Afghanistan is a country of over a hundred ethnic groups, tribes, non-Muslims, and other communities. Most ethnic groups have a conflict with each other. In recent times, the Taliban attacked the non-Muslim communities, especially Hindus and Sikhs. The Ministry of External Affairs of India facilitated the travels of a few Hindu families to India. Even after the Afghan government concludes a peace deal with the Taliban, conflicts may continue and peace may still be elusive. The effectiveness of the peace deal will depend on the commitments of each party.

    European countries do not have the military or economic strength to prosecute overseas conflicts. The internal mechanism of NATO is weaker than before. And after the Brexit deal, the fragmented European union lacks the political will to intervene in the war-torn state. China’s interests in Afghanistan are mostly commercial. Infrastructures or projects under Belt and Road Initiative can’t be built amid the carnage. China has the political, financial, and military strength to fill the void, after the complete withdrawal of the US forces. The Chinese financial contribution in Afghanistan is a clear sign that the country has a long-term strategy in the region. This apart, China has security concerns as well in Afghanistan. The rise of extremist movements in Afghanistan is likely to impact security in China, especially in Xinjiang province. In recent years, China has increased its military ties with Afghanistan. In the absence of the American troops, Afghanistan may consider China as possible support.

    Once the US exits, Kabul will have an option to raise the peace issue in the Shanghai Cooperation Organization (SCO). The SCO can be the main military and economic block in Asia. Except for Turkmenistan, all the bordering countries of Afghanistan and other major players in South Asia have either members-status or observer status at the SCO. It can certainly play a very effective role as the peacemaker providing its members, each with considerably different stakes in Afghanistan can get their act together.

    The Taliban in the Afghan government would provide political leverage to Pakistan over India.

    If the Taliban assumes power, India-Afghanistan bonhomie will turn frosty. Unlike other countries, the Indian government never supported the Taliban. India has been a staunch supporter of Afghan-led, Afghan controlled and Afghan-owned peace deal. Pakistan has always been supportive of the Taliban as it serves its strategic interests. The Taliban in the Afghan government would provide political leverage to Pakistan over India. Seeing that it has been left out of the Afghan peace talks, it appears that India is coming around to talk to the Taliban.

    Afghans are exhausted from bloodshed in the last few decades. The region has turned into a breeding ground for Islamic State in Khorasan, Al-Qaeda, and other terrorist groups. A stable and democratic Afghan government is necessary for maintaining peace in the South Asian region. As the effectiveness of SAARC continues to be hampered by India-Pakistan animosity, other South Asian states, Organization of Islamic Cooperation member states, and other Islamic states like Saudi Arabia or Turkey should act to restrain the Taliban and pave the way for peace in Afghanistan.

     

    Image: US Secretary of State Mike Pompeo meets with Taliban’s Mullah Abdul Ghani Baradar and members of his negotiating team. Credit: www.voanews.com

     

  • Side-lining of Palestine Issue: Threat to Palestinian Rights and Self-determination

    Side-lining of Palestine Issue: Threat to Palestinian Rights and Self-determination

    Over the years, the international concern for the resolution of the Palestinian conflict has been diminishing. Israel has consistently dodged the core issue of returning Palestinian lands (West Bank) they occupied in 1967. Instead, it has continued to create new settlements in the occupied territories. Israel, obviously, has no intention of returning to pre-1967 boundaries; this was clear when the current Prime Minister of Israel, Benjamin Netanyahu, announced his plan to annex the West Bank in May 2020.

    Image Credit: The New Arab

    He deferred its implementation as the normalisation of relations with the United Arab Emirates (UAE) gathered momentum. However, Netanyahu indicated that Israel will “never give up our rights to our land.” (Al Jazeera 2020). The situation and the perception created now is such that not annexing the West Bank would appear to be a concession from Israel.

    As the Arab countries are taking a realistic view in placing their national interests first, Palestine is no longer a priority issue for them.

    This paper looks at how the Palestinian issue is gradually side-lined over the last few decades by the international community. There are four factors that have contributed to this development. First is the increase in conflicts in the Arab world, which has led to fragmentation and disunity in their approach to the resolution of the conflict. As the Arab countries are taking a realistic view in placing their national interests first, Palestine is no longer a priority issue for them. Second is the realisation of the fact that Oslo deal was unfair to start with and how under the guise of negotiations Israel continued to expand settlements and limit any prospect of sovereignty for the Palestinians. The Palestinian authorities hung on to the Oslo deal even though it was flawed, leading to decades of standstill in negotiations. Third, with the rise of the militant groups around the time of 9/11, the Palestinian cause has lost significant sympathies, and Israel’s violent response is seemingly more reasonable in the views of the international community. Fourth, the United States has supported Israel consistently in many issues, keeping Israel on the safe side in international and regional politics, shielding it from any proactive criticism.

    A look at the brief history of the conflict is necessary to explore the four factors mentioned above.

    Brief History of the Conflict

    Palestine was part of the Ottoman Empire until its defeat and collapse World War I. The area became a British protectorate as the result of the armistice of 1919. It coincided with the persecution of the  Jews due to the rise of anti-Semitism across Europe. The 1917 Balfour Declaration by the British government promised the Jews a national home in Palestine. This decision failed to factor the rights of the Palestinians who have lived there for millenniums. Jews began migrating to Palestine in huge numbers despite vehement protestations from the Palestinians leading to the now perennial Israel-Palestinian dispute. As Britain vacated the region post-1945, it abdicated its moral responsibility and left the resolution of the dispute to the United Nations (UN). The withdrawal of the colonial powers and the ensuing chaos in the regions vacated by them is a recurring pattern in decolonization history. The UN tried to divide Palestine into two states; Israel and Palestine, with Jerusalem as a joint capital and an international zone. Neighbouring Arab countries saw this as a residual form of colonialism and went to war in 1948. The war resulted in the catastrophic displacement of thousands of Palestinians. This catastrophe is remembered as Nakba, a day with a lot of historical sentiment across the Arab World (Chomsky and Pappé 2015). Israel won but did not control Gaza or the West Bank. Israel occupied these areas in the six-day war in June 1967. The occupation of the West Bank continues till today, whereas Gaza is now under Hamas. Coupled with all this, there are massive human rights violations against the Palestinians. This includes humiliating Palestinians at checkpoints, arresting without trial, arresting Palestinian children etc. (Chomsky, and Pappé 2015). Moreover, when Palestinians file reports about being harassed by Israeli citizens, it does not get any attention as the conviction rate is only 3% (Oxfam 2019).

    One of the prime demands of the Palestinian struggle is a return to the borders of 1967; so that Palestine can exercise full sovereignty over Gaza and the West Bank. However, Gaza has been economically cut off because Hamas controls it, and there is a huge blockade against it making life in Gaza difficult and miserable. Hamas also attacks Israel, and this has always led the Israel Defence Forces (IDF) into retaliating. Whereas on the West Bank, there are thousands of settlements by Israel, virtually pushing Palestinians out. This settlement strategy is seen as a deliberate move to counter the demographic threat from the larger number of Palestinians inside Israel (Chomsky and Pappé 2015). The obsession with demographic re-engineering has been fundamental to Israel, and it does not intend to change its policy. It also couples this with closing Palestinian places, reducing the Palestinian economic structures present in East Jerusalem (Arafeh et al. 2017) etc. There are currently 8 million Israeli citizens of which 1.2 million are Palestinians (“Palestinian Citizens Of Israel” 2020). They are treated as second-class citizens and many of them are engaged in menial labour

    The fractures in Arab Unity  

    All the West Asian and North African countries were initially pro-Palestine during the cold-war and decolonization era. This could be associated with the Pan-Arab notion present during that period. Many Arab countries had recently secured independence, and the Palestinian injustice was still fresh in their memory. However, losing consistently in these wars was also a demotivator and blow to them; fiscally and otherwise. In the last few decades, several countries have established ties with Israel; Egypt in 1979, Jordan in 1994. This is also the time Pan-Arab spirit declined, and increased conflicts began to emerge amongst many West Asian and North African countries.

    These political conflicts include; countries taking sides in the Iran-Iraq war, funding proxy wars, taking sides on the invasion of Iraq, etc. Furthermore, security threats have been perceived to be heightened in many West Asian and North African countries due to the rise of religious radicalization and the rise of terrorist groups. Arab league relations have also been strained for various reasons, including the Syrian Civil War and over its membership (Reuters 2020).

    More importantly, Saudi Arabia and Iran have their cold war. The United States has exaggerated the Iranian threat, and both Saudi Arabia and Iran covertly fund proxy civil wars across West Asia, be it Yemen or Syria.

    Israel has emerged as a technological and military power in the region. Netanyahu says, “we believe in peace out of strength and we believe in alliances born out of Israel’s value as a technological, financial, defence, and intelligence powerhouse” (The Times of Israel 2020).  Many Arab countries may, therefore, find value in Israel’s technological capabilities. Parallelly, economic conditions in many Arab countries are worsening. Under these circumstances, with deep distrust amongst many Arab states and incentive for countries to be friendly with Israel, normalization of relations with Israel is taking place.

    Arab countries are putting their national interest first, and if the Palestinian issue is seen as an obstruction they have no qualms about relegating it to a side-issue.

    However, a majority of the Arab and Gulf countries still do not officially recognize Israel. This is where the significance of the UAE-Israel and Bahrain-Israel deal comes in. The United States uses these factions within West Asia and North Africa to pursue its agenda with Jared Kushner pushing for normalization. The United Arab Emirates and Bahrain announced decisions to normalize relations with Israel on 12th August and 12th September 2020, respectively. Many of the West Asian countries, Saudi Arabia, in particular, are close allies of the United States. As the USA nudges these countries with incentives,  Palestinian sovereignty or a fair peace treaty no longer seems to be a precondition to establishing ties with Israel. Arab countries are putting their national interest first, and if the Palestinian issue is seen as an obstruction they have no qualms about relegating it to a side-issue.

    Support for Palestine still exists, but it comes in fragments from different countries. It is important to remember that there is no coalition; no pressure; no one group that consistently fights for it.

    Long Term Effects of a Flawed Deal

    One will always remember the picture of the handshake between Yasser Arafat and Yitzhak Rabin facilitated by Bill Clinton while signing the Oslo Accords at Camp David. The Oslo Accords were an extremely publicized affair, and many proclaimed that peace to the decades-old conflict had been reached, but this was far from the truth.

    When the accord was signed in 1993, the Palestine Liberation Organization (PLO) was already weak. Additionally, there was also a general reduction of support for the PLO among Palestinians, as seen by the eruption of the first intifada, which was initially spontaneous (Hassan 2011).

    Image Credit: Aljazeera

    The Oslo accords had several terms and clauses, but it mainly called for the recognition between Israel and the PLO. The accord also stipulated that Israel would end its occupation in Gaza and certain parts of the West Bank (Oxfam 2019). There would be an interim self-governance strategy and, eventually, a shift of power in Gaza and West Bank to the Palestinian Authority (Hassan 2011). An interim period was given so that both sides would have time to “gain trust” with one another.

    The accord showed an ambiguity regarding when Israel would withdraw from Gaza. It did not recognize Israel’s occupation, and neither did it speak of the Palestinian refugees.

    However, there were many flaws with the deal from the beginning. The accord showed an ambiguity regarding when Israel would withdraw from Gaza. It did not recognize Israel’s occupation, and neither did it speak of the Palestinian refugees (Hassan 2011). There was no stringent enforcement of the deal and having no third party accountability also rendered Palestinians vulnerable, as is evident. Furthermore, the Oslo accords did not condemn or mention the human rights violations against the Palestinians (Oxfam 2019).  The flawed nature of the deal began to show signs of rupture from the early days as accounts speak of how, as early as 1994, after the accords were signed, the IDF still had control over most of the West Bank and made no plans to move and were hovering around the edge of Ramallah (Tolan 2018). The fundamental issue here was that the Oslo Accord was signed by two unequal partners with Israel displaying dominant power.

    Therefore, while the buzz around the accords was still on, in reality, Israel continued policing Palestinians and establishing settlements in the West Bank area.

    No matter the initial motive, the Oslo accord, in 2020, can be analyzed as a distraction and cover-up by Israel while they continued their settlements. There is evidence supporting this as today there are 600,000 settlers in West Bank compared to 115,600 in 1993 (Oxfam 2019).

    Another significant issue is that Mahmoud Abbas and the Palestinian Authority (PA) have no framework other than the failed and biased Oslo accords. Owing to the proclamation that this accord would end the conflict, the PA became stuck in this framework. The way forward, as said by researcher Victor Kattan is that “The PA must produce a concrete vision of the state it wants to establish” (Arafeh et al.2017).  This lack of vision by the leaders is one of the reasons for the stagnation in the negotiations. Till today, Abbas and PA threaten to quit the accords and routinely proclaim that the Oslo deal is no longer valid. However, this should have come decades ago, during the second intifada in the year 2000, which illustrated that the Oslo accords were unfavourable towards the Palestinians. It shows the PA’s failure as a representative body, and their approval rate by the Palestinian public has reduced drastically.

    There have been talks to solve the dispute after Oslo deal, for instance, the Taba Summit. However, none have gained the clout or effort that the Oslo deal garnered.

    Militancy

    Ever since the attack of 9/11, the conversation surrounding militancy has increased. Invasion of Afghanistan and Iraq by the United States, a world power, ensured that the world knew the stance of the West on militancy.

    Militancy and violent retaliation by the Palestinians armed groups have been major issues, and the world witnessed the Munich massacre of the Israeli Olympic team in 1972. Furthermore, there have been Palestinian militant factions, which is where organizations such as Hamas come in. The first intifada led to Hamas’ formation and the second intifada helped Hamas gain clout (Uslu and Karatas 2020). Hamas has been deemed a terrorist organization by the United States, the European Union, because of its fundamentalist ideology and use of violence. This also led to the Palestinian struggle to lose sympathies of the international community due to its wariness of militant groups. Hamas takes a more “hard-line” approach towards Israel and is infamous for its rocket attacks against Israel from Gaza and suicide bombings (Uslu and Karatas 2020).  Israel and Hamas are also very wary of negotiating with each other. So far, the only talks between the two groups have been to swap prisoners.

    Many have criticized Hamas for the use of violence, however, Israel and other states cannot condemn the violence being deployed by Hamas, while Israel itself consistently shows violent behaviour towards the Palestinians. Hamas gained clout after the intifadas showed the deplorable conditions of the Palestinians in the occupied territories and Gaza. Termination of aid to Gaza on account of peoples’ support to Hamas has created more problems in terms of economy and livelihood. In the end, it is Palestinian people who suffer the most.

    Pro-Israel Policies of the United States  

    The United States is a close ally of Israel; technologically, financially, and otherwise. Israel, too, provides intelligence and acts as the “eye” of the United States from the West Asian region. The US-Israel relationship was instrumental in limiting the erstwhile Soviet Union’s influence in West Asia during the cold war (Beauchamp 2018). Much of the aid the United States gives to Israel is military aid, and as an important defence ally, Israel receives state-of-the-art weapon systems and intelligence sharing (Congressional Research Service 2019). The US has played a critical role in Israel’s emergence as a technology power and a major arms exporter.

    The United States has used its veto in the security council several times to protect Israel, including when the UN looked at taking action to prevent  Israel’s invasion of Lebanon and to stop the construction of walls inside the West Bank (Zunes 2012).

    The Israel caucus and lobby in the United States is powerful and many pro-Israeli outfits/individuals are major funding sources for Congressional elections (Cook 2018). The American Israel Public Affairs Committee (AIPAC) has financially backed people in the congress, which has influenced the decisions made by many lawmakers. For instance, billionaire, Sheldon Adelson, funded 82 million dollars to Republican’s election and is known for his pro-Israel sentiments. He even pushed for the USA embassy to be moved to Jerusalem from Tel-Aviv and has also proven to be unconcerned about giving Palestinians voting rights in Israel (McGreal 2018).

    The Donald Trump administration has taken the support for Israel one step further. Trump supports Israel in controversial issues that many shy away from addressing due to the politics in West Asia and Palestine’s historical symbolization. Trump came up with a peace deal for Israel and Palestine which was criticized severely and rejected by Palestine as the negotiations did not involve them (Holmes et al. 2020). The fact that Trump did not involve Palestinians in the negotiation shows how one-sided and utterly dismissive he is of the Palestinian authorities and people. The refusal of the right to return for Palestinian refugees, keeping Jerusalem as an undivided capital of Israel, recognizing Israeli settlements are among many reasons why the deal is flawed. The United States also brokered two peace deals in West Asia, the UAE-Israel peace deal first, followed by the Bahrain-Israel deal. It has also has been pushing other Arab countries to normalize relations with Israel (Barrington and Williams 2020).

    The Trump administration also shifted the United States embassy to a contested and occupied Jerusalem in 2018. All the more, this ultimately recognized and legitimised Israel’s occupation of the West Bank. After Trump’s announcement to shift the embassy, Israel’s housing minister declared that Israel was developing 14,000 “new settlement units” in Jerusalem (Arafeh et al. 2017). Mohamoud Abbas also asserted that the United States could not be a reliable mediator after shifting capital to Jerusalem. However, the United States has continued to meddle and create a one-sided mediated plan (Arafeh et al. 2017).

    Trump has also continued to cut out aid for Palestine, which has severe repercussions for Gaza’s already poorly funded city. In 2018, after Palestinians Authorities blamed Trump for being partial, he cut 200 million dollars in economic aid and cut funding to the United Nations Relief Work Agency (UNRWA), the primary network in helping Palestinian refugees (Holmes 2020).

    During the US presidential elections, Netanyahu appealed to evangelical supporters in the United States. In a virtual conference, he said that Trump might give him the green-light to annex certain parts of the West Bank that have religious significance in the Bible (Ravid 2020). The President-Elect Joe Biden has clearly highlighted that he would review these decisions, recognise Palestinians’ right to self-determination and adopt a more balanced approach.

    It is evident that the Trump administration has played a significant role in side-lining the Palestinian issue.

    Looking Ahead

    The Palestine problem has stretched far too long, with many “negotiations” that have failed to address the historical injustice done to the Palestinians. Amidst all this, clashes continue between protestors in Gaza and Israeli forces. While there are mass casualties and acts of aggression on both sides, there is no denial of how poorly Israel has treated Palestinians over the decades. Furthermore, most issues regarding Palestine have been put on the back-burner, however, the Arab League stepped up to condemn the unfair Trump Peace Deal, which is the bare minimum it could have done.

    There needs to be more initiative from the side of the PA to have a more concrete plan for the future of Palestinian sovereignty. The PA is also dominated by older elites, but with changing aspirations of the Palestinians, there need to be more women and younger people in the body.

    Additionally, for Palestinian sovereignty to be achieved, there has to be a major restructuring of the PA. It is clear that PA has been stripped of its power over the years and afflicted with corruption, has not improved the Palestinians’ situation. There needs to be more initiative from the side of the PA to have a more concrete plan for the future of Palestinian sovereignty. The PA is also dominated by older elites, but with changing aspirations of the Palestinians, there need to be more women and younger people in the body.

    There is some importance given to Palestine in the United Nations such as making Palestine as a presiding chair for the G77 or the United Nations Security Council Resolution 2334, which says that “altering the demographic composition, character, and status of the Palestinian Territory occupied since 1967, including East Jerusalem… (is) in violation of international humanitarian law” (SC Res 2334 2016). However, voting pro-Palestinian at some UN resolutions, having Palestinian authorities come over, and reiterating a “two-state solution” is no longer enough. Furthermore, different countries use this issue as a political tool to show their “sentiments.” Instead, there needs to be more proactive international collaboration to fight for Palestinian rights consistently. The Palestinian issue is a fundamental human rights issue and should be urgently addressed before the already minimal fragments of Palestine disappear under Israel.

    References

    “Palestinian Citizens Of Israel”. Institute For Middle East Understanding, 2020, https://imeu.org/topic/category/palestinian-citizens-of-israel. Accessed 25 Sept 2020.
    Al Jazeera. “Netanyahu Says West Bank Annexation Plans Still ‘On The Table’”. 2020,   https://www.aljazeera.com/news/2020/08/13/netanyahu-says-west-bank-annexation-plans-still-on-the-table/. Accessed 12 Sept 2020.
    Arafeh, Nur et al. “Trump, Jerusalem, And The Future Of Palestine – Al-Shabaka”. Al-Shabaka, 2017, https://al-shabaka.org/roundtables/trump-jerusalem-future-palestine/. Accessed 6 Sept 2020.
    Arroyo, Carmen. “Palestinian Children, The True Victims Of The Conflict”. The Wire, 2020, https://thewire.in/world/palestinian-children-true-victims-conflict-israel. Accessed 5 Sept 2020.
    Barrington, Lisa, and Dan Williams. “After UAE-Israel Breakthrough, Kushner Pushes Other Arabs To Go Next”. Reuters, 2020, https://www.reuters.com/article/us-israel-gulf-usa/after-uae-israel-breakthrough-kushner-pushes-other-arabs-to-go-next-idUSKBN25S5QC. Accessed 20 Sept 2020.
    Beauchamp, Zack. “Why Are The US And Israel So Friendly?”. Vox, 2018, https://www.vox.com/2018/11/20/18080080/israel-palestine-us-alliance. Accessed 16 Sept 2020.
    Chomsky, Noam, and Ilan Pappé. On Palestine. Haymarket Books, 2015.
    Congressional Research Service. U.S. Foreign Aid To Israel. Congressional Research Service, Washington D.C, 2019.
    Cook, Jonathan. “Under Trump, The Israel Lobby Is A Hydra With Many Heads”. Middle East Eye, 2018, https://www.middleeasteye.net/opinion/under-trump-israel-lobby-hydra-many-heads. Accessed 7 Sept 2020.
    Hassan, Shamir. “Oslo Accords: The Genesis and Consequences for Palestine.” Social Scientist, vol. 39, no. 7/8, 2011, pp. 65–72. JSTOR, www.jstor.org/stable/41289422. Accessed 30 Sept. 2020.
    Holmes, Oliver et al. “Trump Unveils Middle East Peace Plan With No Palestinian Support”. The Guardian, 2020, https://www.theguardian.com/world/2020/jan/28/donald-trump-middle-east-peace-plan-israel-netanyahu-palestinians. Accessed 1 Sept 2020.
    Holmes, Oliver. “US To Give Palestinians $5M In Coronavirus Aid – 1% Of What Trump Cut”. The Guardian, 2020, https://www.theguardian.com/world/2020/apr/17/us-aid-palestinians-coronavirus-trump-cut. Accessed 22 Sept 2020.
    McGreal, Chris. “Sheldon Adelson: The Casino Mogul Driving Trump’s Middle East Policy”. The Guardian, 2018, https://www.theguardian.com/us-news/2018/jun/08/sheldon-adelson-trump-middle-east-policy. Accessed 17 Sept 2020.
    Oxfam. From Failed To Fair Learning From The Oslo Accords To Foster A New Rights-Based Approach To Peace For Palestinians And Israelis. Oxfam, Oxford, 2019, pp. 3-24, https://oxfamilibrary.openrepository.com/bitstream/handle/10546/620904/bp-failed-to-fair-oslo-accords-011119-en.pdf. Accessed 6 Sept 2020.
    Ravid, Barak. “Netanyahu Presses Trump By Lobbying U.S. Evangelicals To Back Annexation”. Axios, 2020, Accessed 29 Sept 2020.
    Reuters. “No Consensus Yet For Syria Return: Arab League Chief”. 2020, https://in.reuters.com/article/us-mideast-crisis-syria-arabs/no-consensus-yet-for-syria-return-arab-league-chief-idUSKCN1Q014R. Accessed 15 Sept 2020.
    SC Res 2234, UNSC, UN Doc S/RES/2334 (23 December 2016) < https://www.un.org/webcast/pdfs/SRES2334-2016.pdf> accessed 15 September 2020
    The Times of Israel. “PM Said Seeking To Formalize Relations With Saudi Arabia Before Next Election”. 2020, https://www.timesofisrael.com/pm-said-seeking-to-formalize-relations-with-saudi-arabi-before-next-election/. Accessed 24 Sept 2020.
    Tolan, Sandy. “Was Oslo Doomed From The Start?”. The Nation, 2018, https://www.thenation.com/article/archive/was-oslo-doomed-from-the-start/. Accessed 17 Sept 2020.
    Uslu, Nasuh, and Ibrahim Karataş. “Evaluating Hamas’ Struggle in Palestine.” Insight Turkey, vol. 22, no. 1, 2020, pp. 109–124. JSTOR, www.jstor.org/stable/26921171. Accessed 30 Sept. 2020.
    Zunes, Stephen. “Putting The UN Veto In Perspective”. Huffpost, 2012, https://www.huffpost.com/entry/syria-russia-un-veto_b_1267495?guccounter=1. Accessed 21 Sept 2020.
  • Contract Farming in India: A long-pending Reform but not a Panacea for all Agri-issues

    Contract Farming in India: A long-pending Reform but not a Panacea for all Agri-issues

    India’s agricultural sector has for long been mired in issues of low productivity, land fragmentation, poor infrastructure, and inadequate delivery mechanisms among others that have often rendered farmers, victims of a system, without proper regulatory mechanisms. The requirement for better infrastructure, technology, and quality-produce has been at the forefront while pushing for more private investment into the sector. However, real gains in agriculture can only be seen when all farmers gain equal access to this investment and receive fair benefits.

    Around 126 million farmers in the country, as of today, are small and marginal farmers with an average holding size of 0.6 hectares.  It means they cannot produce a surplus and can barely sustain their families, a leading factor in the agrarian crisis that has befallen India.

    India’s agrarian crisis: A quick snapshot

    In India, small and marginal farmers makeup 86.2% of all farmers in India but own only 47.3% of crop area. Around 126 million farmers in the country, as of today, are small and marginal farmers with an average holding size of 0.6 hectares.  It means they cannot produce a surplus and can barely sustain their families, a leading factor in the agrarian crisis that has befallen India. Fragmentation of holdings also hinders access to government-offered new technology and farm support schemes fundamental to making the sector profitable. Experts believe that the only way out is to provide farmers with access to better technology and markets and to make small farms more economically viable through diversification into high-value crops and massive capital investments in value chains.

    To address these issues, the government recently passed three agricultural reform bills–The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020; The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020; and The Essential Commodities (Amendment) Bill, 2020. Essentially, the bills break the monopolistic powers of the Agriculture Produce Management Committee (APMC) markets, allow contract farming, and remove stocking limits on traders for many commodities, with some caveats still in place.

    Among the concerns raised, many believe that enabling contract farming will leave small farmers vulnerable and at the mercy of private players, leaving them worse off than before.

    The bills, in the views of many, are inherently anti-farmer in nature, triggering farmer protests across the country and the Union Minister for Food Processing Harsimrat Kaur Badal resigning in protest. Among the concerns raised, many believe that enabling contract farming will leave small farmers vulnerable and at the mercy of private players, leaving them worse off than before.

    Reforms and changes to liberalize the Indian Agri-market was long due, with bills of similar nature pursued both at the Union and State level.

    Liberalization of Indian agriculture through the years

    In fact, the first attempt at the reforms in agricultural markets was made by the union government in 2003 with the model Agricultural Produce Marketing Committee (APMC) Act,  which made new market channels, such as direct purchase, private wholesale markets, and contract farming (CF), legal for farmers and buyers alike. Set against the backdrop of poorly functioning APMC markets (regulated and unregulated), that even today cannot deliver MSPs to the farmers, the bill pushed States to amend their own APMC Acts.  Today, in all major agricultural States, there are many cases of contract farming and direct purchase by various groups of traders dealing with farm produce. Yet contract farming faced setbacks, as it was still within the APMC domain and hence saw a conflict of interest with even traders and commission agents strongly opposing it.

    In order to resolve this deadlock, a new and improvised Agricultural Produce, and Livestock Marketing (Promotion and Facilitation) Act, 2017 (APLMA, 2017) was passed by the government in order to take contract farming out of the APMC domain. This led to the birth of a separate model act on Agricultural Produce and Livestock Contract Farming and Services 2018 (Promotion and Facilitation – APLCFS2018). Among other major provisions, the act mandated the removal of market fees and commission charges to buyers resulting in a saving of 5%–10% of transaction cost, thus making the market more conducive to private players. However, all said and done, contrary to popular belief, the Indian experience with contract farming (CF) is not new.

    The first widely acknowledged incident of contract farming in the Indian context was the entrance of Pepsi Foods Ltd. into Punjab in 1989. The company intended to specifically focus on exports of value-added processed foods. This led to the birth of PepsiCo’s backward linkage with farmers of Punjab. The PepsiCo model of contract farming opened up new options for farmers, led to productivity increase, and introduced modern technology for the tomato crop. Following the Pepsico example, local firms such as Nijjar in Punjab and Bhilai Engineering in Madhya Pradesh also took up a tomato contract cultivation.

    The Indian experience with Contract Farming: Are farmers really benefitting?

    Studies of the CF system in India have tried to establish whether crops under the contract system have better outcomes than those under non-contracts/traditional systems. Findings show that contract production gave much higher gross and net returns compared with that from the traditional crops of wheat, paddy, and potato, those under non-contract situations. This was because of the higher yield and assured price under contracts and better-quality inputs.

    The Punjab and Haryana CF experience has been far from satisfactory with studies revealing that contract growers faced many problems like the undue quality cut on produce by firms, delayed deliveries at the factory, delayed payments, low price, and pest attack on the contract crop which raised the cost of production. The firms also manipulated provisions of the contracts in practice and also delayed payments up to 60 days. But it locked growers into these contracts because of the firm-specific fixed investments they had made.

    It is clear then that CF often protected company interest at the expense of the farmer and did not cover farmer’s production risk e.g. crop failure, and kept the right of the company to change price, and offered prices based on open market prices.

    It is clear then that CF often protected company interest at the expense of the farmer and did not cover farmer’s production risk e.g. crop failure, and kept the right of the company to change price, and offered prices based on open market prices. This is a serious issue as market prices are volatile and even premiums may not help a farmer if market prices go down significantly, which is not uncommon in India. (MSPs which benefit only 6% of Indian farmers have also been historically low in recent times)

    Contract farming in India was also mainly carried out with only large and medium farmers.  This bias in favour of large/medium farmers perpetuated the practice of reverse tenancy in regions like Punjab where contract farmers leased inland from marginal and small farmers for contract production, creating even larger issues of land control versus ownership.

    Given the big farmer preference and the pernicious harms that CF brings with it, the heralding of a new era of Agri reforms thus rightfully raises the question of what the road ahead looks like for small farmers in India.

    The road ahead: Viable modes of contract farming for Indian farmers

    The only way that small farmers can realistically realize returns and stand their ground is through organizing themselves in the form of Farmer- producer organizations, bargaining cooperatives, and group contracts. Producer organizations are beneficial as they amplify the political voice of smallholder producers, create opportunities for producers to get more involved in value-adding activities such as input supply, credit, processing, marketing, and distribution. They also lower the transaction costs for the processing/marketing agencies working with growers and negotiate fair contracts for buyers and growers.  The legal system in India has made available the organizational option of the Producer Companies (co-operative companies) under the Companies Act, in which farmers in many states have gone ahead with various existing and new projects.

    Another form of organization that can be explored is that of New Generation Co-operatives (NGCs) which are voluntary, more market-oriented, member responsive, self-governed, and avoid free-riding and horizon problems as they have contractual equity-based transactions with grower members and limited membership.

    Collective action through cooperatives or associations is important not only to reduce the information asymmetry between the growers and the firm, but also to help small farmers adapt to new patterns and greater levels of competition.

    Collective action through cooperatives or associations is important not only to reduce the information asymmetry between the growers and the firm, but also to help small farmers adapt to new patterns and greater levels of competition. Thus, there is a need to promote/encourage farmer groups for CF as in Thailand where besides contract grower groups, the potato growers co-operative also dealt with a multinational contracting company on behalf of its members.

    On legal grounds, there needs to be a serious consideration of protection accorded to contract growers as a group. In Japan, subcontracting agencies have seen legal protection given to them in their relations with large firms. These laws specify the duties and forbidden acts for the large parent firm such as defaulting on payments and are monitored and kept in check by the Fair Trade Commission. Necessary safeguards and flexible systems need to come in the legal sphere to protect small farmer interests. The new 2020 Agri bills largely leave regulation out of the purview of government responsibility and have no mention of how contracts are to be regulated.

    State support to CF arrangements needs to account for the size of holdings else it will not be beneficial to small farmers at all.  In Thailand, the state not only provided coordination and support of local authorities but also initially provided interest compensation to farmers to encourage participation and lower costs. Subsequently, the practice was replaced by low-interest loans. They gave training in CF to farmers and state intervention helped the farm sector by promoting competition.

    Policy design should focus on small farmers

    The glaring problem that burdens small farmers is that they are simply not assured of a strong support mechanism from private players to protect their interests in aspects like delayed payments and deliveries, contract cancellation damages, inducement/force/intimidation to enter a contract, disclosure of material risks, competitive performance-based payments, and sharing of production risks. Only when they can be guaranteed that they will not be exploited on such grounds can the benefits of CF arrangements materialize.

    Thus policies concerning the design of contract agreements need to be fair and should ensure clauses on increased competition for procurement instead of monopsony, a guaranteed market for farmer produce, effective repayment mechanism, market information for farmers to effectively bargain with companies, a commitment to fair sharing of risk and innovating pricing mechanisms( bonus, fixed price, share in equity, and quality-based pricing).

    The 2020 Agri bills may have been too ambitious in opening up markets to private players without locking-in adequate safeguards for farmers.

    Contract farming is not a panacea to the issues that plague the agricultural sector in India. It is not an end but a welcome step towards agricultural development. The 2020 Agri bills may have been too ambitious in opening up markets to private players without locking-in adequate safeguards for farmers. If contract farming needs to see returns in the Indian context, it cannot do so until it recognizes that the twin planks of efficiency and inclusivity need to go hand in hand.

    Image: Rice fields by Nandlal Sarkar from Pixabay

  • US strategists lost empathy, along with their wars

    US strategists lost empathy, along with their wars

    This article was published earlier in Responsible Statecraft.

    The great realist thinker Hans Morgenthau stated that a fundamental ethical duty of the statesman is the cultivation of empathy: the ability through study to see the world through the eyes of rival state elites. Empathy in this sense is not identical with sympathy. Thus, George Kennan’s deep understanding of Stalinism led to an absolute hostility to that system.

    This kind of empathy has very valuable consequences for foreign policy. It makes for an accurate assessment of another state establishment’s goals based on its own thoughts, rather than a picture of those goals generated by one’s own fears and hopes; above all, it permits one to identify the difference between the vital and secondary interests of a rival country as that country’s rulers see them.

    A vital interest is one on which a state will not compromise unless faced with irresistible military or economic pressure. Otherwise, it will resist to the very limit of its ability, including, if necessary, by war. A statesman who sets out to challenge another state’s vital interests must therefore be sure not only that his or her country possesses this overwhelming power, but that it is prepared actually to use it.

    Geopolitical power is really, in the end, local and relative: it is the power that a state is willing to bring to bear in a particular place or on a particular issue relative to the power that a rival state will bring to bear. Furthermore, the degree of the willingness to mobilize and use power and to make sacrifices depends ultimately on whether the issue concerned is believed to be a vital national interest. If it is only a secondary interest, then it is one on which the statesman should be prepared to make concessions and seek compromise.

    The first step in this process of empathy is simply to listen to what the other side says. This however is not in itself enough, for they may of course be exaggerating an issue’s importance as a bluff or a negotiating gambit. It is therefore also necessary to study in depth the history, politics and culture of the country concerned. Thus, despite what Chinese officials say, we might doubt that they would actually go to war if Taiwan declares independence. A study of modern Chinese history, and of the importance of nationalism to the legitimacy of the Chinese state, makes clear that they are not bluffing.

    What makes this search for understanding easier is that foreign and security establishments generally hold historically-derived doctrines about their country’s vital interests that are relatively easy to identify given study and an open mind.

    The greatest enemy of an open mind and a capacity for empathy is self-righteousness. One aspect of self-righteousness is a confusion between basic moral commitments and the inevitable moral compromises forced upon state representatives trying to defend their country’s interests in a morally flawed and chaotic world.

    The morality of Western policymakers lies in their commitment to Western democracy, and their renunciation of absolutely immoral means: notably the mass murder of civilians. This commitment however, while it may restrain Western democracies from the most evil actions, does not confer some kind of innate innocence on their conduct of policy.

    This is especially true of the Middle East where I have worked for a number of years. Given the nature of this region, any outside state, democratic or otherwise, seeking to play an important role there will inevitably be compelled to engage in certain immoral actions — including alliances with corrupt and murderous dictatorships. What Western policymakers can, however, be blamed for is the pretense that because our systems are democratic, this somehow in itself makes these immoral actions better than those same actions when engaged in by other states.

    The least excusable Western failure of empathy since the end of the Cold War has been with regard to Russia because — by contrast to some Middle East countries, let alone North Korea — the attitudes and beliefs of the Russian establishment are not hard to understand, at least for anyone with a minimal grasp of Russian history and culture. Moreover, the realism of Russian policymakers fits the mindset of many American security officials.

    The vital interests of Russia are adhered to by the Russian establishment as a whole. They consist chiefly of a belief that Russia must be one pole of a multipolar world — not a superpower, but a great power with real international influence. Also: that Russia must retain predominant influence on the territory of the former Soviet Union, that any rival alliance must be excluded, and that international order depends on the preservation of existing states. In addition, as with any political system, there is a commitment to the existing Russian political order and a determination that any change in it must not be directed from outside.

    There are obvious tensions between some of these Russian interests and secondary U.S. interests, but on one issue — the danger from Sunni Islamist extremism and terrorism — a vital interest of Russia is completely identical with our own. Because of this danger, U.S. administrations, like the Russians, have often supported existing authoritarian Muslim states for fear that their overthrow would lead to chaos and the triumph of Islamist extremism.

    In Syria, Russia followed the policy of the U.S. in Algeria 20 years earlier — and indeed in its support for General Abdel Fattah al-Sisi in Egypt today. Russian fears of an ISIS takeover of Syria if the state collapsed were echoed in briefings to President Obama by the CIA. Yet a Western narrative has emerged of Russia engaging in wicked support for “brutal dictatorships” in the Middle East, and that this policy in turn is linked not to fear of Islamist extremism, but implacable anti-Americanism and reckless geopolitical ambition.

    Straightforward Western prejudices (now dignified with the abominable euphemism of “narratives”) are part of the reason for these false perceptions derived from the Cold War. The collapse of Communism, however, also led to a growth in Western hubris that led Western policymakers to fail either to listen to their Russian colleagues when they stated Russia’s vital interests, or to study Russia in sufficient depth to understand that they were not bluffing but really meant what they said. Instead, you had the tragicomic picture of American officials lecturing Russian officials on the “real” interests of Russia.

    As a result, U.S. and British officials ignored Russian warnings that if Washington persisted in trying to extend NATO membership to Georgia and Ukraine, Russia would fight. And when Russia did fight — albeit in a very limited way — this was taken as a sign not of a Western failure to listen, but of Russian “madness,” aggression, and evil. Though if one thinks of the Monroe Doctrine, Russian concerns in this regard should hardly be incomprehensible to an American official. It should also have been easy enough to accept the Russian point that this was a vital interest for the sake of which Moscow was prepared to make very important concessions to Washington on other issues.

    Instead, the United States establishment embroiled itself in confrontations with Russia, only to recognize at the last moment in Georgia in 2008 and Ukraine in 2014 that these countries were not in fact American vital interests, and that the U.S. was not prepared to fight to defend them. An additional danger therefore in refusing to study other countries’ vital interests is that it makes it more difficult to think seriously about your own. We had better hope that in dealing with the vastly more formidable challenge of China our policy elites will engage in real study, eschew self-righteousness, and identify and not attack the vital interests of China, as long as Beijing does not seek to attack our own.

    This article is republished with the permission of the author and Quincy Institute.
    Image credit: Pexels
     
  • BeiDou: China’s Space Flight to Global Dominance

    BeiDou: China’s Space Flight to Global Dominance

    Technological independence and Economic prowess define a ‘Great power’ in today’s Information Age. In an era of rapid technological advancements, China has emerged as an economic and technology juggernaut, rising in stature as a global superpower. Ever since the beginning of Deng Xiaoping’s modernisation strategy, China has invested heavily in its science and technology sector aiming to reduce its dependency on foreign technology. After nearly three decades of the relentless pursuit of technological competence, China has now established itself as a dominant force in innovation and technology. One such milestone because of its relentless pursuit is the establishment of its indigenous Global Navigation Satellite System (GNSS), The BeiDou Navigation Satellite System (BDS). BeiDou marks China’s entry into an elite club of GNSS systems, becoming one of only four global navigation systems worldwide. It cements China’s place as a prominent Space Power and as a potential suitor among countries for future space co-operation. BeiDou will directly rival the Global Positioning System (GPS) of the U.S. and its cheap costs with greater accuracy could bring an end to the monopoly of GPS in the global navigation systems arena.

    Military Objectives

    ‘National security’ is the primary reason for the development of the BDS navigation system. China’s ambition to build an indigenous satellite navigation system stemmed from the “embarrassment” it suffered during the Taiwan strait missile crisis in 1996[1]. It is believed that two of the warning missiles fired by the PLA, close to Taiwan’s Keelung military base, failed to hit the designated target due to the sudden disruption of the GPS. Missiles launched rely on Position Navigation and Timing (PNT) data, provided by a constellation of satellites, to navigate accurately to their designated target. With the BeiDou Navigation System (BDS) online, the Chinese military possesses a military and strategic autonomy and no longer requires to be dependent solely on the GPS for tracking and navigation. BeiDou aims to offer the Chinese PLA with precision-guided missile delivery systems, robust communication systems, enhanced cyber and drone warfare capabilities. Thus, integrating BeiDou into military systems and equipment will enable China to effectively bypass any constraints on GPS imposed by the U.S.[2].

    The BDS navigation system offers signals at a higher bandwidth, thus providing better accuracy than the GPS. Its global position accuracy is under 10 cm in the Asia-Pacific compared to the GPS’s 30cm [3]. BeiDou’s higher accuracy and affordable prices may encourage many countries to consider it as a viable alternative to GPS service provided by the U.S. Many militaries today fear manipulation of the navigation signals by the U.S. in times of conflict, as they are solely reliant on GPS for precision guidance and navigation. The BDS is compatible with GPS, GLONASS & GALILEO navigation systems, thus offering militaries with a fool-proof alternative. This dynamism will be a key strategic asset to any country during conflict situations[4]. One such example of countries moving away from GPS is Pakistan, which is all set to incorporate BeiDou into its civil and military domain as part of its defence and strategic cooperation with China. It gives Pakistan access to precise geospatial data for application in surveying and mapping, construction and scientific studies[5]. With Pakistan on a defence equipment buying spree from China, its military would gradually be fully integrated with the BDS navigation system soon, moving away from its reliance on GPS. This shows China’s pursuit of establishing its indigenous navigation system in the Asian region, putting an end to the GPS hegemony.

    Space Silk Road

    The BeiDou navigation satellite system is of critical importance to China’s Belt and Road Initiative (BRI). The BDS navigation system will ensure accurate navigation capabilities that will complement the Land and Maritime Silk routes, which are a part of the larger Belt and Road Initiative of China. The Space Silk road aims to establish an array of space capabilities including a fully operational space station, ground infrastructure, launch services, satellites, aerospace industries and BDS related industries[6]. It offers a wider dimension to China’s ambitions for BRI and could promote greater growth and development of its space infrastructure and technology. It also promotes civil-military dual-use technologies and provides a platform for enhancing China’s indigenisation in communication, satellite navigation, aerospace and artificial intelligence[7]. It aims to provide the international community with credible alternative infrastructure and promote further cooperation in space-innovation and space-technology. China’s Space Silk Road legitimises its stake as a credible leader in space and a growing superpower in the international system.

    Over 30 countries including Pakistan, Saudi Arabia, Myanmar, Thailand, Laos and Indonesia have already signed agreements with China to integrate the BDS navigational system in the domestic sectors like transportation, communication, etc. They have also allowed the construction of ground stations, which would improve the accuracy and range of the BDS navigation system. The Space Silk road aims to tap into the lucrative satellite navigation industry, its system and components market enabling China to wield greater influence in third countries and their economy[8]. The BDS navigation satellite system is the centrepiece of the Space Silk Road under China’s Belt and Road Initiative and is of massive strategic and geopolitical importance in China’s ambition to establish itself as a global superpower.

    Economic Implications of BeiDou

    It is clear as day that any country that possesses an economic might wields greater influence in the world’s geopolitics. The U.S. has been the dominant force in the world economy until the turn of the 21st century, but not anymore. China’s meteoric rise to economic supremacy is deeply rooted in its aim to knock the U.S. right off their perch and take its place as a global leader in technology innovation and manufacturing. It aims to be the focal point of global manufacturing and offer nations credible and high-tech equipment and exercise a greater foothold in the global markets. ‘Made in China 2025’ espouses this ambition of China to cement its place as a global manufacturing leader in strategic industries like information technology, communication systems, a global navigation system, aerospace, railways, agricultural machinery etc. which are critical to the economic competitiveness and growth in the 21st century[9].

    A major cornerstone of the ‘Made in China 2025’ and the ‘13th 5-year plan’ is to fast-track the commercial applications of the BeiDou navigation satellite system. The Global Navigation Satellite System (GNSS) industry is estimated to be worth US$82.4 billion and is forecast to grow at an average rate of 7% p.a. through 2023 with over 3.6 billion GNSS devices currently in use worldwide. China aims to gain control of this lucrative market, which would give it economic superiority against the U.S. in the GNSS downstream industry and also aims to break the monopoly that the GPS enjoys in the satellite navigation industry. As of 2012, the U.S. led the GNSS downstream industry with a share of 31% followed by Japan 26%, the E.U. 25.8% and China with 7% share. China aims to capture 60% of the domestic GNSS downstream industry and 80% of important applications, becoming globally competitive by 2020. It envisions to build an industrial chain comprising all parts of the GNSS downstream industry ranging from chips, modules, antennae, receivers etc, all compatible with the BDS navigation system. China expects Beidou to have a global market penetration of 60% and attain worldwide coverage by 2020[10].

     In sheer numbers, it projects the GNSS market to grow by US$81.5 billion and have a compounded annual growth rate of 6.6%. Estimated at US$155.1 billion in 2027, the GNSS global market is expected to reach US$228.7 billion by 2027 growing at a CAGR of almost 6% between 2020-2027. The U.S. GNSS market is estimated to be worth US$42 billion in 2020 while China, being the world’s second-largest economy is likely to reach a GNSS market size worth US$47.8 billion in 2027 with a CAGR of 8.6%, effectively getting even with or overtaking the U.S. in the global GNSS market[11]. In a study carried out by a North Carolina based research organization RTI International, sponsored by the U.S. government’s National Institutes of Standards and Technology, between 1984-2017 GPS has generated economic benefits to the tune of US$1.4 trillion. The largest contributing sectors were the telecommunications industry with US$685.9 billion, telematics with US$325 billion and location-based services on smartphones with US$215 billion. It is estimated that losing GPS service business would have a US$1 billion per day impact on the economy[12].

    In a recent report published in the White Paper on the Development of China’s Satellite Navigation and Location Services Industry (2020), released by the GNSS and LBS Association of China, China’s satellite navigation and location-based services industry achieved an output of US$48.58 billion in 2019. The industry’s core sector associates with the development and implementing satellite navigation technology including chips, devices, algorithms, software, navigation data, terminal equipment and infrastructure. The BDS navigation system alone has contributed a whopping 80% of output value generated from these sectors[13]. The sheer scope and economic opportunity in the GNSS sector substantiate China’s dogged persistence to gain control of this industry. As the global navigation satellite systems move towards interoperability soon, BeiDou could lead the race to offer high-tech navigation systems and equipment compatible with GPS, GLONASS, GALILEO to the international community. Implementing the BDS navigation system has bolstered China’s standing in the international community as an economic powerhouse and stands as a testament to the country’s resilience and steadfast vision to become a global superpower and a leader in space.

    BeiDou’s Geopolitical Implications and the Future of Space

    The BeiDou Navigation Satellite System is an important strategic asset for China, in its ambitions to achieve global supremacy and establish itself as a leader in Space. China looks to use BeiDou’s scope and potential to achieve its larger geopolitical and strategic goals in the military and economic domain. On the economic front, this would negatively affect U.S. companies operating in the Chinese markets, as China has taken steps to reward its domestic sector to promote BeiDou and expand its GNSS industry. Effectively, U.S. suppliers would be driven out of the market by the local Chinese suppliers whose equipment would be on par or even better than equipment bought from the West. It would enable China to create a global industrial chain of satellite navigation and telecommunication equipment, which are of the highest quality and at affordable prices, wooing third countries and providing a credible alternative to the Western equipment. This serves well to two of China’s prominent strategic objectives of establishing itself as a leading global economy and driving the U.S. out of the Asian markets.

    Considering heightened U.S. presence in the highly contested South China Sea and China’s lingering territorial disputes with neighbouring countries, BeiDou’s initial deployment in South East Asia offers China strategic advantage and Area Access/Area Denial capabilities. Incorporating the BDS navigation system, possessing greater accuracy than GPS, in both ballistic and cruise missile systems offers China with precision-guided weapons capability, thus acting as an effective deterrent and strategic threat to the U.S. in the region. Greater precision and accuracy implies greater reconnaissance capabilities, digital espionage and enhanced tracking capabilities, thus countries like the U.S. feel BeiDou poses a critical security threat to their national security[14] With the BeiDou navigation satellite system going online, all roads lead to China realizing its dream of an Asia devoid of the West and attaining military autonomy over the U.S., especially in South East Asia.

    The BDS satellite navigation system is the third dimension of China’s strategic Belt and Road Initiative, aiming to achieve global coverage from all fronts. It is an effective foreign policy tool that China can utilise to garner international support and cooperation. With over 130 countries on board China’s BRI project, BeiDou would be a critical asset to attract more countries aboard its ambitious project. Achieving global coverage through BRI, supported by BeiDou, would increase China’s standing in the international community and mark another step towards the end of U.S. dominance in the global geopolitical arena.

    The global ambitions of China with its BeiDou navigation system bring with it a sense of caution and uncertainty in the geopolitical arena. Behind the veil of China’s good Samaritan measures, lie the desires of a power-hungry dragon. The BDS navigation system and its subsequent GNSS downstream industrial chain offer countries lucrative opportunities, but at what cost? Recent patterns would show clearly China’s cut-throat diplomacy with its BRI project. Deceived by vast sums of money in the BRI project, countries who were aboard the project were pushed into a debt-trap by the Chinese, ceding control over their markets and economy to China. BeiDou could be just another tool China could use to seize control of the third country’s markets and strong-arm them to bend to their will and desire.

    In the geopolitical arena of Space, China’s emergence as a space power would no longer give the U.S. leverage that it had been enjoying in the international institutions on discussions and matters on Space technology and governance. BeiDou could be China’s ticket to space superiority. It could give China the upper hand in GNSS discussions and the ability to wield greater influence in Space innovation and technology. History has taught us frequently that once a nation or group of nations achieve technology superiority in any sector, they monopolize it to safeguard their strategic interests and consolidate their position of power. A good example would be the discriminatory Non-Proliferation Treaty which, under the pretext of bringing order in the domain of Nuclear Technology, has only achieved to limit the capabilities and ambitions of aspiring nuclear states driving a wedge between haves and have-nots. The signatory parties themselves show no compliance with the guidelines of the Treaty. Today, there are nine countries having space launch capabilities. China’s place at the top in countries having space capabilities is fast becoming a reality, and its role in the politics of Space presents an interesting conundrum. China’s pattern of unilateral acts of aggression and its zero-sum approach could sow the seeds for its hegemony in Space. BeiDou could be the most important piece for China in the jigsaw of Space, setting the precedent for an interesting future in the geopolitics of Space, possibly tilting the fine margins of power in favour of the Dragon that is poised to take its decisive flight.

     

     

    References

    [1] Chan, Minnie. “‘Unforgettable Humiliation’ Led to Development of GPS Equivalent.” South China Morning Post [Hong Kong], 13 Sept. 2009, www.scmp.com/article/698161/unforgettable-humiliation-led-development-gps-equivalent

    [2] Sloane, Heath. “Precision Politics: China’s Answer to GPS Comes Online.” The Diplomat, 7 Apr. 2020, https://thediplomat.com/2020/04/precision-politics-chinas-answer-to-gps-comes-online/

     [3] Woo, Ryan, and Liangping Gao. “China Set to Complete Beidou Network Rivalling GPS in Global Navigation.” Reuters [Beijing], 12 June 2020, www.reuters.com/article/us-space-exploration-china-satellite-idUSKBN23J0I9

    [4] Xiaoci, Deng. “China Completes BDS Navigation System, Reduces Reliance on GPS.” Global Times, 23 June 2020, www.globaltimes.cn/content/1192482.shtml.

    [5] “Pakistan Military to Use Chinese Navigation System BeiDou to Improve Interoperability.” The Economic Times, 21 Aug. 2020, https://economictimes.indiatimes.com/news/defence/pakistan-military-to-use-chinese-navigation-system-beidou-to-improve-interoperability/articleshow/77675471.cms?from=mdr

     [6]  Ibold, Sebastian. “China’s Space Silk Road.” Belt and Road Initiative, 12 Apr. 2018, www.beltroad-initiative.com/space-silk-road.

    [7] Aluf, Dale. “China’s Space Silk Road Reaches Mars and beyond.” Asia Times, 31 July 2020, https://asiatimes.com/2020/07/chinas-space-silk-road-reaches-mars-and-beyond/

    [8] China Briefing. Dezan Shira & Associates, www.china-briefing.com/news/made-in-china-2025-explained. Accessed 4 Nov. 2020.

    [9] United States Chamber of Commerce. “Made in China 2025: Global Ambitions Built on Local Ambitions”. Washington D.C.: 16 March 2017, https://www.uschamber.com/report/made-china-2025-global-ambitions-built-local-protections-0

     [10]  Wilson, Jordan. “China’s Alternative to GPS and its implications for the United States”, U.S. – China Economic and Security Review Commission. 5 January 2017. https://www.uscc.gov/research/chinas-alternative-gps-and-its-implications-united-states

    [11] “Global Global Navigation Satellite System (GNSS) industry.” ReportLinker, July2020, www.reportlinker.com/p05443565/Global-Global-Navigation-Satellite-System-GNSS-Industry.html?utm_source=PRN.

    [12] RTI International, “Economic Benefits of the Global Positioning System”. North Carolina. 31 May 2019. https://www.rti.org/publication/economic-benefits-global-positioning-system-gps

    [13] Global Times. “China’s Satellite Navigation Industry Turned up $49 Billion in 2019.” Global Times, 23 Sept. 2019, www.globaltimes.cn/content/1188659.shtml.

    [14]https://www.uscc.gov/sites/default/files/Research/Staff%20Report_China’s%20Alternative%20to%20GPS%20and%20Implications%20for%20the%20United%20States.pdf