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  • Taiwan Elections 2020: Emphasising Taiwan’s Democracy, Nationalism and Sovereignty

    Taiwan Elections 2020: Emphasising Taiwan’s Democracy, Nationalism and Sovereignty

    Taiwan’s first female President, Tsai Ing-Wen of the pro-democratic DPP Party won a landslide victory for second term in the national elections held in January. China condemns Tsai’s victory by reiterating its “one country, two systems model.
    Election Results: Voice for Democracy and Sovereignty

    Taiwan’s president, Tsai Ing-wen won re-election on January 11rth  by a historic landslide, a decisive result widely seen as a rebuke to Beijing’s efforts to integrate Taiwan into the ‘one-China’ concept. The DPP (Democratic Progressive Party), rode on Tsai’s popularity and maintained control of the Legislative Yuan, the country’s parliament. DPP has consistently taken a very ‘Taiwan nationalistic’ approach and has been a strong opponent of Beijing’s ‘one-China policy’ and the so-called ‘1992-consensus’. This landslide victory and a second term gives Tsai the power to uphold Taiwan’s commitment to democracy. Taiwanese voted to reject China’s “one country, two systems model” while still maintaining support for Tsai’s stand on the “1992 consensus”, which would dictate the Cross-Strait ties based on “peace, parity, democracy and dialogue”.

    On winning the elections, President Tsai remarked – China must ‘face reality’ of Taiwan’s independence and called on China to ‘review’ it’s current policy toward the de facto nation that Beijing claims is part of its territory.

    China refuses to acknowledge the victory of pro-democratic forces and maintains that this development would not alter its “one-China” principle. China’s Foreign Ministry stated that “regardless of what happens in Taiwan, the basic facts won’t change: there is only one China in the world and Taiwan is part of China.”

    In the voting week, Xi Jinping ushered in a range of measures “to further promote economic and cultural exchanges and cooperation between the two sides of the Taiwan Strait”. Despite these positive announcements, he sent a Chinese aircraft carrier to sail through the Straits to intimidate, should Tsai’s victory initiate a declaration of independence.

    The Chinese army also conducted a naval and air force drill on 9-10 February in a threatening attempt to which Washington responded with the US Air Force sending two surveillance planes as an expression of solidarity with Taiwan.

    Election results and impact on KMT

    In the aftermath of the astounding defeat in January, the opposition KMT has been forced to re-examine its policies and priorities. The party elected Mr Johnny Chiang, a 48-year old lawyer, as its president in March first week. Chiang represents the younger generation who are more focused on separate Taiwan identity, reflecting DPP’s resonance across the young voters. KMT has some serious issues to resolve if it wants to remain relevant in Taiwan. It is constrained by its linkage to the inconvenient history of Taiwan and a support base that is seen as focused on benefitting from cross-Strait engagement, and in some cases, unique access to the CCP through party-to-party ties. The main internal issue is the party’s cross-Strait policy with China, whether 1992 consensus will endure as the foundation for official mechanisms. Chiang is seen as one who will most likely ‘discard’ the 1992 consensus arguing that the consensus has lost its utility and undergone ‘distortion’ when linked with the ‘one country, two systems’ model used in Hong Kong.

    Background: 1992 Consensus – discarded by rising Taiwanese identity?

    Taiwan was ruled for more than three decades by the nationalist army, the Kuomintang (KMT),which fled to the island in 1949 after being defeated by the Chinese Communist Party (CCP) and created a rival government, the Republic of China, better known as today’s Taiwan. It has since transformed into a multiparty democracy, under a government and political system, completely separate from China’s. KMT’s position stems from the legacy of the Chinese civil war with the CCP, which is a complicated history of KMT and CCP vying to represent ‘one China’ as the ‘Republic of China’ by KMT and the ‘People’s Republic of China’ by CCP. KMT, in view of this history, is seen as the most pro-mainland of Taiwan’s two major political parties. In contrast, the DPP has always maintained much tougher stance with Beijing. It has played a prominent role in democratisation of Taiwan and places greater emphasis on uniqueness of Taiwanese identity and a history of more than 100 years that is separate from that of China’s. From the late 1980s when democratisation of Taiwan began, more and more Taiwanese are embracing a Taiwanese consciousness and favouring independence even though maintaining status quo still remains the majority priority for the moment. Majority of the youth, and 60-70% of Taiwanese are fiercely conscious of their Taiwanese identity, and view Taiwan as an independent and sovereign nation-state. This also means that the idea and legacy of nationalist party’s ROC is  seen as impractical, in consonance with geopolitical realities.

    The 1992 Consensus, seen as having enabled the growth of Taipei-Beijing cooperation, revolves around the issue of ‘one-China’ interpretation – ‘that there is only one China and that Taipei and Beijing agree to disagree on which government is its legitimate representative’ has been the foundation of cross-Strait relations. It was curated by the KMT and the PRC wherein in principle they agree that there is “One China”. However, the contentious terminology “One China” can be interpreted by either side having accorded its own meaning. The CCP believes “one China” is the “People’s Republic of China,” while Taiwan believes “one China” should mean the ROC established in 1912 and hitherto exists.

    The KMT government in 2008-16, led by Ma Ying-jeou used the so-called 1992 Consensus to strengthen economic, trade and cultural relations between Taiwan and PRC. It led to rapid development of  economic links  and integration with PRC while political issues were kept away. Trade, indirect investment, and travel via Hong Kong grew steadily. By 2014, over 40% of Taiwan’s trade was with the mainland, and some 80% of its foreign direct investment (FDI) went to China; Taiwan businesses operated more than one hundred thousand businesses on the mainland. Taiwan-China two ay trade in 2019 was USD 244.35 billion. The trade balance has, consistently been in Taiwan’s favour.

    KMT’s strategy, under Ma’s leadership, focused on reviving Chinese nationalism and was aimed at anchoring Taiwan in the Chinese nation, bridging the gap with PRC, opposing Taiwan independence, favouring reconciliation and eventually unification between the two sides of the Straits. By 2012-13 this approach gave rise to suspicions amongst the Taiwanese about Ma’s rapprochement policy. Paradoxically it strengthened the predominance of Taiwanese identity, which is stronger amongst the youth. This resulted in KMT’s internal fractures in 2012-13, its loss in local elections of 2014, the turbulence of the Sunflower revolution of 2014, and its huge loss to DPP in the presidential elections of 2016.

    The ideological battle between the Democratic Progressive Party(DPP) and the Kuomintang (KMT) has persisted since 2016 (when Tsai became President) and the DPP refused to recognise the “1992 consensus”. In 2000, Tsai as the minister of Mainland Affairs Council (MAC) said, “The so-called ‘one China, differing interpretations’ is only a usage by our side to describe the process of the meeting. It is a way of description that the new government can accept, but it does not mean that we have accepted Beijing’s ‘one-China, two models principle.’

    Though DPP lost the local elections in 2018 to the pro-China Kuomintang party (KMT), and had no hopes of winning the presidential 2020 elections, Tsai has been trying to replace the Chinese identity with the Taiwanese identity by promising people that the Taiwanese sovereignty will be protected. By articulating “maintenance of status quo”, she indicates that she may not actually pursue outright independence in order to maintain a peaceful environment that helps growth and development; in effect allowing PRC to see it as a support for “One China” in principle and being open to cross-Strait dialogue. But she makes it clear to rest of the world – “we don’t have a need to declare ourselves an independent state. We are an independent country already and we call ourselves the Republic of China, Taiwan.”

    Diversifying Economic and Trade Strategies

    During her presidency in 2016, she had initiated “new south-bound policy (NSP)” to strengthen relations with selected countries in South and South-East Asia and gain entry into regional blocs. As the US unveiled its Indo-Pacific strategy of Free and Open Indo-Pacific (FOIP), Taiwan saw great benefits in dove-tailing it’s NSP strategy into the Indo-Pacific. The NSP has made notable gains in the first term, and Tsai’s re-election offers great opportunity to diversify the gains in the second term. The Chinese have been  aggressively countering this strategy by compelling nations to switch allegiance to China. This had resulted in Taiwan having only close to 16 diplomatic allies which include small nations like Belize and Naru. Despite this, major nations have come around the issue to strengthen ties with Taiwan through economic and cultural centres. Nevertheless, the ‘New South-bound Partnership’ strategy is a conscious effort by Taiwan to reduce its economic dependency on the mainland. Taiwan has aggressively pursued economic partnerships with countries like India, and has encouraged investments by Taiwanese companies. Its investments in South-East Asia has more than doubled in this period.

    China has also been accused of meddling with local Taiwanese elections in 2018, according to Wang William Liqiang, a self-identified Chinese spy presently seeking political asylum in Australia. As a counter-strategy and to prevent foreign influence in the country’s elections, Taiwan’s legislature passed the anti-infiltration act on 31 December 2019, which criminalises external meddling. According to MAC Chief Chen Ming-tong, “[the act] aims to counter infiltration”. He added that it acts “as a corrective measure to ensure normal cross-Strait exchanges and reduce politically-motivated infiltration and intervention by Beijing. The Act prevents hostile external powers from engaging, through local collaborators, in illegal lobbying and election campaigning, disrupting rallies and assemblies, and making political donations.”

    Rising anti-Chinese sentiment has gained momentum due to the recent protests in Hongkong. Young voters have been deeply influenced by this and are supporting Tsai. This is supplanted by the economic slowdown which affected Taiwan and has divided the Taiwanese voters—those who support the Economic Cooperation Framework Agreement (ECFA) with China and those who don’t.

    Taiwan had also altered its economic policy since the election of DPP in 2016, wherein industrial restructuring has resulted in a large businesses (heavy industries) moving to China in order to reduce the labour cost. This has led to an increase in trade and investment in China. However, the catch is that since both governments don’t recognise each other, the Taiwanese companies are exposed to high risk and no dispute settlement is prevalent currently nor is it guided by international norms. China continues to be Taiwan’s largest trading partner, accounting for nearly 30% of the island’s total trade. However, Taiwan’s investment into the mainland has been declining over the last five years, and so also mainland’s investment in Taiwan.

    The Future

    The ‘one-China policy’ is a zero-sum game between the PRC and the ROC. China has always reiterated that only by accepting China’s authoritarian rule can the Taiwanese people attain prosperity and peace. From the beginning of 2005, the “carrots and sticks” policy has been predominant in the Cross-Strait relations. Since China’s policy has backfired, she is capable of adopting coercive measures—economic crippling, isolation by cutting off diplomatic allies, direct invasion or meddling with internal politics. If Beijing decides to use force, it could spiral into a regional conflict inviting Taiwan’s allies and heavy economic repercussions.

    China’s isolation strategy with respect to Taiwan is a constant challenge, which influences majority of the Taiwanese to maintain status quo in current environment. Status quo can mean different things to different people. Chinese president Xi’s aggressive articulation in 2019 of ‘one-China policy’ with respect to Taiwan and the events in Hong Kong has triggered a massive nationalistic fervour in support of democracy and Taiwan identity amongst the younger population.

    China has repeatedly said that it will bring Taiwan under its authority by any means necessary, including force. Analysts believe Xi Jinping aims to achieve that by 2049, the deadline for the country to achieve its ‘great rejuvenation’. Beijing’s refusal of renouncing the possible use of force for unification is reflected in the continued military build-up on the Fujian coast. By 2014, PLA had over 1500 ballistic and cruise missiles targeting Taiwan, ten times more than in 2000, and more accurate and destructive than in 2000.

    Chinese state media have downplayed President Tsai’s election, but there is no doubt that China considers it as a major setback to its reunification efforts. The election has resulted in a cooling off period for cross-Strait relations, and the global ‘Corona Virus pandemic’ has only added to put this off any priority for some time.

    Only time will tell if Taiwan and China manage to engage in dialogue and come to a consensus regarding their irreconcilable differences. As democracy and  pro-democratic forces continue to strengthen and sustain Taiwanese identity and nationalism, Taiwan’s functioning as a sovereign independent state is stronger than ever, while Beijing’s strategy of geo-economic boxing-in Taiwan into accepting its ‘one-China’ policy looks less probable. On the other hand, giving legitimacy to Tsai’s government will be a tricky call for many countries as they have to walk a tight rope in order not to rupture relations with China. How different nations recognise and engage with the new Taiwanese government will definitely be a contributing factor in determining Taiwan’s future.

  • Modi’s move to engage SAARC on COVID-19 shows his capacity to surprise

    Modi’s move to engage SAARC on COVID-19 shows his capacity to surprise

    Category : Global Health/SAARC

    Title : Modi’s move to engage SAARC on COVID-19 shows his capacity to surprise

    Author : Kanwal Sibal 16-03-2020

    Former foreign secretary, Kanwal Sibal, observes that Prime Minister Modi’s initiative to organise a video-conference of Saarc leaders to develop together a roadmap to fight the challenge of COVID-19 is a well thought out strategy and shows his capacity to surprise. Modi’s move could inject new life into Saarc, just when India was seen as downgrading the Saarc platform for stronger regional cooperation and promoting Bimstec.

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  • India Meets Myanmar at a Bustling Bazaar in Chennai

    India Meets Myanmar at a Bustling Bazaar in Chennai

    Category : Heritage, Culture & Civilisation

    Title : India Meets Myanmar at a Bustling Bazaar in Chennai

    Author : Yamuna Matheswaran 12-03-2020

    Refugee/Migrant issues have plagued countries both in their domestic governance and international relations. While nations gain immensely from migrants’ contribution, governments and politicians do not hesitate to throw them out when their utility is more relevant or they become the scapegoat of their politics. Indians have migrated to various lands in search of employment, trade, and better prospects as entrepreneurs. Tamils have travelled to Burma and many other countries through trade over millenniums. In recent times Tamils and other Indian migration happened during the British Raj. Indians in Burma – primarily Tamils hailing from Tamil Nadu, but also Bengalis, Telugus, and other groups – worked as farmers, civil servants, traders, moneylenders, day labourers, and security personnel. Their world came crashing down in 1962 when military dictator Ne Win seized power and stripped ethnic minorities of their businesses, land, and claims to citizenship leading to an exodus of refugees to India, mostly Tamils. Yamuna Matheswaran revisits the Burmese refugees in Chennai and its issues 50 years down the line.


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  • High expectations during Vietnam’s Chairmanship of the ASEAN

    High expectations during Vietnam’s Chairmanship of the ASEAN

    Vietnam assumed ‘2020 Chairmanship of the ASEAN’ in November 2019 from Thailand in accordance with Article 31 of the ASEAN Charter under which the Chairmanship rotates annually. Hanoi announced the theme for its Chairmanship as ‘Cohesive and Responsive’, in which ‘Cohesive reflects the need to enhance ASEAN unity and solidarity, economic integration, ASEAN awareness and identity, and work toward a “people-centered” community’ and                                 ‘Responsive underlines the importance of promoting ASEAN pro-activeness, creativity and capacity in response to opportunities and challenges brought about by rapid changes in regional and global landscape’.

    Soon after taking over the 2020 Chairmanship, Vietnam was confronted with a ‘black swan’ event i.e. COVID-19. It  delivered admirably by taking bold measures to control the spread of the virus in the country and announced that the ASEAN Coordinating Council (ACC) will compile a report on the COVID-19 to be submitted to ASEAN leaders at the 36th ASEAN Summit scheduled in Vietnam in April.

    Vietnam’s Deputy Foreign Minister Nguyen Quoc Dung, who is the Secretary-General of the 2020 ASEAN National Committee, has identified five key priorities for his country’s Chairmanship Year and it is not surprising to see reference to Hanoi’s commitment to ‘regional peace and stability amid strategic complexities’. Boundary and associated disputes including illegal occupation, reclamation and weaponization of islands and features in South China Sea are central to ASEAN, and as a corollary a major issue for Vietnam’s 2020 Chairmanship. There is now evidence of a push back against Beijing’s intimidation. This is evident from the forceful statements and credible operational initiatives in South China Sea by the claimant states against China which has deployed law enforcement and paramilitary vessels.

    In this context there are expectations from Vietnam to vigorously pursue and make substantive contributions towards keeping the South China Sea less turbulent and more peaceful, and address issues that threaten regional peace and security. It would also be Hanoi’s endeavor to prevent any confrontation and further escalation in disputes in the South China Sea. However, this may not be the case as a number of incidents in the South China Sea over resources i.e. fishing and offshore energy exploration have begun rather very early in Vietnam’s ‘2020 Chairmanship of the ASEAN’.

    First is about Indonesia and China. The former does not claim any island or features in the Spratly Islands and therefore does not have any dispute in South China Sea; but presence of Chinese coast guard vessel escorting Chinese fishermen to fish in Natuna, part of  Indonesian waters, which China claims to be the traditional fishing ground, prompted political and military response from Jakarta. There was also a standoff between China and Vietnam in the Vanguard Bank involving 50 Vietnamese and 40 Chinese vessels over the operations of the drilling rig Hakuryu 5 operated by Russia’s Rosneft in Vietnam’s oil and gas Block 06-01.

    Another three-way standoff over oil and gas operations is playing out between China and Malaysia in which the state-owned Petronas is exploring on the extended continental shelf of a ‘Malaysian oil and gas block in the area for which Hanoi and Kuala Lumpur had submitted a joint claim’. China has resorted to intimidation similar to the Vanguard Bank between China and Vietnam.

    At another level, United States military response in support of Taiwan after Chinese military airplanes flew across the Taiwan Straits and the Bashi Channel is noteworthy. Likewise, US’ support has been forthcoming for Vietnam against China and could trigger enhanced defence and security cooperation between the two sides as also create new opportunities for Hanoi to inform Beijing about its confidence to deal with China on the South China Sea issue at its own terms.

    However, the Philippines would be a different challenge for Vietnam after President Rodrigo Duterte announced annulment of the Visiting Forces Agreement (VFA) notwithstanding the fact that the US has been the most important ally of the Philippines in countering China’s expansive claims in the disputed Philippines Sea. It is useful to mention that Philippines is critical  for US’ Indo-Pacific  strategy of a free and open oceans.

    Second is the about the Code of Conduct (CoC), an upgraded document of the earlier Declaration on the Conduct of Parties in the SCS (DOC), which is under negotiation between China and ASEAN member states and is expected to be adopted in 2021.Vietnam must concentrate on the CoC. The onus will be on Vietnam to not only build consensus among the  ASEAN , Hanoi will have to work hard  to put in place a workable COC which can then be taken forward by Brunei Darussalam who would assume the ‘2021 Chairmanship of the ASEAN’.

    Third is about the contestation between the US and China over freedom of navigation operation (FONOP). During the last three years, the US forces have routinely conducted FONOP which Washington claims to be in accordance with international law and that its military will fly, sail, and operate wherever international law permits. Chinese reaction and response to the FONOP has been at the political, diplomatic and strategic levels. It has exercised coercion at sea through dangerous maneuvers and more recently a PLA Navy destroyer fired a military grade laser at a US P-8 surveillance aircraft.

    ASEAN Chairmanship is a challenging position and attracts high expectations from the member countries. The position entails building upon the work done by the previous Chair as also pursue new regional issues that are always as challenging as the earlier ones. Besides, there are anticipations by regional and other global players to not only follow up the ongoing challenges but address new questions that confront the ASEAN. More often than not, the ASEAN countries have delivered and received appreciation from the international community.

    By all counts Vietnam’s chairmanship of the ASEAN can be expected to be both challenging and rewarding. Hanoi is expected to live up to the expectations on the responsibilities enshrined in the ASEAN charter and deliver to the peoples of the ASEAN as also build upon the themes and priorities set by previous Chairmanship. Vietnam will also be under pressure to adopt a tougher line against China on the South China Sea issue in view of the recent spats between China and other claimant states. But Vietnamese leaders are known for their maturity and diplomatic skills and would play a pragmatic role to manage tensions in the region.

    Image Credit: Vietnam Economic Times

  • An unmitigated disaster

    An unmitigated disaster

    Category : Democracy & Governance/Governance, Law & Order

    Title : An Unmitigated Disaster

    Author : Deepak Sinha 04.03.2020

    The ill-conceived CAA act and the fears induced by it and the issues of National Population Register have led to nation-wide protests. The resultant police actions at various places culminated in the Delhi violence and police inaction that has given rise to world-wide condemnation. That it coincided with US President Trump’s visit should be even more worrisome for the government. Deepak Sinha analyses the issue in his Op-Ed.

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  • Reflections on “Peace” in Afghanistan: Leaving a Misguided War and Choosing Not to Look Back

    Reflections on “Peace” in Afghanistan: Leaving a Misguided War and Choosing Not to Look Back

    Kahlil Gibran, the Lebanese-American poet, artist, writer and philosopher, famously said ‘History does not repeat itself except in the minds of those who do not know history’. In today’s generation very few know and understand history, and so it is most likely that very few will see that the recent US-Taliban peace deal has an eerie resemblance to the end stage of the Vietnam war. US Special envoy, Zalmay Khalilzad and Taliban political chief, Mullah Abdul Ghani Baradar signed a ‘historic’ peace deal on February 29, 2020 in Doha, capital of Qatar  paving the way for ending two decades of American military fighting in Afghanistan and their return. In the context of the US-Taliban peace deal that raises more questions than answers, TPF revisits an article written by Andrew J Bacevich few months ago. Comparing the two similar situations (US-Vietcong deal and US-Taliban deal) in a very incisive analysis, Andrew Bacevich raises very relevant observations. Effectively this means that the US is exiting after conceding defeat to the Taliban and abandoning the Afghan government that it supported all this while. It would be only a matter of time before the Taliban, with active support from Pakistan, dismantles whatever semblance of stable governance and democracy that has been built over the last 15 years in war-torn Afghanistan. TPF

    This article was first published in “TomDispatch.com”    The Peninsula Foundation is happy to republish this article with permission from ‘TomDispatch.com’.  TPF  

    Andrew J Bacevich

    When the conflict that the Vietnamese refer to as the American War ended in April 1975, I was a U.S. Army captain attending a course at Fort Knox, Kentucky. In those days, the student body at any of our Army’s myriad schools typically included officers from the Army of the Republic of Vietnam (ARVN).

    Since ARVN’s founding two decades earlier, the United States had assigned itself the task of professionalizing that fledgling military establishment. Based on a conviction that the standards, methods, and ethos of our armed forces were universally applicable and readily exportable, the attendance of ARVN personnel at such Army schools was believed to contribute to the professionalizing of the South Vietnamese military.

    Evidence that the U.S. military’s own professional standards had recently taken a hit — memories of the My Lai massacre were then still fresh — elicited no second thoughts on our part. Association with American officers like me was sure to rub off on our South Vietnamese counterparts in ways that would make them better soldiers. So we professed to believe, even while subjecting that claim to no more scrutiny than we did the question of why most of us had spent a year or more of our lives participating in an obviously misbegotten and misguided war in Indochina.

    For serving officers at that time one question in particular remained off-limits (though it had been posed incessantly for years by antiwar protestors in the streets of America): Why Vietnam? Prizing compliance as a precondition for upward mobility, military service rarely encourages critical thinking.

    On the day that Saigon, the capital of the Republic of Vietnam, fell and that country ceased to exist, I approached one of my ARVN classmates, also a captain, wanting at least to acknowledge the magnitude of the disaster that had occurred. “I’m sorry about what happened to your country,” I told him.

    I did not know that officer well and no longer recall his name. Let’s call him Captain Nguyen. In my dim recollection, he didn’t even bother to reply. He simply looked at me with an expression both distressed and mournful. Our encounter lasted no more than a handful of seconds. I then went on with my life and Captain Nguyen presumably with his. Although I have no inkling of his fate, I like to think that he is now retired in Southern California after a successful career in real estate. But who knows?

    All I do know is that today I recall our exchange with a profound sense of embarrassment and even shame. My pathetic effort to console Captain Nguyen had been both presumptuous and inadequate. Far worse was my failure — inability? refusal? — to acknowledge the context within which that catastrophe was occurring: the United States and its armed forces had, over years, inflicted horrendous harm on the people of South Vietnam.

    In reality, their defeat was our defeat. Yet while we had decided that we were done paying, they were going to pay and pay for a long time to come.

    Rather than offering a fatuous expression of regret for the collapse of his country, I ought to have apologized for having played even a minuscule role in what was, by any measure, a catastrophe of epic proportions. It’s a wonder Captain Nguyen didn’t spit in my eye.

    I genuinely empathized with Captain Nguyen. Yet the truth is that, along with most other Americans, soldiers and civilians alike, I was only too happy to be done with South Vietnam and all its troubles. Dating back to the presidency of Dwight D. Eisenhower, the United States and its armed forces had made a gargantuan effort to impart legitimacy to the Republic of Vietnam and to coerce the Democratic Republic of Vietnam to its north into giving up its determination to exercise sovereignty over the entirety of the country. In that, we had failed spectacularly and at a staggering cost.

    “Our” war in Indochina — the conflict we chose to call the Vietnam War — officially ended in January 1973 with the signing in Paris of an “Agreement Ending the War and Restoring Peace in Vietnam.” Under the terms of that fraudulent pact, American prisoners of war were freed from captivity in North Vietnam and the last U.S. combat troops in the south left for home, completing a withdrawal begun several years earlier. Primary responsibility for securing the Republic of Vietnam thereby fell to ARVN, long deemed by U.S. commanders incapable of accomplishing that mission.

    Meanwhile, despite a nominal cessation of hostilities, approximately 150,000 North Vietnamese regulars still occupied a large swathe of South Vietnamese territory — more or less the equivalent to agreeing to end World War II when there were still several German panzer tank divisions lurking in Belgium’s Ardennes Forest. In effect, our message to our enemy and our ally was this: We’re outta here; you guys sort this out. In a bit more than two years, that sorting-out process would extinguish the Republic of Vietnam.

    Been There, Done That

    The course Captain Nguyen and I were attending in the spring of 1975 paid little attention to fighting wars like the one that, for years, had occupied the attention of my army and his. Our Army, in fact, was already moving on. Having had their fill of triple-canopy jungles in Indochina, America’s officer corps now turned to defending the Fulda Gap, the region in West Germany deemed most hospitable to a future Soviet invasion. As if by fiat, gearing up to fight those Soviet forces and their Warsaw Pact allies, should they (however improbably) decide to take on NATO and lunge toward the English Channel, suddenly emerged as priority number one. At Fort Knox and throughout the Army’s ranks, we were suddenly focused on “high-intensity combined arms operations” — essentially, a replay of World War II-style combat with fancier weaponry. In short, the armed forces of the United States had reverted to “real soldiering.”

    And so it is again today. At the end of the 17th year of what Americans commonly call the Afghanistan War — one wonders what name Afghans will eventually assign it — U.S. military forces are moving on. Pentagon planners are shifting their attention back to Russia and China. Great power competition has become the name of the game. However we might define Washington’s evolving purposes in its Afghanistan War — “nation building,” “democratization,” “pacification” — the likelihood of mission accomplishment is nil. As in the early 1970s, so in 2019, rather than admitting failure, the Pentagon has chosen to change the subject and is once again turning its attention to “real soldiering.”

    Remember the infatuation with counterinsurgency (commonly known by its acronym COIN) that gripped the national security establishment around 2007 when the Iraq “surge” overseen by General David Petraeus briefly ranked alongside Gettysburg as a historic victory? Well, these days promoting COIN as the new American way of war has become, to put it mildly, a tough sell. Given that few in Washington will openly acknowledge the magnitude of the military failure in Afghanistan, the incentive for identifying new enemies in settings deemed more congenial becomes all but irresistible.

    Only one thing is required to validate this reshuffling of military priorities. Washington needs to create the appearance, as in 1973, that it’s exiting Afghanistan on its own terms. What’s needed, in short, is an updated equivalent of that “Agreement Ending the War and Restoring Peace in Vietnam.”

    Until last weekend, the signing of such an agreement seemed imminent. Donald Trump and his envoy, former ambassador to Afghanistan Zalmay Khalilzad, appeared poised to repeat the trick that President Richard Nixon and National Security Advisor Henry Kissinger pulled off in 1973 in Paris: pause the war and call it peace. Should fighting subsequently resume after a “decent interval,” it would no longer be America’s problem.  Now, however, to judge by the president’s Twitter account — currently the authoritative record of U.S. diplomacy — the proposed deal has been postponed, or perhaps shelved, or even abandoned altogether.  If National Security Advisor John Bolton has his way, U.S. forces might just withdraw in any case, without an agreement of any sort being signed.

    Based on what we can divine from press reports, the terms of that prospective Afghan deal would mirror those of the 1973 Paris Accords in one important respect. It would, in effect, serve as a ticket home for the remaining U.S. and NATO troops still in that country (though for the present only the first 5,000of them would immediately depart). Beyond that, the Taliban was to promise not to provide sanctuary to anti-American terrorist groups, even though the Afghan branch of ISIS is already firmly lodged there. Still, this proviso would allow the Trump administration to claim that it had averted any possible recurrence of the 9/11 terror attacks that were, of course, planned by Osama bin Laden while residing in Afghanistan in 2001 as a guest of the Taliban-controlled government. Mission accomplished, as it were.

    Back in 1973, North Vietnamese forces occupying parts of South Vietnam neither disarmed nor withdrew. Should this new agreement be finalized, Taliban forces currently controlling or influencing significant swaths of Afghan territory will neither disarm nor withdraw. Indeed, their declared intention is to continue fighting.

    In 1973, policymakers in Washington were counting on ARVN to hold off Communist forces. In 2019, almost no one expects Afghan security forces to hold off a threat consisting of both the Taliban and ISIS. In a final insult, just as the Saigon government was excluded from U.S. negotiations with the North Vietnamese, so, too, has the Western-installed government in Kabul been excluded from U.S. negotiations with its sworn enemy, the Taliban.

    A host of uncertainties remain.  As with the olive branches that President Trump has ostentatiously offered to Russia, China, and North Koea, this particular peace initiative may come to naught — or, given the approach of the 2020 elections, he may decide that Afghanistan offers his last best hope of claiming at least one foreign policy success. One way or another, in all likelihood, the deathwatch for the U.S.-backed Afghan government has now begun. One thing only is for sure. Having had their fill of Afghanistan, when the Americans finally leave, they won’t look back. In that sense, it will be Vietnam all over again.

    What Price Peace?

    However great my distaste for President Trump, I support his administration’s efforts to extricate the United States from Afghanistan. I do so for the same reason I supported the Paris Peace Accords of 1973. Prolonging this folly any longer does not serve U.S. interests. Rule number one of statecraft ought to be: when you’re doing something really stupid, stop. To my mind, this rule seems especially applicable when the lives of American soldiers are at stake.

    In Vietnam, Washington wasted 58,000 of those lives for nothing. In Afghanistan, we have lost more than 2,300 troops, with another 20,000 wounded, again for next to nothing. Last month, two American Special Forces soldiers were killed in a firefight in Faryab Province. For what?

    That said, I’m painfully aware of the fact that, on the long-ago day when I offered Captain Nguyen my feeble condolences, I lacked the imagination to conceive of the trials about to befall his countrymen. In the aftermath of the American War, something on the order of 800,000 Vietnamese took to open and unseaworthy boats to flee their country. According to estimates by the United Nations High Commissioner for Refugees, between 200,000 and 400,000 boat people died at sea. Most of those who survived were destined to spend years in squalid refugee camps scattered throughout Southeast Asia. Back in Vietnam itself, some 300,000 former ARVN officers and South Vietnamese officials were imprisoned in so-called reeducation camps for up to 18 years. Reconciliation did not rank high on the postwar agenda of the unified country’s new leaders.

    Meanwhile, for the Vietnamese, north and south, the American War has in certain ways only continued. Mines and unexploded ordnance left from that war have inflicted more than 100,000 casualties since the last American troops departed. Even today, the toll caused by Agent Orange and other herbicides that the U.S. Air Force sprayed with abandon over vast stretches of territory continues to mount. The Red Cross calculates that more than one million Vietnamese have suffered health problems, including serious birth defects and cancers as a direct consequence of the promiscuous use of those poisons as weapons of war.

    For anyone caring to calculate the moral responsibility of the United States for its actions in Vietnam, all of those would have to find a place on the final balance sheet. The 1.3 million Vietnamese admitted to the United States as immigrants since the American War formally concluded can hardly be said to make up for the immense damage suffered by the people of Vietnam as a direct or indirect result of U.S. policy.

    As to what will follow if Washington does succeed in cutting a deal with the Taliban, well, don’t count on President Trump (or his successor for that matter) welcoming anything like 1.3 million Afghan refugees to the United States once a “decent interval” has passed. Yet again, our position will be: we’re outta here; you guys sort this out.

    Near the end of his famed novel, The Great Gatsby, F. Scott Fitzgerald described two of his privileged characters, Tom and Daisy, as “careless people” who “smashed up things and creatures” and then “retreated back into their money or their vast carelessness” to “let other people clean up the mess they had made.” That description applies to the United States as a whole, especially when Americans tire of a misguided war. We are a careless people. In Vietnam, we smashed up things and human beings with abandon, only to retreat into our money, leaving others to clean up the mess in a distinctly bloody fashion.

    Count on us, probably sooner rather than later, doing precisely the same thing in Afghanistan.

    Image Credit: www.upi.com

  • The end of the liberal world order is not the end of the world – we just need to fight for freedom AND equality

    The end of the liberal world order is not the end of the world – we just need to fight for freedom AND equality

    The turmoil concerning Brexit, the Rise of the „Rest” (the fast developing countries), dramatic social inequality, the exclusion of ever larger parts of the populace (the decline of the „Rest“, which is excluded from globalization), the rise of radical Salafism, all these developments have contributed to worldwide emotions, that the promises of globalization have been disappointed and been revealed as illusions. When Juergen Habermas, the noted German philosopher judged in 1991 concerning the democratic revolutions in the former states of the Warsaw treaty, that Western modernity would now transcend into the Orient not only with its technical achievements, but also with its emancipatory and democratic principles he was hardly more than the prisoner of the idealism concerning Western modernity. Although being fully aware of the negative impact of two world wars, colonization and its exorbitant violence, Auschwitz and the Cold War, and fighting for his whole life against a repetition of these developments he still believed to be able to rely on a cleaned, purified Western modernity, an approach which his companions, Anthony Giddens and Ulrich Beck, labeled second modernity. Again, in the years starting with the Arab Rebellion or the Arab Spring it seemed as if the conceptions of democracy, human rights and freedom were transcending from the Western world to the Orient, and its final victory seemed to be plausible – a purified Western modernity would triumph in the end – and Francis Fukuyama wrote his second masterpiece by arguing that at the end of history still stands democracy. But now we are already discussing post-democracy and Paraq Khanna is labeling the current phase as devolution – struggles for a local or at least regional identity.

    The liberal world order after 1991 was based on capitalism (centered on property as natural and human right), the assumption that worldwide free trade will finally lead to peace (economic globalization) and is accompanied by the orientation towards consumerism as a cultural norm. But consume does neither generate values nor identity. International organizations served the purpose of regulating conflicts between sovereign states and the military, political and economic hegemony of the United States secured this kind of liberal world order, or rather the United States payed the costs (this is the point Trump hangs up), both, out of their own interest or as being the trustee of the whole. This liberal world order now is tattered in fragments, not least because the US under Trump abandoned it willfully, whereas the Europeans are desperately trying to preserve it but don’t stand a chance, because they are relying on an idealized past which never existed in the developing and poor countries.

    Contrary to the assumptions of the pundits of glo-calization (Robertson and Bauman), the local showed to be not only an amendment of neoliberal globalization, but a counter-movement to the process of globalization (IS, Trump, „Buy American“, Brexit, Marine Le Pen, Duterte, Bolsonaro, Salafism, the European radical right, populistic movements). In his notes on Nationalism, George Orwell already wrote, that emotion does not always attach itself to a nation. It can attach itself to a church or a class, or it may work in a merely negative sense, against something or other – we can add against anybody, who does not belong to “us”. In short: We against the Rest. But the “Rest” is not far away anymore, as in neoliberal globalization the regions in Sub-Saharan and Saharan Africa, in southern India, in the MENA-states, but they are within the West (either as excluded sub-proletarians, the precariat, or as refugees). Although being a counter-reaction, the current waves of struggles for local identities and advantages are as a negation bound to neo-liberal globalization, the globalization of liberalism without equality, which we label tribal globalization.

    The advent of tribal globalization does not signify the end of globalization, but the end into the illusions into globalization, which nevertheless has its undisputed successes. But there is no way back to an idealized globalization before Trump, Salafism, or an idealized neo-liberal world-order, because these developments were exactly the result of which they are purporting to fight. The exclusion of the „superfluous“, the „Rest“, produced by neo-liberal globalization, the advent of precarious kinds of life and the liquidity of identity throughout the world must be understood as a double one: The “Rest” is excluded from the positive aspects of globalization and people who are belonging to the  Rest are the arbitrarily used enemy-image to construct a fixed „We“-identity („We against the Rest”). And this “Rest” comprises roughly two third of the world’s populace. As the neo-liberal globalization has led to such a social acceleration of the transformation of the whole world,  people, communities and polities of all kinds are trying to cope with this process by re-inventing age-old static identities, which are so old, that it is supposed that these will outdo even this transformation. Such seemingly fixed identities are: Race, ethnicity, religion, patriarchy, and – perhaps the oldest one, sex and gender (this can explain the terrible rise of violence against women); and of course, identity through the exercise of violence itself, which is reverting the feeling of being totally powerless into being almighty. Especially biological differences are re-actualized, because they seem to be not subject to change.

    These seemingly fixed identities are those of the pluperfect, the far distant past, which can be viewed as being free from the failures of the simple past, and mainly free from the failure of the immediate fathers – as already was typically for the German Nazis. Tribal identity is a perfect construction, because it is transporting the ideal of being absolutely united against everybody who is not belonging – and the question: Do I belong is the most important question in tribal globalization. Whereas tribes throughout the world are vanishing, tribal thinking in terms of „We against the Rest“ is flourishing. Such a modern tribe could be based on ethnicity, religion, sex, nation or whatsoever, it is not the content, which characterizes a modern tribe, but having a tribal identity (typically is Trump’s crony capitalism and with relation to the IS, not their ideology is so much counting, but belonging to a previously powerful tribe). With the emergence of tribal globalization, the very understanding of local order and world order is at stake; order wars are arising, when our order or that of others is dissolving (either only in our perception or in reality); our own order is challenged by another concept or and another order is transgressing into our own (the refugee crisis in Europe). The fast developing countries are not immune concerning the accelerated transformation of societies and identities and the task to cope with this development.  As the main problem of neo-liberal globalization is the dissolution of identities and the exclusion of ever growing parts of the populace, that of the emerging tribal globalization the re-invention of age-old fixed identities, which is leading to order wars, what might be a solution?

    Based on the concept of the floating (Clausewitz) and developing (Hegel) balance and harmony (Confucius), we strongly advocate the position, that the West as well as the East is only able to hold on their order and values, if these are discursively balanced and harmonized by the contribution of all great civilizations of the earth. Although the liberal world had its undisputed advantages like the rise of the newly industrialized nations, the current developments are already indicating its end. To put it to the core: freedom as the basis of the liberal world order is turning into oppression or civil wars without equality– just in the name of freedom. Whereas in the 20th century the colonized civilizations had to learn to live with the victorious West, in the twenty-first century the civilizations of the earth finally have to learn to live with one another. This task requires a floating balance (Clausewitz) between freedom and equality, a kind of harmony (Confucius: difference with unity and unity with difference) within societies and between states.

    Image Credit: WikiImages from Pixabay

  • President Trump’s India Visit : Balancing Optics with Substance

    President Trump’s India Visit : Balancing Optics with Substance

    As President Donald Trump arrives in India today, 24 February 2020,on his maiden official visit to India,  there is significant level of discussions amongst the academics, strategists, and foreign policy experts about whether this visit is more about optics than substantive discussions on strategies and agreements to strengthen the US-India strategic partnership. On arrival the president’s first public engagement is a super spectacle, ‘Namaste Trump’ at the new Motera Stadium in Ahmedabad that will have more than 100,000 people, which is Prime Minister Modi’s way of reciprocating for ‘Howdy, Modi’ at Houston last year. Most opine that while Mr Trump’s visit will be packed with pageantry, it will be light on policy and therefore, unlike previous presidential visits this one may not yield many break-through agreements. There are, however, some important developments that are very unique to the Trump-Modi era when compared to the previous visits of American presidents. Both leaders excel in showmanship and also in projecting strong nationalistic orientation to each one’s domestic constituency. Trump, with his transactional and disruptive approach comes off as more unpredictable when it comes to foreign policy and strategic issues.

    Politics and Showmanship

    It has taken Mr Trump, more than three years since he assumed office to visit India. This could mean that India was not a high priority for the Trump regime in the initial years, or as it turned out India was not the target of Trump’s disruptive strategy that he employed against USA’s traditional allies, China, Russia, and others. The final year of a POTUS term is generally termed as the ‘lame duck year’, where very few presidents have had a good last year and many were hampered by major controversies. It is important to note that India is the first country that President Trump is traveling to after his impeachment trial. There is more to Mr Trump’s India relationship than just this visit. One must remember that he is a shrewd businessman, and even before he became the president, India was already home to the most Trump ventures outside of North-America.  While India’s strategic importance is well recognised by all presidents since Bill Clinton, President Trump’s approach is considerably different than the others. His daughter Ivanka Trump made headlines when she visited Hyderabad, as White House Advisor, for the Global Entrepreneurship Summit in Nov 2017 and the prime minister broke protocol to host a dinner in her honour.

    That the Trump administration has followed a calibrated strategy of recognising and enhancing PM Modi’s image for significant gains to the American defence industry in particular is evident. The current visit, therefore, focuses primarily on strengthening strategic partnership issues in areas such as defence trade, intelligence sharing, counter terrorism, and visa issues. American side may make a token mention about Trump’s offer to facilitate improvement of India-Pakistan talks, China and issues of religious freedom.  However, these will get swamped by the more visible spectacle that will be on display at Ahmedabad and Agra.

    Defence Relationship – the most substantive progress

    India – US defence partnership has progressed significantly over the last decade and a half. The two militaries are exercising together more frequently than ever, and the strategic interactions are moving more towards equitable approach to various aspects. The Trump administration has covered significant ground in nudging India, despite its reluctance, towards partnerships such as the ‘Quad’ and moving towards interoperability by concluding various agreements including the foundational agreements through Defence-Trade-Technology relationship mechanisms.

    Defence trade between the two countries has grown exponentially since 2007. Two major procurements are likely to be signed by the Indian government during this visit: acquisition of 24 Sea-Hawk naval multi-role helicopters (NMRH) from Lockheed Martin worth $ 2.6 billion for the Indian Navy and six AH-64E Apache attack helicopters from Boeing worth $ 930 million for the Indian Army. Both procurements will be through the FMS (Foreign Military Sales) route. Trump administration cleared the decks for enhanced defence cooperation with India by approving India as a major Non-NATO defence partner in 2019, thus smoothening the process for exporting or selling hi-tech weapon systems to India. This is often confused with India becoming a major Non-NATO ally, which is clearly not the case.

    What is clear is that the US has secured major business deals with India to its great advantage, without India gaining much in terms of technology access or industrial production of hi-tech weaponry. The US objective is clearly to wean India away from its heavy dependence on Russian weaponry and secure much broader business relationship with American arms industry. The MIC (military industrial complex) of the USA is clearly focused on India now as its major avenue of business in the 21st century. The Americans were clearly unhappy that India went ahead with S-400 purchase from Russia despite the threat of CAATSA. That India has decided to buy an air defence missile system from the US, again through FMS route, worth $ 1.9 billion seems to be a compensation for such a decision.

    The US-India defence deal will scale $ 20 billion this year after the Trump visit. Many of these weapon system procurements, in terms of numbers, are not of a scale sufficient to create major industrial partnerships for manufacturing. India, however, will need to look at ways and means of acquiring significant technologies from the US through joint ventures, co-design and co-development. Otherwise, there lurks the danger of India being trapped in an all too familiar pattern of buyer-seller relationship rather than as strategic partners.

    Strategic gains?

    The visit’s focus is in areas of trade, defence, counter-terrorism, energy, and co-ordination on regional and global issues. These are areas in which considerable ground has been covered and is a continuing process. The agreement on trade deal, which was keenly expected, has been deferred. With President Trump accusing India of high tariffs and dashing all hopes of a deal before the visit, it is clear that the USA intends to push hard for favourable access to Indian markets for American companies. There are some positives that are emerging. The prospects for increased collaboration in space between ISRO and NASA looks bright.

    The focus of the American side is primarily on Defence trade.  Increase in investments in defence production may become a possibility with major projects in the pipeline. Both Boeing and Lockheed Martin are pushing hard for IAF’s 114 aircraft order, which will be processed under the strategic partnership model of ‘Make in India’ program. This could expand the production run to over 200 aircraft. Similarly, the naval  helicopter (NMRH) procurement has a possibility  of expanding into ‘Make in India’ project for over 100 helicopters. Boeing’s S-76D is a contender for Navy’s utility helicopter procurement under ‘make in India’ program.

    The spectacle of this visit will certainly contribute to both leaders’ constituencies, for President Trump’s re-election campaign and for PM Modi it may divert people’s attention from current issues of flagging economy, Delhi electoral reverses, the Kashmir issue and ongoing protests on CAA and NRC. India however, will need to negotiate hard and leverage the expanding defence business to address technology access and  strengthen Indian industry by enabling them into global supply chain. For this the Indian establishment will need to see well beyond the optics to assess real gains.

    Air Marshal M Matheswaran AVSM VM PhD (retd) is the President of TPF and a former Deputy Chief of the Integrated Defence Staff.

     

  • Budget 2020: Rhetoric vs Reality

    Budget 2020: Rhetoric vs Reality

    Sharing structural similarities with the 1991 economic conditions, , the current decline in Indian economy is in desperate need  for radical reforms to energize the growth. Faced with severe fiscal constraints, the optimistic projection of revenue by the government   seems more of a challenge than realistic prospects for economic growth. Tax revenue is expected to fall short by INR 2.5 lakh crores in FY20 as the GDP records an 11- year low of 4.5 %.  As against the target of INR 24.6 lakh crores, there is likely to be a shortfall of INR 2 lakh crores for the current fiscal year. Expenditure cannot only depend on the expected revenue and fall in revenue collection will become a grave concern to achieve the fiscal deficit target set at 3.5 percent .  The budget is expected to balance deficit and growth by laying down a plan for fiscal consolidation and pushing the growth fundamentals. The Finance Minister in her speech mentioned three pillars under which the budgetary allocation has been rationalized. There is a need for deeper examination of budget proposals  beyond the slogans of the budget speech in order to comprehend the government’s long-term economic strategy.

    Aspirational India

    The agriculture sector with poor growth rate yet employing 50 percent of the workforce required significant capital infusion. 2.6 lakh crore has been allocated to agriculture & allied activities out of which 75,000 crores are dedicated to double farmers’ income. In reality, implementing a cash transfer scheme with a huge quantum of finance is a strenuous task facing  challenges on the ground. Schemes such as setting up solar panels and village storage run by Self Help Groups will act as a non monetary support measure. However, infusion of cash in rural credit structure and ease in acquiring credit facilities is largely ignored. The absence of  adequate investment for R & D in agriculture is a major shortfall in the budget. A target to increase the milk production capacity to 108 million tonnes is ambitious, yet no road map has been laid down to enhance the capacity in the current structure.  Weak consumption and high unemployment has contracted rural economic growth but the budget has failed to directly inject finance to increase effective demand. Sharp cuts in MGNREGA budget is giving rise to concerns as the total money in circulation in the economy continues to be low.

    Income insecurity will weaken the consumption demand for a few more quarters, arresting the medium-term growth. Healthcare Sector has been allocated  a total of 67,000 crores which is a significant increase of 10 percent compared to the last budget. The government’s flagship healthcare program, Pradhan Mantri Jan Arogya Yojana or  Ayushman Bharat, is allocated 6,400 crores which is the same as the previous year along with the National Rural Health Mission being allotted 28,000 crores. The Finance Minister has approved a Private-Public Partnership (PPP) between private medical colleges and hospitals in the country. The initiative is aimed to improve the skill levels of enrolled students to export their services abroad. Effectiveness of the PPP model in healthcare will depend on the amount of scrutiny and quality checks placed at the execution stage. Highest decline in funds was for Rashtriya Swasthya Bima Yojana from Rs 156 crores to Rs 29 crores, and Food Safety & Standards Authority of India was reduced to Rs 283.71.

    The draft of National Education Policy in 2019 invited multiple debates but achieving quality education has been the common goal across all levels of education. Human capital investment and skill development has been crucial to the 2020 budget with an allocation of almost 1 lakh crore for education and training. Breakup of funds for education under primary, secondary and higher education was not spelt out.  Finance minister citing the increase in gross enrolment ratio of girls in education has clearly missed the data on falling rates of women in labour force. The narrow lens of viewing enrolment number as a measure  women empowerment has to be revisited to achieve gender equality status. Encouraging apprenticeship and internships in rural areas for engineering and technical graduates is an important mention as the students lack experiential learning. Higher education population stands at around 36.6 million, surging the demand for  institutions offering graduate courses. The Government due to its limited fiscal capacity has allowed private institutions to address the demand for higher education. Despite this opening up tertiary education remains at only 25.8 percent of Gross Enrolment Rate. Quality in higher education is still a distant dream in India and it is important to dedicate funds to improve the quality of higher education in particular.

    Economic Development 

    Under Economic Development, promoting MSME sector and developing infrastructure have been the focus areas. Setting up NIRVIK scheme for higher export credit disbursement and facilitating investment clearance cells is a favourable move for medium and small scale business. Primarily, encouraging potential start-ups to equip their operations  with technology and managerial skills for creating export market demand must take precedence.

    National Logistic Policy is underway to revamp the transport infrastructure and new trains are to be operated under PPP. 100 new airports to be developed under UDAAN scheme is expected to create substantial employment in infrastructure sector. Linking basic Bharatnet services to 1 lakh gram panchayats is a notable initiative to improve the internet connection at local unit level. An exclusive direct investment in disruptive technology and artificial intelligence continues to be absent indicating India’s lag in becoming more competitive. Failure of the ‘Make in India’ initiative to materialize as expected is a relevant evaluation to reframe the fund allocation to accelerate indeginious production. Foreign trade of India presents a grim picture with exports slipping by 1.8 % in the last few months.  Although the political aspect of ditching Regional Comprehensive Economic Cooperation (RCEP) played well, quitting a multilateral trade deal has reduced the scope to upgrade domestic technologies. Frailty of the economy has clearly reduced the incentive for small businesses to invest in production and service despite schemes dedicated for this domain. Entrepreneurship culture in a favourable environment to undertake small businesses with insurance cover should aim at utilizing the existing human and capital resources through upgraded technology. A National Pipeline project has been proposed to ensure public spending on road, irrigation, power (conventional and renewable), railways and housing. Under this project, substantial funds are allocated for roads and least is for rural infrastructure. A prepaid  ‘smart metering’ system is to be substituted for conventional energy meters. On the financial front, tax concessions for corporate companies and foreign investment have been proposed. Reducing income tax slabs cheered the middle class but it has been a necessary and not sufficient condition to push the economy in a growth trajectory. Extension of tax holiday for real estate corporations would not qualify as fiscal stimulus with poor housing demand. As Dr Rathin Roy, economist suggests, either productivity should improve for pushing the demand at existing wage or minimum wage should increase. Decoding his post-Keynesian idea, structural crisis present in India offers much more complexity in practice. Land, labour and capital market reforms are inevitable to catch the growth momentum in the long run. Revising tax structure under Goods & Service Tax (GST) does not count for a structural reform to revive growth and scant attention has been paid for resolving systemic issues using budget as a tool. 

    Caring India

    The last pillar of the budget, emphasizing the importance of national and social security,  allocated funds for marginal groups, senior citizens and women, adopting a populist measure.  Over 6 lakh anganwadi workers are to be given smartphones and the budget estimate for nutritional related programs stands at 35,600 crores. Proposals were made to establish Indian Institute of Heritage and Conservation along with the development of 5 archaeological sites.  Major schemes like PM KISAN, Direct Benefit Transfer, Pradhan Mantri Awas Yojna and ICDS (Integrated Child Development Service) witnessed a jump from revised budget estimates of 2019-20. The Finance Minister in her budget had mentioned a number of schemes aimed at the Environment, Pollution and Climate Change. It includes 4,400 crores for the Clean Air Policy, 460 crores for Pollution Control and 3,100 crores for the Ministry of Environment, Forest and Climate Change. The last budget witnessed reduction in GST rates on Electric Vehicles (EV) and an annual tax reduction of up to 1.5 lakhs on interest paid to purchase EVs. However, the current budget has increased the custom duties to curb the import of cheap materials from China making the vehicles more expensive. National Adaptation Fund for Climate Change (NAFCC) is a central sector scheme set up to support concrete adaptation activities that mitigate the adverse effects of climate change. The Budget missed out on the replenishment of the much-needed NAFCC and has ignored it for two consecutive years. The overall fund allocation for Climate Change and Environment has increased by 5 per cent in the budget. Promoting sustainable business practices at micro levels is a key in tackling climate change. Accommodating the green budget would demand more involvement beyond mere budget allocation, effective plans need to be developed that can constantly track the progress of India’s climate change dialogue and advocacy.

    The defence budget for 2020-21 stands at 3.37 lakh crores, constituting 1.5% of the GDP, excluding pensions. Capital and revenue expenditure is valued at 1.18 and 2.18  lakh crores and pension at 1.33 lakh crores. This will affect several big projects taken up by the armed forces to build capabilities against Pakistan and China as there has been only a marginal increase in capital expenditure compared to previous year (1.08 lakh crores). Armed forces will be forced to cut down on arms and equipment purchases, thereby diluting the state’s priority on national security. However, with adequate government support there is scope for the private sector to bridge  the gap in areas of maintenance and logistics of the armed forces. Corporate tax cuts in the manufacturing sector, strategic disinvestment in Central Public Sector Enterprises (CPSE) and abolition of ‘angel tax’ for start-ups is appreciable. However, more involvement and sincere efforts should be undertaken by the Government to enhance private sector involvement in creating additional funding for developing a robust defence industry and meeting the needs of the armed forces at the same time.

     A recent study by Oxfam reported that 73% of the total wealth is owned by 1% of India’s population, as a result the number of billionaires has increased to 120 in 2019 from nine in 2000. A funding strategy that does not  attend to the growth of income among masses would lead to furthering the inequality and handicap the long term growth of an economy. Budget continues to be a powerful instrument to reallocate resources through fiscal policies and reduce economic inequality in a country. Facing a high risk of missing the demographic dividend, the budget was expected to make radical and structural reforms. Immediate measures to revitalise economic wealth among middle-class and rural residents is the need of the hour. The ostensible budget might garner popularity but the foundation to achieve India’s growth potential remains insufficient. Choice between managing fiscal deficit at the cost of reduced demand and initiating growth at the cost of huge fiscal deficit summarizes budget decisions. Biting the fiscal bullet, the finance ministry has assumed more accountability in explaining every component of expenditure but has failed to provide confidence for a resurgent Indian economy. Micro level assessment reveals a rosy picture but the exercise has undoubtedly choked the Indian economy in the short run.

    Contributions by

    Manjari Balu and Swaminathan S are Research Analysts with TPF.

    Aditya Balakrishna is an Intern with TPF.

    Views expressed are their own.

    Image Courtesy: Sanjay Rawat // www.fortuneindia.com

  • Will the US Revert to ‘Just like in Grand Ma’s Time’ Again?

    Will the US Revert to ‘Just like in Grand Ma’s Time’ Again?

    Category : International Affairs/USA

    Title : Will the US Revert to ‘Just like in Grand Ma’s Time’ Again?

    Author : Andrei Korobkov 11-02-2020

    Donald Trump’s opponents persist in their delusion that his arrival to power was an accident, and if they manage to throw him out of office, history will resume its natural course, and everything will be just like in grandma’s time again. This is a battle between the views of Washington’s elite and the general public resulting in a systemwide crisis. Should the elite further refuse to recognise how serious the crisis has become, and if they will not acquiesce to curtail their ambition and search for compromise, it will be disastrous for the United States and the rest of the world, argues Andrei Korobkov.

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