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  • Social automation and APT attributions in National Cybersecurity

    Social automation and APT attributions in National Cybersecurity

    Advanced Persistent Threats (APTs) are a prime concern in the formulation and implementation of national cybersecurity policies. These threats often also involve complex social engineering tactics which are undergoing a quantitative and qualitative revolution with burgeoning AI capabilities. However, the attribution of these APT activities can be mired with technical and political considerations. We analysed 142 APT groups’ attributions along with their use of social interaction vectors to ascertain the nature of the risk environment and the operational threat landscape of AI and social automation. We discover that close to 80% of APT activities could be chalked up to merely 20% of key nation-state threat actors competing with each other. We further discuss the implications of this political threat distribution for national cybersecurity environments.

    Keywords: cybersecurity, AI Policy, advanced persistent threats, automation, social engineering


    Read full paper here

  • Can a Muscular Response deter Chinese Aggression?

    Can a Muscular Response deter Chinese Aggression?

    The Sino-Indian War of 1962, which is seen as a humiliating defeat for India, continues to rankle all Indians. Clearly, it is seen as a result of poor leadership both at the political and military levels. In hindsight, many believe that the PLA could have been routed had India regrouped its Army and used the IAF in a massive counterattack. It was November, and with the onset of winter and the closing of the Himalayan passes, the PLA could have been demolished completely. That we didn’t even think of it shows the serious vacuum in strategic thinking. More than half a century later, and with the Indian military much stronger and battle-hardened, it is inexplicable why India’s leadership is shy of following an aggressive strategy, including the use of force proactively against China. Brigadier Deepak Sinha, a vetran and TPF’s Senior Fellow, raises this question while correlating the current situation with that of 1962.

    There is an urgent need for us all to shed our divisive politics, long-held dogmas and skewed perceptions, forget fanciful visions and face reality, especially when it comes to the question of national security. The last thing we need is for petty politics and fragile egos to control our nation’s destiny. Nothing can be more consequential, traumatic or shameful than being bested by a rival on the battlefield. The consequences of our “defeat” in the Sino-Indian Conflict of 1962 continue to rankle and haunt us to this day.

    Quite clearly, the fear psychosis that permeates our higher military and political leadership is palpable.

    Indeed, our reluctance, for fear of escalation, to launch a quid-pro-quo riposte and grab disputed territory elsewhere as a bargaining chip following the PLA’s blatant land grab of disputed territory in Eastern Ladakh is a clear indication of this. This was reinforced by an earlier interview with ANI by our Foreign Minister, who stated, “Look, they (China) are the bigger economy. What am I going to do? As a smaller economy, I am going to pick up a fight with the bigger economy? It is not a question of being reactionary, it’s a question of common sense….” Quite clearly, the fear psychosis that permeates our higher military and political leadership is palpable.

    On the other hand, the Chinese leadership has a very different perception of our capabilities as was reflected back in 1959 following the Longju incident. A declassified United States document of that time points out that “the late August clashes point to a mode of thought which has remained an ingredient in the Chinese leaders’ calculations on the border dispute: ‘When the Indians show a temperament to advance on the ground, we must alter their frame of mind by letting military action take over political caution. Besides, military risk itself is negligible because we are the stronger side.” Obviously, over the years, they have been given no reason to believe otherwise. In order to understand what ails us, it is worth briefly examining the course of the 1962 conflict to get a clearer idea of the extent of our loss at the hands of the Chinese. That should help us understand why, over fifty years later, we continue to remain so traumatised and fearful.

    The opening skirmish of that conflict occurred in the North East with the capture, on 8th Sept, of the isolated Assam Rifles post at Dhola, on the southern slopes of the Thag La ridgeline. This post was surrounded and completely dominated by PLA positions on higher ground, and its loss was a foregone conclusion. The actual conflict commenced at approximately 0500 hours on 20th October, when the PLA launched a massive infantry attack, supported by artillery, on the 7 Infantry Brigade positions. The Brigade was deployed in a tactically unsound manner on direct orders of GOC 4 Corps, Lt Gen B M Kaul, along the Southern banks of the Namka Chu River over a 20 Km frontage instead of on the heights overlooking the river.

    The battalions were deployed in platoon penny pockets, lacking mutual support, in temporary positions with no overhead cover. Artillery support was restricted to just one battery of Heavy Mortars and a troop of two field guns with limited ammunition. No intelligence was available to the Brigade Headquarters or any of the other higher headquarters as to PLA force levels or their intentions. The assault came as a surprise and just four hours later, by 0900 Hours, the Brigade ceased to exist as a fighting force. Within just another 96 Hours, the strategic border town of Tawang, approximately 100 Km in-depth, held by an understrength battalion, was attacked and captured without a fight.

    Almost simultaneously in the Northern Theatre, isolated forward positions at Aksai Chin and the Pangong Tso area were also cleared after a brief skirmish. After an administrative pause of approximately a month, the PLA launched the next phase of its offensive with its assault on the Walong positions on 16th Nov and on the main defences of the 4 Infantry Division at Bomdi La, Se La and on the Division Headquarters at Dirang Dzong. Simultaneously, on 20th Nov, Chushul came under attack by an Infantry Divison. On 21st Nov the Chinese announced a unilateral ceasefire and subsequently withdrew to positions occupied by them prior to the commencement of the conflict.

    There are three main deductions that can be drawn from an examination of the facts. Firstly, that the conflict was, in essence, extremely limited in terms of time, space and force levels involved. From an army of 550,000 personnel, approximately 20,000 personnel were committed into this conflict, primarily due to our limited logistical capabilities. The conflict was primarily restricted to the tactical level only, at battalion level and below. While the conflict itself was spread over one month, the tactical engagements themselves lasted a few hours at best, and on one or two occasions where stiffer resistance was put up, extending to 48-72 Hours. Unfortunately, given the terrain, lack of field fortifications, etc, casualties suffered were relatively high, with approximately fifteen hundred killed, similar numbers wounded, two thousand missing and another 4000 taken prisoner. The Air Force, which could have played a critical role in blunting the PLA attacks and destroying their lines of communications, was deliberately confined to the logistics role for reasons that are still not clear, while the Navy remained a bystander.

    Sadly, our military and political leadership exhibited an utter lack of moral courage, determination and willpower by quietly acquiescing to the unilateral ceasefire, thereby kicking the main irritant of the demarcation of borders further up the road, where it has once again come to bite us on our posteriors.

    Secondly, far from being a major defeat, as has been commonly made out, it was at best a temporary reverse that could, and should, have been countered with the use of fresh troops under a more determined and professional leadership. More importantly, the PLA understood this fact and, therefore, undertook a unilateral withdrawal to its earlier pre-war line of defences. It must have been fully cognisant that if hostilities were to continue, it would find itself in an increasingly untenable position with its supply lines already badly stretched and being further impacted with the onset of winter. It would only have been a matter of time before the Indian Army got over its shock, regrouped and reorganised itself and launched a counter-offensive to recapture lost territory. Sadly, our military and political leadership exhibited an utter lack of moral courage, determination and willpower by quietly acquiescing to the unilateral ceasefire, thereby kicking the main irritant of the demarcation of borders further up the road, where it has once again come to bite us on our posteriors.

    Thirdly, what continues to remain totally inexplicable is the reasons why our military and political leadership continue to remain so traumatised and scared to this day. The truth is that the narrative that emanated following the reverses was set by officers and men belonging to units that, for the most part, had withdrawn before coming in contact with the PLA. They were low on morale and had come to believe the Chinese were supermen who could not be stopped by mere mortals. It was from amongst the experience and perception of these personnel that pamphlets on the tactics and capabilities of the PLA were subsequently formulated that continue to be relied on to this day, thereby giving further credence to that distorted narrative.

    The fact of the matter is that in any future conflict, the PLA will be fighting over 2000 Kms away from its home bases, supported along communication lines that run over some of the most difficult and inhospitable terrain in the world. They are also easily susceptible to interdiction, given the nature of the terrain. In addition, they would have to contend with a hostile and badly oppressed population not just within Tibet but in Xingjian as well, which could revolt if a suitable opportunity arose. This would require the PLA to deploy additional forces for rear area security to prevent disruption of the lines of communication.

    Moreover, while there are sizeable disparities in aspects such as force levels and capabilities, infrastructure development and economic strength, one needs to be cognizant of the fact that we have also made tremendous strides with regard to infrastructure development, logistics and offensive capabilities. Our forces still hold the edge vis-à-vis combat experience and operating in mountains, while the Air Force continues to hold the upper hand in the TAR purely on account of terrain profile and radius of action. Most importantly, the availability of two Mountain Strike Corps gives us immense flexibility, if properly utilized, to grab the initiative and force a decision dilemma on the PLA. In the circumstances, the reason for our extreme reluctance to stand up against the Chinese bully must lie elsewhere. One distinct possibility is that our political leadership lacks faith in the military leadership and its ability to fight and win.

    This will seem at odds with the fact that the military has a splendid history of having always successfully completing any task given to it. If anything, it has been grossly misused by the Central and State Governments to carry out tasks that are not in their ambit, whether these be organizing the Commonwealth Games or construction of railway over-bridges, because the concerned departments and agencies have been unable to produce the requisite results. Clearly, this mistrust, primarily in the sphere of civil-military relations, has more pernicious roots and is very deeply embedded in the politico-bureaucratic psyche.

     Interestingly, in the Official History of the 1962 Conflict with China, available in the public domain but yet to be published, the Chief Editor, Dr S N Prasad, concludes that the chief reason for our defeat was that the political establishment was unable to avoid war while it was in the process of transforming the military establishment. Given Prime Minister Nehru’s apprehensions about the military taking control, he wanted to change it from being, as Mr Prasad puts it, a “close-knit professional body, deliberately isolated from the citizen. Its predominant motive force remained esprit de corps and not identification with the people… Perhaps he wanted to model it after the People’s Liberation Army of China, more egalitarian, flexible, closer to the people………Such basic changes required a committed, or at least a pliant, band of army officers in key positions. So mediocre Thapar was selected instead of the doughty Thorat as Army Chief, and Bijji Kaul was made CGS……. “

      He further goes on to add that “To carry out this transformation of the national defence set up, a decade of peace was absolutely essential. For establishing indigenous weapons manufacture, money had to be found by cutting arms imports. The armed forces would be short of equipment and stores for several years till the new arms factories started producing. The officer cadre was a house divided within itself till the new breed fully took over. A period of transition was inevitable, during which the fighting machine would not be fully efficient and would be vulnerable………Therein seems to lie the basic cause of the debacle of 1962. India failed to avoid a war during the transition period. Lulled by faulty political assessment and wrong intelligence forecasts, the country got caught in a war when it was least prepared.”

    With Mr Modi’s ascension to power, we came a full circle as he took it upon himself to steer it away from its apolitical and secular character towards a more ideologically compatible institution that would be in sync with his Party’s long-held vision of making India into a Hindu Rashtra.

    Fortuitously for the country, Nehru’s vision for a transformed military was stymied by the 1962 Conflict and the most important lesson that his successors assimilated quickly was to stay away from interfering in the internal affairs of the military as that could gravely damage internal cohesion and morale. With Mr Modi’s ascension to power, we came a full circle as he took it upon himself to steer it away from its apolitical and secular character towards a more ideologically compatible institution that would be in sync with his Party’s long-held vision of making India into a Hindu Rashtra.

    Towards this end Mr Modi has smartly used the concept of “deep selection” to ensure key senior appointments were filled by officers displaying an affinity for his government’s ideology, regardless of existing rules, seniority or merit. This, in turn, made them personally beholden to him, and he was thus able to use them to take ownership and deflect criticism from initiatives that were pushed through by his government regardless of their adverse impact on long-standing and cherished customs and traditions or on the operational capabilities of the Services. This has led to schisms within the institution, damaged the integrity and cohesion of the chain of command and cast a big question mark on the apolitical and secular character of the Services.

    In this context, a politically compromised Chief of Defence Staff and other senior officers shamefully endorsed the PMO, thrusting down the ill-conceived Agnipath Scheme on the military with not a single objection being raised. This scheme has all but destroyed the basic ethos of our fighting arms, ensuring that the deeply entrenched and effective Regimental System has been severed at the roots. Given their ignorance of matters military, they would have been ignorant of Winston Churchill’s wise advice that “Regiments are not like houses. They cannot be pulled down and altered structurally to suit the convenience of the occupier or the caprice of the owner. They are more like plants; they grow slowly if they are to grow strong…and if they are blighted or transplanted, they are apt to wither.”

    And wither they have, the resulting adverse impact on morale is not difficult to gauge. This is undoubtedly being further exacerbated by the considerable voids in manpower, with combat units reportedly functioning at less than 75% of their authorised strength, and truncated peace tenures to fill up operational voids in Eastern Ladakh, Manipur and Jammu & Kashmir. In addition, the government’s emphasis on the ‘Atman Nirbhar Abhiyan’ and ‘Make in India Scheme’ has resulted in deficiencies, even if temporary, in the holdings of weapons systems, ammunition and other warlike stores. Given all these factors, the military obviously finds itself in an extremely precarious situation, committed to its fullest capacity with limited options available. Ironically, a government that lays such a great emphasis on our Hindu origins, culture and history has managed to display a profound ignorance of statecraft and warfare, as brought out in Kautilya’s Arthashastra. In this classic, Chanakya points to the necessity for a strong army because, for all nation-states, there are only two states of being: either conquer or be conquered.

    …at the present time, we are once again confronted with an extremely turbulent geopolitical situation, with the world’s attention on the ongoing crises in Europe and the Middle East. The situation today, in many ways, is clearly reminiscent of the period on the eve of the 1962 Conflict. For reasons not very different from then, the Indian Military finds itself in a very similar situation as well.In these circumstances, the real question that we should be asking ourselves is not whether we can overcome our past traumas and face down the PLA, but more importantly, whether China will seize this opportunity to recalibrate the Sino-Indian relationship through the use of force.

    Interestingly, in 1962, China launched major operations against us at the end of the campaigning season, which could have been jeopardised by unseasonal snow. Obviously, this was because, at that time, the world’s attention was riveted to the Cuban Missile Crisis. Similarly, at the present time, we are once again confronted with an extremely turbulent geopolitical situation, with the world’s attention on the ongoing crises in Europe and the Middle East. In addition, the United States is deeply immersed in its own internal problems with presidential elections just around the corner and with little time for other matters.

    The situation today, in many ways, is clearly reminiscent of the period on the eve of the 1962 Conflict. Moreover, at that time, Chairman Mao was under intense pressure as his Great Leap Forward experiment had failed, and he had been removed from his appointment as State President. Today, President Xi also finds himself under similar pressure following his disastrous Zero Covid and hard-line economic policies that have tanked the economy. For reasons not very different from then, the Indian Military finds itself in a very similar situation as well.

    Undoubtedly, the political leadership and the military top brass must be fully cognizant of this state of affairs. Clearly, they are in no position to stare down the PLA. What makes matters worse is that following the General Elections, Mr. Modi’s authority and standing have been greatly diminished. Where does this leave those senior officers who have progressed by hanging on to his ideological coat-tails? Has the authority and credibility of the CDS, an out-and-out political appointee and loyalist, been affected within the Chiefs of Staff Committee of which he is the Chairman? What will be its impact on the move towards the establishment of theatre commands? In these circumstances, the real question that we should be asking ourselves is not whether we can overcome our past traumas and face down the PLA, but more importantly, whether China will seize this opportunity to recalibrate the Sino-Indian relationship through the use of force.

     

    Feature Image Credit: Border Clashes between India and China ‘regularly covered up’  The Telegraph

    Namka Chu and Dhola Post Picture credit: www.indiasentinels.com

  • Globalisation’s Sunset

    Globalisation’s Sunset

    Are we witnessing the end of globalisation and the rise of economic nationalism? Who is responsible for this state of affairs? For many, the villain is clearly the US and its allies in the West. The reason is the rise of China as the world’s manufacturing and technology superpower. China is beating the West at its own game, and the US is shaken by the visible signs of the end of its hegemony and the dominance of the West.  Globalisation is being throttled by the West in a futile attempt to end China’s rise. The result will be catastrophic for the Global South in its aspirations for accelerated development. Former Venezuelan ambassador and Princeton scholar Alfredo Toro Hardy analyses what he sees as the sunset of globalisation.

    – Team TPF

     

    Economic globalisation was the offspring of the neoliberal ideology that prevailed after the collapse of the Soviet Union. The globalisation process took off in the mid-nineties, as was identified by the firm support given to it by leaders such as Bill Clinton and Tony Blair, particularly the former, who commanded the world’s largest economy.

                Its most emblematic expressions would be the Washington Consensus, the creation of the World Trade Organization in 1995, and China’s entry into these organisations in 2001. The first resulted from the convergence of positions between the U.S. Treasury Department and International Financial Organizations based in Washington. It would translate into a ten-point recipe called to set in motion the economic liberalisation of distressed and closed economies, chiefly the previous communist ones. The second involved the global homogenisation of rules in matters as diverse as manufacturing, agriculture, services, labour standards or intellectual property, as well as the abandonment by its members of industrial policies and protectionism. The third represented the insertion into the global labour market of more than a billion human beings whose working costs were but a fraction of those in developed countries. This would be accepted and even promoted by the United States under the assumption that a China open to the world’s economy would eventually open itself to the values of liberal democracy as well.

                The importance of neoliberal ideology, as a determining factor of this process, would be key. As a matter of fact, for a long time the leading force in the world economy, America’s economy, was characterised by its industrial policies, protectionism, and vertical integration of its corporations. The federal government’s industrial policies became a catalyst for economic development, either through direct investments and engagement or through incentives for the private sector to follow a particular course of action. The countless products and services incorporated into the American technological repository resulting from NASA’s R&D efforts exemplify these policies. They still represent the broad shoulders on which the country’s private technological sector stands. Protectionism expressed itself through tariffs and non-tariff barriers to protect domestic production from foreign competition. Vertical integration, on its part, involved direct control by U.S. corporations in their production and distribution channels. Hence, outsourcing did not figure in their strategies. It is worth adding that even President Reagan, despite his deregulatory crusade, supported his country’s industrial policies and imposed protective barriers against Japanese competition (Foroohar, 2022).

    Globalization in question

                For decades, globalisation has represented an unchallenged paradigm. Under its course, China reached the anteroom of world economic supremacy, numerous cheap labour economies, particularly in Asia, emerged strongly, and large corporations relying on the revolutions in information technology, communications and transports outsourced and dispersed their production and services (again mainly in Asia). Actually, it was in the emerging Asian countries where, in nine of every 10 cases, the great beneficiaries of globalisation were concentrated. Moreover, it was estimated that between 2020 and 2030, the global middle class would jump from 3,300 million to 4,900 million people, with 80% of that jump taking place in Asia (Milanovic, 2018, p. 19; OCDE, 2010). However, for some time now, globalisation has been under serious questioning. Among the reasons behind this, the following should be outlined: the emergence of powerful populist movements in the Western World; climate change distortions upon trade and the impact on climate itself, resulting from maritime trade over long distances; and economic and political nationalism in China.

                Populism is, to a large extent, directly related to the immense social upheavals caused by the massive outsourcing of jobs to the cheapest labour economies. In 2000, Clinton predicted that globalisation would allow the export of products without exporting jobs. Exactly the opposite happened, though, seriously affecting the social fabric of the United States and its European counterparts. This significantly eroded their democratic systems. Climate change, with hurricanes, floods, and other incidents, has increased the risk of global supply chains, resulting in annual revenue losses of up to 35% for companies. (McKinsey and Company, 2020).

    Conversely, the massive mobilisation of supertankers worldwide generates up to 14% of the total greenhouse gas emissions affecting the planet. (Prestowitz, 2022). Indeed, “the ultimate buyer [of final products] remained an ocean or a continent away” (O’Neil, 2022, p. 113). In addition, contrary to what American promoters of China’s emergence had suggested, the country’s economic prosperity has led to an increasingly nationalistic and authoritarian model. Far from getting closer to U.S. values, China has emphasised its economic nationalism and geopolitical aggressiveness within the context of a growing rivalry with the United States.

    The triggering elements

                However, even if disappointment with globalisation continued to grow, the triggering elements that would end up clearly tilting the balance against it were still missing. COVID and Russia’s invasion of Ukraine took care of it. Twenty trillion U.S. dollars in goods rely on global supply chains. Especially so as the disaggregation of production translates into millions of components, parts and final manufacturers moving in every direction. (McKinsey and Company, 2020). This vertiginous dissemination of productive processes led to unexpected, sudden, and massive disruptions during the pandemic. As a result, global economic interdependence choked. The endless Zero COVID policy implemented in China, the geographic nerve centre for global trade, exponentially aggravated this situation. The result was none other than inflation that brought to mind the seventies and has not yet been controlled.

                This was joined shortly afterwards by the impact of the invasion of Ukraine by Russia. One that not only disrupted vital energy and food supply chains but fundamentally brought geopolitics back to the global scenario through the main door. As if the emerging Cold War between China and the U.S. had not already been enough to undermine faith in globalisation, events in Ukraine made security the central component of the international order. It was a sort of fall of the Berlin Wall in reverse. One that brought down the relevance of economics and propelled that of politics. Olaf Scholz’s “global zeitenwende” clarified that a new strategic culture and national strategy would become his country’s new priority (Scholtz, 2023). Under such circumstances, placing economic security in distant and potentially hostile hands was no longer a rational option.

    Back to the past

                Not surprisingly, the United States began reverting to policies that preceded globalisation. That is, to industrial policies, to protectionism, and the vertical integration of its corporations. Indeed, before losing the House of Representatives to Republicans in November 2022, Biden’s Democrats passed several laws that embody industrial policies. A perfect example is the so-called energy revolution, with 490 billion dollars being involved in incentives to guide private investment towards generating clean energy sources. It also allowed the federal government to intervene in medicine prices through direct negotiations with the pharmaceutical industry. In the same direction went the laws that stimulated competitiveness and innovation, the superconductors industry, and infrastructural development. In parallel, the “Buy American” policy, subsidies to the domestic industry, and the maintenance of the tariffs imposed by Trump represented an evident protectionist impulse. Meanwhile, American corporations, in tune with these policies and in reaction to the risks of dismembering their production and services on a global scale, are opting for vertical integration and direct control of their activities. This implies, by its very nature, a production centred on the local or the regional.

    Getting back home

                All of the above factors contribute to industries’ onshoring and supply chains. In 2021, of the 709 large U.S. manufacturing corporations consulted, 83% responded that they would very likely or probably return their production operations to the United States. (Ma, 2021). Numerous leading American and foreign corporations are opting to produce in the U.S. to benefit from the new incentives put in motion by the Biden administration. This list includes, among many others, Intel, GM, US Steel, Taiwan Semiconductor Manufacturing (TSMC), Toyota, Samsung and Micron Technology. The amount of their investments, in tens of billions of dollars in many cases, speaks for itself. The motivation behind this impressive move was well reflected in the words of the larger-than-life founder of TSMC, Morris Chang: “Globalization and free trade are almost dead and unlikely to return”. (Cheng, 2022; Doherty and Yardeni, 2022). However, together with this on-shoring move, there are also parallel movements of near-shoring or friendly shoring nature, where manufacturing and supply chains are being circumscribed to neighbours or traditional allies that do not represent a security risk. With the world’s largest economy becoming protectionist, it will be difficult for globalisation to retain its influence, especially as Europe rapidly evolves in the same direction.

    Globalization last hope

                Until recently, an area of globalisation seemed to be relatively protected from these kinds of upheavals: the digital ecosystem. According to a 2016 report, the rapid flows of international trade and finance that characterised the 20th century appear to have flattened (…), yet globalisation has not reversed. Indeed, digital flows are growing very quickly.” (McKinsey Global Institute 2016). However, a few months ago, Brookings published a highly pessimistic report regarding the future of this sector. According to it: “Historically, the arrival of the global web created an opportunity for the interconnection of the world under a global digital ecosystem. However, mistrust between nations has led to the emergence of digital barriers, which imply their focus on controlling their digital sovereignty (…). These developments threaten current forms of interconnectivity, causing high-tech markets to fragment and retract, to varying degrees, upon national states”. (Brookings, 2022). Thus, the last sector of globalisation, which still showed significant dynamism, is also reversing under the impact of geopolitics. Globalisation, no doubt about it, seems to be experiencing sunset.

     

     

    References

    Brookings (2022). “The geopolitics of AI and the rise of digital sovereignty”, December 8.

    Cheng, Ting Fang (2022). “TSMC founder Morris Chang says globalization is ‘almost dead’, Nikkei, December 7.

    Doherty, J. and Yardeni, E. (2022). “Onshoring: Back to the USA”, Predicting the Markets, February 5.

    Foroohar, Rana (2022). Homecoming. New York: Crown.

    Ma, Cathy (2021). “83% of North American Manufacturers are Likely to Reshore Their Supply Chains”, Thomas, June 30.

    McKinsey & Company (2020). “Could climate change become the weak link in your supply chain”, August 6.

    McKinsey Global Institute (2016). “Digital Globalization: The New Era of Global Flows”, March.

    Milanovic, Branko (2018). Global Inequality. Cambridge, Mass.: The Belknap Press of Harvard University Press.

    OCDE (2010). “The Emerging Middle Class in Developing Countries”, Working Paper Number 285.

    O’Neil, Shannon K. (2022). The Globalization Myth. New Haven: Yale University Press.

    Prestowitz, Clyde (2022). “Is the U.S. Moving Out from Free Trade? Industrial Policy Comes Full Circle”, Clyde’s Newsletter, December 12.

    Scholz, Olaf (2023). “The Global Zeitenwende”. Foreign Affairs, January/February.

     

    Feature Image Credit: worldcrunch.com (Globalization as Ideology is Dead and Buried).

    Image Credit: Gulliver’s Travails (Paresh Nath, The Khaleej Times, UAE) www.uncommonthoughts.com

  • The Perils and Promise of the Emerging Multipolar World

    The Perils and Promise of the Emerging Multipolar World

    The world economy is experiencing a deep process of economic convergence, according to which regions that once lagged the West in industrialisation are now making up for lost time.

    We are therefore entering a post-hegemonic, multipolar world.

    The World Bank’s release on May 30 of its latest estimates of national output (up to the year 2022) offers an occasion to reflect on the new geopolitics. The new data underscore the shift from a U.S.-led world economy to a multipolar world economy, a reality that U.S. strategists have so far failed to recognize, accept, or admit.

    The World Bank figures make clear that the economic dominance of the West is over. In 1994, the G7 countries (Canada, France, Germany, Italy, Japan, U.K., U.S.) constituted 45.3% of world output, compared with 18.9% of world output in the BRICS countries (Brazil, China, Egypt, Ethiopia, India, Iran, Russia, South Africa, United Arab Emirates). The tables have turned. The BRICS now produce 35.2% of world output, while the G7 countries produce 29.3%.

    As of 2022, the largest five economies in descending order are China, the U.S., India, Russia, and Japan. China’s GDP is around 25% larger than the U.S.’ (roughly 30% of the U.S. GDP per person but with 4.2 times the population). Three of the top five countries are in the BRICS, while two are in the G7. In 1994, the largest five were the U.S., Japan, China, Germany, and India, with three in the G7 and two in the BRICS.

    The core U.S.-led alliance, which includes the U.S., Canada, U.K., European Union, Japan, Korea, Australia, and New Zealand, was 56% of world output in 1994, but now is only 39.5%. As a result, the U.S. global influence is waning.
    As the shares of world output change, so too does global power. The core U.S.-led alliance, which includes the U.S., Canada, U.K., European Union, Japan, Korea, Australia, and New Zealand, was 56% of world output in 1994, but now is only 39.5%. As a result, the U.S. global influence is waning. As a recent vivid example, when the U.S.-led group introduced economic sanctions on Russia in 2022, very few countries outside the core alliance joined. As a result, Russia had little trouble shifting its trade to countries outside the U.S.-led alliance.
    The world economy is experiencing a deep process of economic convergence, according to which regions that once lagged the West in industrialization in the 19th and 20th centuries are now making up for lost time. Economic convergence actually began in the 1950s as European imperial rule in Africa and Asia came to an end. It has proceeded in waves, starting first in East Asia, then roughly 20 years later India, and for the coming 20-40 years in Africa.

    These and some other regions are growing much faster than the Western economies since they have more “headroom” to boost GDP by rapidly raising education levels, boosting workers’ skills, and installing modern infrastructure, including universal access to electrification and digital platforms. The emerging economies are often able to leapfrog the richer countries with state-of-the-art infrastructure (e.g., fast intercity rail, 5G, modern airports and seaports) while the richer countries remain stuck with aging infrastructure and expensive retrofits. The IMF’s World Economic Outlook projects that the emerging and developing economies will average growth of around 4% per year in the coming five years, while the high-income countries will average less than 2% per year.

    It’s not only in skills and infrastructure that convergence is occurring. Many of the emerging economies, including China, Russia, Iran, and others, are advancing rapidly in technological innovations as well, in both civilian and military technologies.

    China’s capacity for innovation and low-cost production is underpinned by enormous R&D spending and its vast and growing labor force of scientists and engineers.

    China clearly has a large lead in the manufacturing of cutting-edge technologies needed for the global energy transition, including batteries, electric vehicles, 5G, photovoltaics, wind turbines, fourth generation nuclear power, and others. China’s rapid advances in space technology, biotechnology, nanotechnology, and other technologies is similarly impressive. In response, the U.S. has made the absurd claim that China has an “overcapacity” in these cutting-edge technologies, while the obvious truth is that the U.S. has a significant under-capacity in many sectors. China’s capacity for innovation and low-cost production is underpinned by enormous R&D spending and its vast and growing labor force of scientists and engineers.

    Despite the new global economic realities, the U.S. security state still pursues a grand strategy of “primacy,” that is, the aspiration of the U.S. to be the dominant economic, financial, technological, and military power in every region of the world. The U.S. is still trying to maintain primacy in Europe by surrounding Russia in the Black Sea region with NATO forces, yet Russia has resisted this militarily in both Georgia and Ukraine. The U.S. is still trying to maintain primacy in Asia by surrounding China in the South China Sea, a folly that can lead the U.S. into a disastrous war over Taiwan. The U.S. is also losing its standing in the Middle East by resisting the united call of the Arab world for recognition of Palestine as the 194th United Nations member state.

    Yet primacy is certainly not possible today, and was hubristic even 30 years ago when U.S. relative power was much greater. Today, the U.S. share of world output stands at 14.8%, compared with 18.5% for China, and the U.S. share of world population is a mere 4.1%, compared with 17.8% for China.
    The trend toward broad global economic convergence means that U.S. hegemony will not be replaced by Chinese hegemony. Indeed, China’s share of world output is likely to peak at around 20% during the coming decade and thereafter to decline as China’s population declines. Other parts of the world, notably including India and Africa, are likely to show a large rise in their respective shares of global output, and with that, in their geopolitical weight as well.

    We are therefore entering a post-hegemonic, multipolar world. It too is fraught with challenges. It could usher in a new “tragedy of great power politics,” in which several nuclear powers compete—in vain—for hegemony. It could lead to a breakdown of fragile global rules, such as open trade under the World Trade Organization. Or, it could lead to a world in which the great powers exercise mutual tolerance, restraint, and even cooperation, in accord with the U.N. Charter, because they recognize that only such statecraft will keep the world safe in the nuclear age.

     

    This article was published earlier in commondreams

    Feature Image Credit: The World Financial Review

  • Artificial Intelligence vs The Indian Job Market

    Artificial Intelligence vs The Indian Job Market

    Artificial intelligence (AI) has become a ubiquitous presence in our daily lives, transforming the way we operate in the modern era. From the development of autonomous vehicles to facilitating advanced healthcare research, AI has enabled the creation of groundbreaking solutions that were once thought to be unattainable. As more investment is made in this area and more data becomes available, it is expected that AI will become even more powerful in the coming years.

    AI, often referred to as the pursuit of creating machines capable of exhibiting intelligent behaviour, has a rich history that dates back to the mid-20th century. During this time, pioneers such as Alan Turing laid the conceptual foundations for AI. The journey of AI has been marked by a series of intermittent breakthroughs, periods of disillusionment, and remarkable leaps forward. It has also been a subject of much discussion over the past decade, and this trend is expected to continue in the years to come.

    According to a report by Precedence Research, the global artificial intelligence market was valued at USD 454.12 billion in 2022 and is expected to hit around USD 2,575.16 billion by 2032, progressing with a compound annual growth rate (CAGR) of 19% from 2023 to 2032. The Asia Pacific is expected to be the fastest-growing artificial intelligence market during the forecast period, expanding at the highest CAGR of 20.3% from 2023 to 2032. The rising investments by various organisations towards adopting artificial intelligence are boosting the demand for artificial intelligence technology.[1]

    Figure 1 illustrates a bar graph displaying the upward trajectory of the AI market in recent years, sourced from Precedence Research.

    The Indian government has invested heavily in developing the country’s digital infrastructure. In 2020, The Government of India increased its spending on Digital India to $477 million to boost AI, IoT, big data, cyber security, machine learning, and robotics. The artificial intelligence market is expected to witness significant growth in the BFSI(banking, financial services, and insurance) sectors on account of data mining applications, as there is an increase in the adoption of artificial intelligence solutions in data analytics, fraud detection, cybersecurity, and database systems.

    Figure 2 illustrates a pie chart displaying the distribution of the Artificial Intelligence (AI) market share across various regions in 2022, sourced from Precedence Research.

    Types of AI Systems and Impact on Employment

    AI systems can be divided primarily into three types:

    Narrow AI: This is a specific form of artificial intelligence that executes dedicated tasks with intelligence. It represents the prevailing and widely accessible type of AI in today’s technological landscape.

    General AI: This represents an intelligence capable of efficiently undertaking any intellectual task akin to human capabilities. Aspiration driving the development of General AI revolves around creating a system with human-like cognitive abilities that enables autonomous, adaptable thinking. However, as of now, the realisation of a General AI system that comprehensively emulates human cognition remains elusive.

    Super AI: It is a level of intelligence within systems where machines transcend human cognitive capacities, exhibit superior performance across tasks, and possess advanced cognitive properties. This extends from the culmination of the General AI.

    Artificial intelligence has been incorporated into various aspects of our lives, ranging from virtual assistants on our mobile devices to advancements in customisation, cyber protection, and more. The growth of these systems is swift, and it is only a matter of time before the emergence of general artificial intelligence becomes a reality.

    According to a report by PwC, the global GDP is estimated to be 14% higher in 2030 due to the accelerating development and utilisation of AI, which translates to an additional $15.7 trillion. This growth can be attributed to:

    1. Improvements in productivity resulting from the automation of business processes (including the use of robots and autonomous vehicles).
    2. Productivity gains from businesses integrating AI technologies into their workforce (assisted and augmented intelligence).
    3. Increased consumer demand for AI-enhanced products and services, resulting in personalised and/or higher-quality offerings.

    The report suggests that the most significant economic benefits from AI will likely come from increased productivity in the near future. This includes automating mundane tasks, enhancing employees’ capabilities, and allowing them to focus on more stimulating and value-added work. Capital-intensive sectors such as manufacturing and transport are likely to experience the most significant productivity gains from AI, given that many operational processes in these industries are highly susceptible to automation. (2)

    AI will disrupt many sectors and lead to the creation of many more. A compelling aspect to observe is how the Indian Job Market responds to AI and its looming threat to job security in the future.

    The Indian Job Market

    As of 2021, around 487.9 million people were part of the workforce in India out of 950.2 million people aged 15-64, the second largest after China. While there were 986.5 million people in China aged 15-64, there were 747.9 million people were part of the workforce.

    India’s labour force participation rate (LFPR) at 51.3 per cent was less than China’s 76 per cent and way below the global average of 65 per cent.[3]

    The low LFPR can be primarily attributed to two reasons:

    Lack of Jobs

    To reach its growth potential, India is expected to generate approximately 9 million nonfarm jobs annually until 2030, as per a report by McKinsey & Company. However, analysts suggest that the current rate of job creation falls significantly below this target, with only about 2.9 million nonfarm jobs being added each year from 2013 to 2019. [4]

    During the COVID-19 pandemic, urban unemployment in India surged dramatically, peaking at 20.9% in the April-June 2020 quarter, coinciding with wage decline. Although the unemployment rate has decreased since then, full-time employment opportunities are scarce. Economists highlight a concerning trend where an increasing number of job-seekers, particularly the younger demographic, are turning towards low-paying casual jobs or opting for less stable self-employment options.[5]

     This shift in employment pattern occurs alongside a broader outlook for the Indian economy, which is projected to achieve an impressive growth rate of 6.5% by the fiscal year ending in March 2025. Despite this optimistic growth forecast, the employment landscape appears to be evolving, leading individuals towards less secure and lower-paying work options. This shift raises pertinent concerns about the job market’s quality, stability, and inclusivity, particularly in accommodating the aspirations and needs of India’s burgeoning young workforce.

    Low female labour participation

    In 2021, China boasted an estimated female population of 478.3 million within the 15-64 age bracket, with an active female labour force of approximately 338.6 million. In stark contrast, despite India having a similar demographic size of 458.2 million women in that age group, its female labour force was significantly smaller, numbering only 112.8 million.[6]

    This discrepancy underscores a notable disparity in India’s female labour force participation rate compared to China, despite both countries having sizeable female populations within the working-age bracket.[7]

    Along with unemployment, there was also a crisis of under-employment and the collapse of small businesses, which has worsened since the pandemic.

    AI vs the Indian Job Market

    The presence and implications of AI cast a significant shadow on a country as vast and diverse as India. Amidst the dynamic and often unpredictable labour market, where employment prospects have been uncertain, addressing the impact of AI poses a considerable challenge for employers. Balancing the challenges and opportunities presented by AI while prioritising job security for the workforce is a critical obstacle to overcome.

     The diverse facets of artificial intelligence (AI) and its capacity to transform industries across the board amplify the intricacy of the employment landscape in India. Employers confront the formidable challenge of devising effective strategies to incorporate AI technologies without compromising the livelihoods of their employees.

    As per the findings of the Randstad Work Monitor Survey, a staggering 71% of individuals in India exhibit an inclination towards altering their professional circumstances within the next six months, either by transitioning to a new position within the same organisation or by seeking employment outside it. Furthermore, 23% of the workforce can be classified as passive job seekers, who are neither actively seeking new opportunities nor applying for them but remain open to considering job prospects if a suitable offer arises.

    It also stated that at least half of Indian employees fear losing their jobs to AI, whereas the figure is one in three in developed countries. The growing concern among Indian workers stems from the substantial workforce employed in Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO), which are notably vulnerable to AI automation. Adding to this concern is India’s rapid uptake of AI technology, further accentuating the apprehension among employees.[8]

    India’s role as a global hub for outsourcing and its proficiency in delivering diverse services have amplified the impact of AI adoption. The country has witnessed a swift embrace of AI technologies across various industries, magnifying workers’ concerns regarding the potential ramifications of their job security.

    Goldman Sachs’ report highlights the burgeoning emergence of generative artificial intelligence (AI) and its potential implications for labour dynamics. The rapid evolution of this technology prompts questions regarding a possible surge in task automation, leading to cost savings in labour and amplified productivity. [9]

    The labour market could confront significant disruptions if generative AI delivers its pledged capabilities. Analysing occupational tasks across the US and Europe revealed that approximately two-thirds of the current jobs are susceptible to AI automation. Furthermore, the potential of generative AI to substitute up to one-fourth of existing work further underscores its transformative potential.

     Expanding these estimates on a global scale suggests that generative AI might expose the equivalent of 300 million full-time jobs to automation, signifying the far-reaching impact this technology could have on global labour markets.

    Recent advancements in artificial intelligence (AI) and machine learning have exerted substantial influence across various professions and industries, particularly impacting job landscapes in sectors such as Indian IT, ITeS, BPO, and BPM. These sectors collectively employ over five million people and are India’s primary source of white-collar jobs. [10]

    In a recent conversation with Business Today, Vardhman Jain, the founder and Vice Chairman of Access Healthcare, a Chennai-based BPO, highlighted the forthcoming impact of AI integration on the workplace. Jain indicated that AI implementation may cause customer service to be the sector most vulnerable to initial disruptions.

    Jain pointed out that a substantial portion of services provided by the Indian BPO industry is focused on customer support, including voice and chat functions, data entry, and back-office services. He expounded upon how AI technologies, such as Natural Language Processing, Machine Learning, and Robotic Process Automation, possess the potential to significantly disrupt and automate these tasks within the industry.

    While the discourse surrounding AI often centres on the potential for job displacement, several industry leaders argue that AI will not supplant human labour, but rather augment worker output and productivity.

    At the 67th Foundation Day celebration of the All-India Management Association (AIMA), NR Narayan Murthy, as reported by Business Today, conveyed a noteworthy message by asserting that AI is improbable to supplant human beings, as humans will not allow it to happen.

    Quoting Murthy’s statement from the report, “I think there is a mistaken belief that artificial intelligence will replace human beings; human beings will not allow artificial intelligence to replace them.” The Infosys founder stressed that AI has functioned as an assistive force rather than an outright replacement, enhancing human lives and making them more comfortable.[11]

    McKinsey Global Institute’s study, “Generative AI and the Future of Work in America,” highlighted AI’s capability to expedite economic automation significantly. The report emphasised that while generative AI wouldn’t immediately eliminate numerous jobs, it would enhance the working methods of STEM, creative, business, and legal professionals.[12]

     However, the report also underscored that the most pronounced impact of automation would likely affect job sectors such as office support, customer service, and food service employment.

    While the looming threats posed by AI are undeniable, its evolution is expected to usher in a wave of innovation, leading to the birth of new industries and many job opportunities. This surge in new industries promises employment prospects and contributes significantly to economic growth by leveraging AI capabilities.

    Changing employment Landscape

    Having explored different perspectives and conversations on AI, it has become increasingly evident that the employment landscape is poised for significant transformation in the years ahead. This prompts a crucial enquiry: Will there remain a necessity for human jobs, and are our existing systems equipped to ensure equitable distribution of the benefits fostered by this technology developments?

    • Universal Basic Income

    Universal basic income (UBI) is a social welfare proposal in which all citizens of a given population regularly receive minimum income in the form of an unconditional transfer payment, that is, without a means test or need to work, in which case it would be called guaranteed minimum income.

    Supporters of Universal Basic Income (UBI) now perceive it not only as a solution to poverty, but also as a potential answer to several significant challenges confronting contemporary workers: wage disparities, uncertainties in job stability, and the looming spectre of job losses due to advancements in AI.

    Karl Widerquist, a professor of philosophy at Georgetown University-Qatar and an economist and political theorist, posits that the influence of AI on employment does not necessarily result in permanent unemployment. Instead, he suggests a scenario in which displaced workers shift into lower-income occupations, leading to increased competition and saturation in these sectors.

    According to Widerquist, the initial effects of AI advancements might force white-collar workers into the gig economy or other precarious and low-paying employment. This shift, he fears, could trigger a downward spiral in wages and job security, exacerbating economic inequality.

     He advocates for a Universal Basic Income (UBI) policy as a response to the challenges posed by AI and automation. Widerquist argues that such a policy would address employers’ failure to equitably distribute the benefits of economic growth, fuelled in part by automation, among workers. He sees UBI as a potential solution to counter the widening disparity in wealth distribution resulting from these technological advancements.[13]

    A study conducted by researchers at Utrecht University, Netherlands, from 2017 to 2019 led to the implementation of basic income for unemployed individuals who previously received social assistance. The findings showcase an uptick in labour market engagement. This increase wasn’t solely attributed to the financial support offered by Universal Basic Income (UBI) but also to removing conditions—alongside sanctions for non-compliance—typically imposed on job seekers.[14]

    Specifically, participants exempted from the obligation to actively seek or accept employment demonstrated a higher likelihood of securing permanent contracts, as opposed to the precarious work arrangements highlighted by Widerquist.

     While UBI experiments generally do not demonstrate a significant trend of workers completely exiting the labour market, instances of higher payments have resulted in some individuals reducing their working hours. This nuanced impact showcases the varying effects of UBI on labour participation, highlighting both increased job security for some and a choice for others to adjust their work hours due to enhanced financial stability.

    In exploring the potential for Universal Basic Income (UBI), it becomes evident that while the concept holds promise, its implementation and efficacy are subject to multifaceted considerations. The diverse socioeconomic landscape, coupled with the scale and complexity of India’s population, presents both opportunities and challenges for UBI.

     UBI’s potential to alleviate poverty, enhance social welfare, and address economic disparities in a country as vast and diverse as India is compelling. However, the feasibility of funding such a program, ensuring its equitable distribution, and navigating its impact on existing welfare schemes requires careful deliberation.

    Possible Tax Solutions

    • Robot Tax

    The essence of a robot tax lies in the notion that companies integrating robots into their operations should bear a tax burden given that these machines replace human labour.

     There exist various arguments advocating for a robot tax. Initially, it aimed to safeguard human employment by dissuading firms from substituting humans with robots. Additionally, while companies may prefer automation, imposing a robot tax can generate government revenue to offset the decline in funds from payroll and income taxes. Another crucial argument favouring this tax is rooted in allocation efficiency: robots neither contribute to payroll nor income taxes. Taxing robots at a rate similar to human labour aligns with economic efficiency to prevent distortions in resource allocation.

    In various developed economies, such as the United States, the prevailing taxation system presents a bias toward artificial intelligence (AI) and automation over human workforce. This inclination, fueled by tax incentives, may lead to investments in automation solely for tax benefits rather than for the actual potential increase in profitability. Furthermore, the failure to tax robots can exacerbate income inequality as the share of labor in national income diminishes.

    One possible solution to address this issue is the implementation of a robot tax, which could generate revenue that could be redistributed as Universal Basic Income (UBI) or as support for workers who have lost their jobs due to the adoption of robotic systems and AI and are unable to find new employment opportunities.

    • Digital Tax

    The discourse surrounding digital taxation primarily centers on two key aspects. Firstly, it grapples with the challenge of maintaining tax equity between traditional and digital enterprises. Digital businesses have benefited from favorable tax structures, such as advantageous tax treatment for income derived from intellectual property, accelerated amortization of intangible assets, and tax incentives for research and development. However, there is a growing concern that these preferences may result in unintended tax advantages for digital businesses, potentially distorting investment trajectories instead of promoting innovation.

    Secondly, the issue arises from digital companies operating in countries with no physical presence yet serving customers through remote sales and service platforms. This situation presents a dilemma regarding traditional corporate income tax regulations. Historically, digital businesses paid corporate taxes solely in countries where they maintained permanent establishments, such as headquarters, factories, or storefronts. Consequently, countries where sales occur or online users reside have no jurisdiction over a firm’s income, leading to taxation challenges.

    Several approaches have been suggested to address the taxation of digital profits. One approach involves expanding existing frameworks, for instance, a country may extend its Value-Added Tax (VAT) or Goods and Services Tax (GST) to encompass digital services or broaden the tax base to include revenues generated from digital goods and services. Alternatively, there is a need to implement a separate Digital Service Tax (DST).

    While pinpointing the ultimate solution remains elusive, ongoing experimentation and iterative processes are expected to guide us toward a resolution that aligns with the need for a larger consensus. With each experiment and accumulated knowledge, we move closer to uncovering an approach that best serves the collective requirements.[15]

    Reimagining the Future

    The rise of Artificial Intelligence (AI) stands as a transformative force reshaping the industry and business landscape. As AI continues to revolutionise how we work and interact, staying ahead in this rapidly evolving landscape is not just an option, but a necessity. Embracing AI is not merely about adapting to change; it is also about proactive readiness and strategic positioning. Whether you’re a seasoned entrepreneur or a burgeoning startup, preparing for the AI revolution involves a multifaceted approach encompassing automation, meticulous research, strategic investment, and a keen understanding of how AI can augment and revolutionise your business. PwC’s report lists some crucial steps to prepare one’s business for the future and stay ahead. [16]

    Understand AI’s Impact: Start by evaluating the industry’s technological advancements and competitive pressure. Identify operational challenges AI can address, disruptive opportunities available now and those on the horizon.

    Prioritise Your Approach: Determine how AI aligns with business goals. Assess your readiness for change— are you an early adopter or follower? Consider feasibility, data availability, and barriers to innovation—Prioritise automation and decision augmentation processes based on potential savings and data utilisation.

    Talent, Culture, and Technology: While AI investments might seem high, costs are expected to decrease over time. Embrace a data-driven culture and invest in talent like data scientists and tech specialists. Prepare for a hybrid workforce, combining AI’s capabilities with human skills like creativity and emotional intelligence.

    Establish Governance and Trust: Trust and transparency are paramount. Consider the societal and ethical implications of AI. Build stakeholder trust by ensuring AI transparency and unbiased decision-making. Manage data sources rigorously to prevent biases and integrate AI management with overall technology transformation.

     Getting ready for Artificial Intelligence (AI) is not just about new technology; it is an intelligent strategy. Understanding how AI fits one’s goals is crucial; prioritising where it can help, building the right skills, and setting clear rules are essential. As AI becomes more common, it is not about robots taking over, but humans and AI working together. By planning and embracing AI wisely, businesses can stay ahead and create innovative solutions in the future.

    References:

    [1] Precedence Research. “Artificial Intelligence (AI) Market.” October 2023. Accessed November 14, 2023. https://www.precedenceresearch.com/artificial-intelligence-market

    [2] Pricewaterhouse Coopers (PwC). “Sizing the prize, PwC’s Global Artificial Intelligence Study.” October 2017. Accessed November 14, 2023. https://www.pwc.com/gx/en/issues/data-and-analytics/publications/artificial-intelligence-study.html#:~:text=The%20greatest%20economic%20gains%20from,of%20the%20global%20economic%20impact.

    [3] World Bank. “Labor force, total – India 2021.” Accessed November 12, 2023. https://data.worldbank.org/indicator/SL.TLF.TOTL.IN?locations=IN

    [4] McKinsey & Company. “India’s Turning Point.” August 2020. https://www.mckinsey.com/~/media/McKinsey/Featured%20Insights/India/Indias%20turning%20point%20An%20economic%20agenda%20to%20spur%20growth%20and%20jobs/MGI-Indias-turning-point-Executive-summary-August-2020-vFinal.pdf

    [5] Dugal, Ira. “Where are the jobs? India’s world-beating growth falls short.” Reuters, May 31, 2023. Accessed November 14, 2023. https://www.reuters.com/world/india/despite-world-beating-growth-indias-lack-jobs-threatens-its-young-2023-05-30/

    [6] Government of India. Ministry of Labour and Employment. “Labour and Employment Statistics 2022.” July 2022. https://dge.gov.in/dge/sites/default/files/2022-08/Labour_and_Employment_Statistics_2022_2com.pdf

    [7] Deshpande, Ashwini, and Akshi Chawla. “It Will Take Another 27 Years for India to Have a Bigger Labour Force Than China’s.” The Wire, July 27, 2023. https://thewire.in/labour/india-china-population-labour-force

    [8] Randstad. “Workmonitor Pulse Survey.” Q3 2023. https://www.randstad.com/workforce-insights/future-work/ai-threatening-jobs-most-workers-say-technology-an-accelerant-for-career-growth/

    [9] Briggs, Joseph, and Devesh Kodnani. “The Potentially Large Effects of Artificial Intelligence on Economic Growth.” Goldman Sachs, March 26, 2023. https://www.key4biz.it/wp-content/uploads/2023/03/Global-Economics-Analyst_-The-Potentially-Large-Effects-of-Artificial-Intelligence-on-Economic-Growth-Briggs_Kodnani.pdf

    [10] Chaturvedi, Aakanksha. “‘Might take toll on low-skilled staff’: How AI can cost BPO, IT employees their jobs.” Business Today, April 5, 2023. https://www.businesstoday.in/latest/corporate/story/might-take-toll-on-low-skilled-staff-how-ai-can-cost-bpo-it-employees-their-jobs-376172-2023-04-05

    [11] Sharma, Divyanshi. “Can AI take over human jobs? This is what Infosys founder NR Narayan Murthy thinks.” India Today, February 27, 2023. https://www.indiatoday.in/technology/news/story/can-ai-take-over-human-jobs-this-is-what-infosys-founder-nr-narayan-murthy-thinks-2340299-2023-02-27

    [12] McKinsey Global Institute. “Generative AI and the future of work in America.” July 26, 2023. https://www.mckinsey.com/mgi/our-research/generative-ai-and-the-future-of-work-in-america

    [13] Kelly, Philippa. “AI is coming for our jobs! Could universal basic income be the solution?” The Guardian, November 16, 2022. https://www.theguardian.com/global-development/2023/nov/16/ai-is-coming-for-our-jobs-could-universal-basic-income-be-the-solution

    [14] Utrecht University. “What works (Weten wat werkt).” March 2020. https://www.uu.nl/en/publication/final-report-what-works-weten-wat-werkt

    [15] Merola, Rossana. “Inclusive Growth in the Era of Automation and AI: How Can Taxation Help?” *Frontiers in Artificial Intelligence* 5 (2022). Accessed November 23, 2023. https://www.frontiersin.org/articles/10.3389/frai.2022.867832

    [16]  Rao, Anand. “A Strategist’s Guide to Artificial Intelligence.” PwC, May 10, 2017.https://www.strategy-business.com/article/A-Strategists-Guide-to-Artificial-Intelligence

     

  • The Centre is notional, the States the real entities

    The Centre is notional, the States the real entities

    Utilisation of the country’s resources needs to be decided jointly by the Centre and the States. The changed political situation after the general election makes this feasible.

    The results of the general election 2024 have thrown up a surprise. They portend greater democratisation in the country, with the regional parties doing well. These parties will share space on the ruling party benches as well as on the Opposition side in Parliament. This will help strengthen federalism, which is so crucial for a diverse nation such as India. It was badly fraying until recently.
    Centre-State relations became contentious during the general election campaign. The idea of’ 400 par’, ‘one nation, one election’, and the Prime Minister threatening that the corrupt (i.e., Opposition leaders) would soon be in jail were perceived as threats to the Opposition-ruled States.
    The Opposition-ruled States have been complaining about step-motherly treatment by the Centre. Protests have been held in Delhi and the State capitals. The Supreme Court of India has said that ‘a steady stream of States are compelled to approach it against the Centre’. Kerala has complained about the inadequate transfer of resources, Karnataka about drought relief and West Bengal about funds for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). The attempt seems to be to show the Opposition-ruled States in a bad light.
    The Supreme Court, expressing its helplessness, recently said that Centre-State issues need to be sorted out amicably. When the Bharatiya Janata Party came to power in 2014, it had talked of cooperative federalism. The introduction of the Goods and Services Tax (GST) in 2017 was an example of this when some States that had reservations about it eventually agreed to its rollout. But that was the last of it. With federalism fraying, discord has grown between the Centre and the Opposition-ruled States.
    There is huge diversity among the States—Assam is unlike Gujarat, and Himachal Pradesh is very different from Tamil Nadu. A common approach is not conducive to the progress of such diverse States. They need greater autonomy to address their issues in their own unique ways. This is both democracy and federalism. So, a dominant Centre forcing its will on the States, leading to the deterioration in Centre-State relations, does not augur well for India.

    Financing and conflict is one issue
    States face three broad kinds of issues. Some of them can be dealt with by each State without impacting other States, such as education, health, and social services. But infrastructure and water sharing require States to come to an agreement. Issues such as currency and defence require a common approach. The last two kinds of issues require a higher authority, in the form of the Centre, to bring about coordination and optimality.
    Expenditures have to be financed to achieve goals, and that results in conflict. Revenue has to be raised through taxes, non-tax sources and borrowings. The Centre has been given a predominant role in raising resources due to its efficiency in collecting taxes centrally. Among the major taxes, personal income tax (PIT), corporation tax, customs duty and excise duty are collected by the Centre. GST is collected by both the Centre and the States and shared. So, the Centre controls most of the resources, and they have to be devolved to the States to enable them to fulfil their responsibilities.

    The Centre sets up the Commission and has mostly set its terms of reference. This introduces a bias in favour of the Centre and becomes a source of conflict between the Centre and the States.

    A Finance Commission is appointed to decide on the devolution of funds from the Centre to the States and the share of each State. The Centre sets up the Commission and has mostly set its terms of reference. This introduces a bias in favour of the Centre and becomes a source of conflict between the Centre and the States. Further, there has been an implicit bias in the Commissions that the States are not fiscally responsible. This reflects the Centre’s bias — that the States are not doing what they should and that they make undue demands on the Centre.
    The States also pitch their demands high to try and get a larger share of the revenues. They tend to show lower revenue collection and higher expenditures in the hope that there will be a greater allocation from the Commission. The Commission becomes an arbiter, and the States the supplicants.

    Inter-State tussles, Centre-State relations
    The States cannot have a common position as they are at different stages of development and with vastly different resource positions. The rich States have more resources, while the poor ones need more resources in order to develop faster and also play catch up. So, the Finance Commission is supposed to devolve proportionately more funds to the poorer States. Unfortunately, despite the efforts of the 15 Finance Commissions so far, the gap still remains wide.
    The rich States, which contribute more and get proportionately less, have resented this. What they forget is that the poorer States provide them the market, which enables them to grow faster. The poorer States also lose much of their savings which leak out to the rich States, accelerating their development. It is often said that as Mumbai contributes a bulk of the corporate and income taxes, it should get more. But this is because Mumbai is the financial capital. So, the big corporations are based there and pay their tax in Mumbai. More revenue is contributed in an accounting sense, and not that production is taking place in Mumbai.
    The Centre allocates resources to the States in two ways. First, on account of the Finance Commission award. Second, the Centre is notional, while the States are real. So, all expenditures by the Centre are in some State. The amount spent in each State is also a transfer. This becomes another source of conflict. Expenditures lead to jobs and prosperity in a State. Benefits accrue in proportion to the funds spent. As a result, each State wants more expenditure in its territory. The Centre can play politics in the allocation of schemes and projects. For instance, it is accused of favouring Gujarat and Uttar Pradesh. The Opposition-ruled States have for long complained of step-motherly treatment.
    To get more resources, the States have to fall in line with the Centre’s diktat. This has taken a new form when the call is for a ‘double engine ki sarkar’, i.e. for the same political party to be governing at the Centre and the States. It is an admission that the Opposition-ruled States will be at a disadvantage. This undermines the autonomy of the States and also weakens federalism.

    State autonomy is not to be confused with freedom to do anything. It is circumscribed by the need to function within a national framework for the wider good. It implies a fine balance between the common and the diverse.

    Issues in federalism
    The Sixteenth Finance Commission has begun work. It should try to reverse fraying federalism and strengthen the spirit of India as a ‘Union of States’. This is not only a political task but also an economic one. The Commission could suggest that there is even-handed treatment of all the States by the Centre and also less friction among the rich and poor States when proportionately more resources are transferred to poor States so as to keep rising inequality in check.
    The issue of governance, both at the Centre and in the States, needs to be flagged. It determines investment productivity and the pace of development. Corruption and cronyism lead to resources being wasted and a loss of social welfare.
    To reduce the domination of the Centre over the States, the devolution of resources from the Centre to the States could be raised substantially from its current level of 41%. The Centre’s role could be curtailed. For instance, the Public Distribution System and MGNREG Scheme are joint schemes, but the Centre asserts that it be given credit. It has penalised States that have not done so.

    The Centre is notional and constitutionally created, while States and local bodies are the real entities where economic activity occurs and resources are generated.

    The Centre’s undue assertiveness undermines federalism. Funds with the Centre are public funds collected from the States and spent in the States. The Centre is notional and constitutionally created, while States and local bodies are the real entities where economic activity occurs and resources are generated. The States have agreed to the Centre’s constitutional position, but that does not make them supplicants for their own funds.

    It is time that the utilisation of the country’s resources is jointly decided by the Centre and the States on the basis of being equal partners. This has become more feasible with the changed political situation after the results of the 2024 general election.

     

    This article was published earlier in The Hindu.

    Feature Image Credit: rediff.com

     

  • In Amman, life moves in slow motion

    In Amman, life moves in slow motion

    Amman Protests in April in support of Palestinians. Image from Reuters.

    On a Tuesday evening outside the al-Kalouti mosque in Amman, Jordan, a crowd of men, women and children has gathered. They carry Palestinian flags and hold placards that read: “Food, Water and Medicine are Rights Not Privileges” and “Stop Ethnic Cleansing”. Some display images of Benjamin Netanyahu, Joe Biden and Abdel Fattah el-Sisi alongside condemnatory messages. In a voice close to breaking, a man yells: “We’re sorry, people of Gaza.”

    “It’s like my life is moving in slow motion. Looking at how the world is reacting and how people still justify the killing shows just how much our lives are worth in their eyes.” It triggers many emotions, she said, especially for the older generation that went through the Nakba, or the mass displacement and dispossession of Palestinians during the 1948 Arab-Israeli war.

    In Jordan, which shares a border with Israel and the West Bank, a heavy atmosphere has prevailed since October. Over half of Jordan’s population is Palestinian or of Palestinian origin, and in the capital of Amman, that number is far higher. Many have family in Palestine. “People are living in a ghost-like state,” said Jumana Abdin, a Palestinian Jordanian woman who lives and works in Amman. “It’s like my life is moving in slow motion. Looking at how the world is reacting and how people still justify the killing shows just how much our lives are worth in their eyes.” It triggers many emotions, she said, especially for the older generation that went through the Nakba, or the mass displacement and dispossession of Palestinians during the 1948 Arab-Israeli war.

    “In Germany, you have to wonder if you might get in trouble for expressing support for Palestine, but Amman feels like a refuge,” said David Ghannam, a Palestinian German working in the development sector in Amman, who travelled to Gaza in early 2023. “There’s a sense of unity in Amman. We’re all collectively mourning the loss of innocent lives.”

    Across Amman, signs of solidarity are ever-present: Palestinian flags hanging from shopfronts and in cafes; watermelon imagery on billboards, clothing and stationery; people donning keffiyehs; daily demonstrations near the mosque. Fundraisers are regularly held for Gaza, and businesses have carried out strikes in solidarity. Starbucks and McDonald’s stores across the city remain empty. In supermarkets, customers are embracing local products, a shift that stems from a refusal to purchase products from countries actively supporting Israel, such as the US and Germany.

    Another byproduct of the war has been a drastic drop in the number of tourists arriving in Jordan. Petra, which used to draw 4,000-5,000 daily visitors prior to October, has seen as few as 400 visitors on some days, according to the regional tourism authority. Bedouin-run shops in the famous archaeological site remain deserted. “We went through difficult days because the Bedouins’ main source of income is tourism,” said Hussein W, who runs the Harmony Luxury Camp in Wadi Rum. “Now the situation is better as visitors who did come spread the word saying things here are safe and stable. But we hope for an end to the war.”

    During the month of Ramadan, Amman’s streets usually come alive with decorations, and a festive air descends as people break their fasts at sunset with a variety of foods. This Ramadan, however, was different. “People are [hesitant] to exhibit any sense of celebration,” said Abdin. “Streets are less busy, restaurants are emptier, and people are staying at home more. On the other hand, fasting for over 14 hours heightened our sense of solidarity with our brothers and sisters in Gaza, who are going days without food or water.”

     

    Feature Image: al-monitor.com Jordanians keep up Ramadan Rallies for Gaza Ceasefire. 

    This article was published in April 2024 in mint lounge 

    The article can also be accessed from the author’s website https://yamunamatheswaran.com

  • Lessons for today? Why did Europeans conquer the world while other civilisations did not?

    Lessons for today? Why did Europeans conquer the world while other civilisations did not?

    There is no question that India, China, Egypt, and Persia, in particular, produced flourishing civilisations long before the Europeans. The axial period around which world history revolves, as constructed by Jaspers, between the 7th and 3rd centuries B.C., does not refer to Europeans but to the three great civilisations of China, India, and Persia.

    There is no question that India, China, Egypt, and Persia, in particular, produced flourishing civilisations long before the Europeans. The axial period around which world history revolves, as constructed by Jaspers, between the 7th and 3rd centuries B.C., does not refer to Europeans but to the three great civilisations of China, India, and Persia (see also Katzenstein). Nevertheless, Europeans conquered and colonised the world in the 18th and 19th centuries, not the other way around. There are essentially four explanatory approaches, which are not only mutually exclusive but also determine the self-image of large parts of the world to this day. Put simply, the twentieth century saw a political and, in large parts of the world, an economic decolonisation, but by no means a decolonisation of thought and self-understanding. Moreover, there is a danger that the Eurocentrism that needs to be overcome will only be replaced by ethnocentrism (as is currently the case in Russia and, to some extent, in Israel) or even a civilisational-cultural centrism that is no less problematic than Eurocentrism. China, in particular, is in danger of repeating the mistakes of the West.

    the twentieth century saw a political and, in large parts of the world, an economic decolonisation, but by no means a decolonisation of thought and self-understanding

    So, what are the four explanatory approaches mentioned above? There are two Eurocentric approaches: an Asia-centric approach and a globalist approach. The first Eurocentric approach explains the worldwide colonisation of Europeans in terms of an intellectual superiority that began either in the development of Greek thought or in the Middle Ages. However, since the European Middle Ages were extremely “dark,” there is no direct connection between Greek rationality and the supposed intellectual superiority of the Europeans. Rather, this connection was made possible only by the translations into Arabic of the most important Greek philosophers, such as Plato and Aristotle, and by further translations into Latin. From my point of view – and a little local patriotism is allowed here, as I live near Fulda – the rise of the Europeans began with a letter from Charlemagne to the monastery in Fulda, in which he praised the religious zeal of the monks, but harshly criticised their intellectual understanding of religion. This gave rise to the so-called Carolingian Renaissance of work, which for the first time saw physical and manual labour as equal value to spiritual development – although it is debatable whether this was the first time this happened. Still, the facts remain undisputed in this explanatory approach. As a result, inventions were made in ever-new waves, the sciences developed, and this ultimately led to spurts of individualisation, the struggle for freedom and human rights that characterised the entire 18th and 19th centuries in the European-American world. This intellectual advantage led to a military superiority that enabled the Europeans to colonise the world despite being vastly outnumbered. To this day, Euro-American civilisation considers itself superior to all others. As for violent colonisation, it is admitted that Europeans are “sorry” for it but that it has nothing to do with the essence of Euro-American civilisation, which is characterised by human rights, democracy, and freedom (see Kant, Hegel, Marx, Weber: for an overview see Stark).

    The second Eurocentric position also assumes European superiority but places it not in the intellectual but in the purely military sphere. The consequence is that Europeans owe their relative prosperity, democracy, and human rights not to themselves but to the violent exploitation of the entire world. Here, too, there are two variants, referring to the Spanish-Portuguese conquests and the Orange army reform in Holland. Since the Muslim armies’ extensive conquest of the Mediterranean region, the Iberian Peninsula had been engaged in a defensive struggle for almost seven hundred years, which ended with their conquest. This created a caste of highly skilled warriors who sought a new vocation after defeating the Muslim armies, which they found in the conquest of Central and South America. The reform of the Orange army, in turn, made modern warfare possible. Based on both, the Europeans first plundered the gold and silver in both Americas.

    Still, they soon introduced enslaved Africans, as they were more likely to survive the plantation work on the Caribbean islands than the indigenous peoples, who were nearly wiped out. The gold and silver shipped to Europe and the products of slave labour created a demand in Europe that was not met by Spain and Portugal but by England and the Netherlands – the Industrial Revolution was thus triggered by a demand created by the exploitation of large parts of the world, precious metals and the “black gold” of slave labour. “Incidentally, the discovery of the sea route to China and India also caused the decline of the Muslim empires and civilisations, as they were no longer the link between Europe and South and East Asia but stood isolated. Political decolonisation was eventually replaced by mostly indirect rule, in which the respective elites were supported militarily and economically to continue exploiting the population.

    In most cases, partial military intervention was sufficient for the industrialised states to maintain this system. In the world systems theory of Immanuel Wallerstein and Samir Amin, this practice was conceptualised by dividing the world into centres, semi-peripheries, and peripheries and defining it as a continuous influx of raw materials, goods, and people (brain drain) from the periphery to the mostly Western centres (Amin and Wallerstein).

     

                                                                                                                            

    A third explanation, however, is Asia-centric. In this view, the dominance of the Europeans and the hegemony of the United States are nothing more than an accident of world history. In this view, East and South Asia have always been the centre of the world economy and intellectual and civilisational development. More precisely, on the shores of the North Pacific and the Indian Ocean (including the Arabian Sea), a power shift has been taking place for thousands of years between China, India, and the Arab-Persian powers. Coincidentally, the retreat of China from about 1500 created a power vacuum in this area, into which the Europeans were gradually able to move. However, they could not compete with these civilisations. The current rise of the great empires and civilisations that were destroyed by European colonisation and Euro-American hegemony is nothing more than a return to the centre of the world, to the countries on the shores of the North Pacific and both parts of the Indian Ocean. In this view, the Europeans and the great powers that emerged from them are in no way superior, but rather the barbarians who caused an unprecedented bloodbath in colonisation and two world wars, including the Holocaust. Now, the centre of the world is returning to where it has always been (Abu-Lughod)

    Another approach is the globalisation approach. It assumes that every five hundred years or so, there has been a shift from one global political centre to the next, i.e., hegemonic empires’ rise, peak, and decline. For the late Andre Gunder Frank, we need to review the last 5000 years, not just the previous 500). At times, individual civilisations succeeded in becoming such hegemonic empires twice. Examples include the Egyptian society, the Chinese Empire of the Han dynasty, the Roman Empire, the Sassanid Empire (Persia), the Muslim Empire until its destruction by the Mongols, and finally European colonisation from about 1500.

    we need a floating balance and mutual recognition of the world’s civilisations

    The crucial question for today is whether globalisation will override this succession of great powers and civilisations or whether there will be a renewed, now genuinely global, struggle for world domination. In my view, we need a floating balance and mutual recognition of the world’s civilisations (Herberg-Rotzhe/Son). The rising civilisations are again faced with whether they will merely repeat the past mistakes and the ethnocentrism of the Europeans under different auspices or contribute to an equal coexistence of the world’s civilisations. And conversely, will the Europeans and the settler colonies they founded also learn to regard other civilisations as equals? Both perspectives will determine the fate of the 21st century if we do not want to experience yet another “bloody century”!

    References:

    Abu-Lughod, Janet: Before European Hegemony: The World System A.D. 1250-1350. Reprint edition. Oxford University Press: Oxford. 1991.

    Amin, Samir: Accumulation on a World Scale: A Critique of the Theory of Underdevelopment. (2 Volumes). Monthly Review Press: New York. 1974.

    Frank, Andre Gunder, The World System: Five Hundred Years or Five Thousand? Routledge: New York. 1996.

    Herberg-Rothe, Andreas and Son, Key-young: Order wars and floating balance. How the rising powers are reshaping our worldview in the twenty-first century. Routledge: New York. 2018.

    Jaspers, Karl: The Origin and Goal of History. Routledge: New York 2021 (original in German 1949).

    Katzenstein, Peter J.” Civilizations in World Politics: Plural and Pluralist Perspectives. Routlöedge: New York 2009.

    Stark, Rodney: How the West Won: The Neglected Story of the Triumph of Modernity. ‎ ISI Books: NewYork. 2015.

    Wallerstein, Immanuel: World-Systems Analysis: An Introduction. Duke University Press: Durham. 2004.

     

    Feature Photo Credit: Photo of ‘Monument of Discoveries’ in Lisbon. Photo by M Matheswaran. The Monument depicts Henry the Navigator followed by 33 pioneers, including Vasco-da-Gama whose exploration voyages were instrumental in establishing the Portuguese colonial empire, and thus begin the age of colonialism and imperialism.

    Image 1-Map: Asian empires and trade routes – the collector.com

    Image 2: Columbus reaching the Americas (actually the Caribbean) in 1492 – Wikimedia Commons

    Image 3: The story of the colonial looting of Africa – Photo of exhibit in African American Museum, Washington D.C. (Photo – M Matheswaran).

    Image 4: Robert Clive meeting Mir Jaffer in Battle of Plassey 1757 – the beginnings of the British Indian Empire – Wikimedia Commons.

     

     

     

  • Xi Jinping: Assessing his Foreign Policy

    Xi Jinping: Assessing his Foreign Policy

    All foreign policies must aim at attaining purpose, credibility, and efficiency. Purpose defines the main objectives that the country wishes to achieve through its international relations. Credibility comes from international recognition of its actions in this field. And efficiency allows implementation, at the lowest possible cost, of the desired purpose. These three notions, although interwoven and influencing each other, keep their own specificity.

             How does Xi Jinping’s foreign policy qualify in these three areas?

    Purpose

    Its purpose, in tune with that of the Chinese Communist Party before his arrival to power, is sufficiently clear. By 2049, the centenary of the founding of the People’s Republic, China should have achieved a prominence commensurate to its glorious past. According to former Australian Prime Minister Kevin Rudd, China marches towards the perception of its global destiny with a clear strategy in mind. Such destiny is none other than the resurrection of its historical glory (Rudd, 2017). Projects such as the Chinese Dream of National Rejuvenation, Made in China 2025, and the Belt and Road Initiative, converge in defining concrete goals that lead in that direction. This includes China’s “Great Unification” with Taiwan, the consolidation of a hegemonic position within the South China Sea, making China the epicentre of an Asian-led world economic order, and creating a global infrastructure and transportation network with China at its head. Xi Jinping visualizes the next ten to fifteen years as a window of opportunity to shift China’s correlation of power with the United States. Hence, Beijing seeks the convergence of energies and political determination towards this window of opportunity. The strategic compass of Xi’s foreign policy could not be more precise. Few countries show a clearer sense of its purpose.

    Credibility

             His foreign policy credibility presents a more mixed result. Vis-à-vis the Western World and several of its neighbours, China’s credibility is at a very low point. However, the situation is different in relation to the Global South, where Xi’s foreign policy promotes four interconnected initiatives to expand China’s influence. Besides the Belt and Road, whose objective is creating a China-led global infrastructure and transportation network, there is also the Global Development Initiative, the Global Security Initiative, and the Global Civilization Initiative. The first, the Global Development Initiative, aims to contrast the unequal distribution of benefits that characterize the West-led development projects with the inclusiveness and balanced nature of this China-led multilateral development project [Hass, 2023]. The other two initiatives, global security and global civilization, present rational and balanced options clearly differentiated from America’s overbearing approach to these areas. In the former case, China’s proposal promotes harmonious solutions to differences among countries through dialogue and consultation [Chaziza, 2023]. The Global Civilization Initiative, on its side, fosters cooperation and interchange between different civilizations, whereby the heterogeneity of cultures and the multiplicity of identities is fully respected [Hoon and Chan, 2023].

    The Hambantota Port in Sri Lanka is one of thousands project that China has helped finance in recent years – Image Credit: The Brussels Times (The so-called China’s debt-trap is a narrative trap).

           However, three dark areas emerge in Beijing’s credibility with respect to the Global South. Number one is the frustration prevailing in many of these smaller and underdeveloped nations, resulting from the contradiction between China’s openness as a lender and its severity as a creditor. This has given rise to the suspicion of a hidden agenda on its part and has led to the coining of the phrase “debt trap diplomacy”. Number two derives from the arrogance shown by Beijing towards the rights of several of its weakest neighbours, disregarding international law. This seems to delineate a tributary vision of its relations with them. Although this only affects China’s neighbourhood, it projects a haughtiness that contradicts its formulations about a more harmonious, equitable and inclusive world order. Number three is the apparent contradiction between Beijing’s proclamation regarding the value of the heterogeneity of cultures and the diversity of identities and its treatment of non-Han Chinese minorities at home. A feature susceptible to reproducing itself abroad. All the above generates a distance between words and deeds that casts a shadow of doubt concerning China’s sincerity. Hence, even within the Global South, China’s credibility shows a mixed result.

    Efficiency

    Finally, there is the area of efficiency. It is a very complex one, particularly given China’s over-ambitious purpose. It must be said that until 2008, Beijing succeeded in rising as a significant power without alarming neighbours or the rest of the world. It even attained the geopolitical miracle of doing so without alarming the United States. Indeed, few countries have made such a systematic and conscious effort to project a constructive international image as China has done to this date. This included the notion of “peaceful rise”, which implied a path different from that followed by Germany before World War I and Japan during World War II when they tried to overhaul the international political landscape. China’s path, on the contrary, relied upon reciprocity and the search for mutual benefit with other countries. It was a brilliant soft power marketing strategy that gave China huge goodwill dividends (Cooper Ramo, 2007).

    “Observe carefully; secure our position; cope with affairs calmly; hide our capacities and bide time; be good at maintaining a low profile; and never claim leadership” – Deng Xioping

    Regarding its reunification with Taiwan, it relied on “one country, two systems” and the economic benefits of their interconnection as the obvious means to propitiate their joining together. Regarding its maritime disputes in the South China Sea, after having deferred the resolution of this issue to a more propitious moment, it proposed a Code of Conduct to handle it in the least contentious possible manner. In general, similar approach was evident in Beijing’s handling of various contentious issues.  Beijing’s leadership followed Deng Xiaoping’s advice to his successors: “Observe carefully; secure our position; cope with affairs calmly; hide our capacities and bide time; be good at maintaining a low profile; and never claim leadership” (Kissinger, 2012, p. 441).

    “Like Europe, it has many twenty-first century qualities. Its leaders preach a doctrine of stability and social harmony. Its military talks more about soft than hard power. Its diplomats call for multilateralism rather than unilateralism. And its strategy relies more on trade than war to forge alliances and conquer new parts of the world” – Mark Leonard on China in 2008

    Writing in 2008, before the change towards a more assertive foreign policy materialized, Mark Leonard said about China: “Like Europe, it has many twenty-first century qualities. Its leaders preach a doctrine of stability and social harmony. Its military talks more about soft than hard power. Its diplomats call for multilateralism rather than unilateralism. And its strategy relies more on trade than war to forge alliances and conquer new parts of the world” (Leonard, 2008, p. 109). This phrase encapsulates well how China was perceived worldwide, including by the Western World. Not surprisingly, a 2005 world survey on China by the BBC stated that most countries in five continents held a favourable view of that nation. Even more significant was the fact that even China’s neighbours viewed it favourably (Oxford Analytica, 2005). It was a time when all doors opened to China.

    2008 represented a turning point. The convergence of several events that year changed China’s perception of its foreign policy role, making it more assertive. Among such events the most significant was the global economic crisis of 2008, the worst crisis since 1929, resulting from America’s financial excesses; other important events were the sweeping efficiency with which China avoided contagion; the fact that China’s economic growth was the fundamental factor in preserving the world from a major economic downturn; and the boost to Chinese self-esteem after the highly successful Beijing Olympic games of that year. In sum, the time in which China had to keep hiding its strengths seemed to have ended.

    Although this turning point materialized under Hu Jintao, changes accelerated dramatically after Xi Jinping’s ascend to power. He not only sharpened the edges of the country’s foreign policy but made it more aggressive, even reckless. Xi’s eleven years’ tenure in office has translated into a proliferation of international trouble spots. His overreach and overbearing style misfired, generating a concerted and strong reaction against China. As a result, the costs linked to attaining China’s purpose have skyrocketed. This deserves a more detailed analysis of China’s foreign policy efficiency under Xi.

    Intimidatory policies and actions

             Xi Jinping’s intimidatory policies and actions on international affairs have been extensive, bringing with them immense resistance.

    After dusting off a plan that had remained on paper for years, Xi decided to build seven artificial islands on top of the South China Sea coral reefs. After assuring President Obama they would not be militarized, he proceeded otherwise. Contravening international maritime law, he assigned 12 nautical miles of Territorial Sea and 200 miles of Exclusive Economic Zone to these artificial outposts.

    Under the protection of the People’s Liberation Navy, an oil rig was built in the waters claimed by Vietnam as its EEZ. Disrespecting the International Court of Justice’s ruling about the Philippines’ waters in the South China Sea, China has forcefully enforced its exclusionary presence in them. China’s Coast Guard is now authorized to use lethal force against foreign vessels operating within maritime areas under its jurisdiction claims. This, notwithstanding that China’s claimed jurisdiction, goes far beyond what is recognized by the U.N. Convention on the Law of the Sea or the International Court of Justice while disputed by several other countries.

    The People’s Liberation Army (PLA) began to ignore the median line in the Taiwan Strait, which it had respected for decades. Frequent and increasingly bold incursions within Taiwan’s Air Defence Identification Zone and reiterated calls to the PLA to prepare for war in Taiwan have become the new normal. The Senkaku-Diaoyu islands, disputed with Japan, have been declared one of China’s core interests, thus closing the door to a negotiated solution. This has translated into the systematic incursion of Chinese maritime law enforcement ships and planes into the territorial and contiguous maritime space of these islands, currently occupied by Japan. Beijing unilaterally imposed an Air Defence Identification Zone over two-thirds of the East China Sea, forcing foreign aircraft to identify themselves under threat of “defensive measures” by the PLA Air Force.

             Since 2017, China has reneged on the quite borders with India and engaged in a series of border skirmishes. It has resorted to intrusions into border regions under dispute resulting in a major skirmish in Ladakh with significant casualties, the first since 1987. In 2023, China released an official standard map showing India’s state of Arunachal Pradesh in Northeast India and Askai Chin plateau in the Indian territory of Ladakh in the west, as official parts of its territory, despite India’s objections. At the same time, it renamed 11 places in Arunachal Pradesh with Chinese names. When South Korea decided to deploy the US Army’s THAAD (Terminal High-Altitude Area Defence) ballistic missile defence, as protection against the growing North Korean threat, China put in motion an economic boycott of South Korean products and services. When Australia and New Zealand protested against Chinese interference in their domestic political systems, Beijing openly threatened to impose economic sanctions on governments or private actors criticising China’s behaviour. A few years later, it effectively banned most Australian exports when Canberra proposed an international scientific investigation on the origins of COVID-19. When Canada detained Huawei’s heiress, Meng Wanzhou, answering an American judicial request, Beijing jailed and presented accusations against two Canadian businessmen based in China (releasing them hours after Meng was released).

    Antagonizing Americans and Europeans

             Xi’s rhetoric in relation to the U.S. has been highly aggressive. Reversing the terms of Deng Xiaoping’s advice to his successors to hide China’s strengths while bidding for right time, Xi has alerted America about its intent to challenge and displace it as the foremost power soon. He has repeatedly referred; to the primacy of China in the emerging world order as its most important objective, to the next ten to fifteen years as the inflexion point when a change in the correlation of power between the two countries should be taking place, to the need to overcome the U.S.’ technological leadership, to the necessity for the PLA to ready itself to wage and win wars, and to the next ten years as a time of confrontation and dangerous storms.

    Xi Jinping starts his European tour in Paris on May6, 2024, his first in five years as China-EU trade relation have hit a low. Picture Source: Sky News.

             China’s actions have also antagonized the Europeans. These relate to China’s refusal to use the term “invasion” when referring to Russia’s actions in Ukraine; supporting the arguments provided by Russia concerning the causes of the war; placing the responsibility of the conflict on the US and the NATO; abstaining from voting in the U.N. on the West’s resolutions against Russia; demonstrating its strong strategic relations with Russia that is described as “partnership without limits”; the conduct of military exercises with Russia while war rages on in Ukraine; and providing indirect support for Russia’s war effort through surveillance drones, computer chips, and other critical components for its defence industry. Though all of the above are sovereign decisions of China, Europe, as China’s major trading partner, expects some support to their position and a neutral approach to the conflict from China.

    For the most part, Beijing’s above foreign policy actions were duly accompanied by a bellicose so-called “wolf warrior diplomacy”. It aggressively reacted to perceived criticism of the Chinese government.

    Domestic actions impacting its Image Abroad

    However, with its aggressive display in the international arena, some domestic actions have negatively permeated abroad. Brushing aside Deng Xiaoping’s commitment to respect Hong Kong’s autonomy for a period of fifty years, Xi reclaimed complete jurisdiction over such territory since his arrival to power. Within a process of actions and reactions, accelerated by the progressive strangulation of Hong Kong’s liberties, Beijing finally imposed a National Security Law over the territory. This ended the Hong Kong Basic Law, which guaranteed its autonomy. By burying the principle of “one country, two systems” established by Deng, Beijing was, at the same time, closing out any possibility of Taiwan’s willing accession to the People’s Republic. Henceforward, only force may accomplish that result.

    On the other hand, the brutal Sinicization of Xinjiang Province has shaken the liberal conscience of Western countries, with particular reference to Europe. The Uyghur population re-education camps have been compared to the Soviet’s Gulag. Beijing’s combative reaction to any foreign criticism in this regard, has compounded China’s image crisis in Europe.

    Any remaining trace of the so-called peaceful emergence of China has completely disappeared under Xi Jinping. Under his rudder, China has brought to the limelight a revisionist and tributary vision of the international order. Not surprisingly, interwoven policies and decisions emanating from different geographical points have been converging to contain China. In an unnecessary way, Beijing under Xi has been instrumental in multiplying the barriers to realising its purpose.

    Keeping China at bay

    The number of initiatives to keep China at bay has multiplied. Its list includes the following. The U.S., Japan, Australia and India created a strategic quadrilateral forum known as the Quad, which is none other than a factual alliance aimed at the containment of China. More formally, Australia, the United Kingdom, and the United States gave birth to a strategic military alliance with the same goal. On its side, Japan and Australia signed a security cooperation agreement.

    Leaving aside its restrained post-war defence policy, Japan doubled its defence budget to 2 per cent of its GDP. This will transform Japan to number three position worldwide regarding military expenditure, just behind the U.S. and China. Within the same context, Japan and the U.S. established a joint command of its military forces while agreeing to create a shared littoral force equipped with the most modern anti-ship missiles. Meanwhile, Japan is set to arm itself with state-of-the-art missiles. Overcoming their longstanding mutual mistrust, Japan and South Korea, jointly with the U.S., established a trilateral framework to promote a rules-based Indo-Pacific region. On the same token, Japan, the Philippines, and the U.S. held a first-ever trilateral summit aimed at defence cooperation and economic partnership. They pledged to protect freedom of navigation and overflight in the South China and East China Seas. Several joint naval exercises have taken place in the South China Sea to defend the principle of freedom of navigation, with France participating in the latest one.

    After several fruitless years of attempting to mollify China’s position concerning their maritime dispute in the South China Sea, the Philippines decided to renew its Mutual Defence Treaty with the U.S., which had elapsed in 2016. Meanwhile, most Southeast and East Asian countries on China’s periphery are rapidly increasing their military spending while  still continuing to support the U.S. security umbrella. Although pledging to remain neutral, even Vietnam, a traditional de facto ally of China, decided to upgrade its diplomatic relations with Washington to the highest level.

    America’s several decades policy of “strategic ambiguity” in relation to Taiwan evaporates as a result of China’s increasing threats and harassment to the island. On top of unambiguous support to Taipei by the President and the Congress, the Pentagon has formulated a military doctrine for  Taiwan’s defence in case of invasion. The idea of defending Taiwan if invaded is also taking shape in Japan.

    The European Union adhered to the U.S., the United Kingdom and Canada in sanctioning the Chinese authorities involved in human rights abuses in Xinjiang (the first such European sanction since Tiananmen in 1989). Equally, and for the same reasons, the European Parliament refused to ratify the long-time negotiated investment agreement between China and the European Union. China’s aggressive reaction to such a decision only toughened the European position further. Significantly, European contacts with Taiwan have increased as its democratic nature, and China’s harassment of it are providing a new light on the subject. In that context, the European Parliament officially received Taiwan’s Minister of Foreign Affairs.

    A gigantic containment Bloc

    France and Germany sent warships to navigate the South China Sea in defiance of Beijing’s claimed ownership of 90 per cent of the Sea. NATO’s updated “Strategic Concept” document, which outlines primary threats to the alliance, identified China for the first time as a direct threat to its security: “The People’s Republic of China’s (PRC) stated ambitions and coercive policies challenge our interests, security and values (…) It strives to subvert the rules-based international order, including in the Space, Cyber and Maritime domains (…)The deepening strategic partnership between the People’s Republic of China and the Russian Federation and their mutually reinforcing attempts to undercut the rules-based international order run counter to our values and interests” (NATO, 2022). Not surprisingly, NATO’s last summit included the heads of state and governments of Australia, New Zealand, Japan and South Korea.

    As a result of Xi Jinping’s actions and policies, China is now being subjected to a gigantic geostrategic containment force—a true block integrated by nations and organizations from four continents. For a country like China, which traditionally identified with political subtlety and enjoyed universal goodwill until not so long ago, this change in its strategic environment is not a small development. Xi’s calculations that acting boldly had become possible as China was powerful enough, its economy big enough, its neighbours dependent on it, and the U.S. resolve as uncertain have proved wrong and grossly misfired. At this point, China’s conundrum might leave China with few options short of war. According to former Australian Prime Minister Kevin Rudd, the 2020s have become the “decade of living dangerously”, as, within it, a war between China and the U.S. will most probably erupt (Rudd, 2022, chapter 16).

    In sum

    An evaluation of Xi Jinping’s foreign policy, using the notions of purpose, credibility, and efficiency as bases, would present the following result. Its purpose is crystal clear, which translates into a high mark. Credibility, on its part, shows mixed results: Not entirely unsatisfactory nor satisfactory. In terms of efficiency, though, Xi Jinping has openly failed. The lack of efficiency associated with his outreach adversely affects the attainment of China’s foreign policy purpose, creating countless barriers to its fulfilment. This lack of efficiency affects the country’s credibility as well. The downturn has been dramatic when comparing the current situation of China’s foreign policy to the one that prevailed before 2008 and, more precisely, to Xi Jinping’s ascension to power.

     

     

    References:

    Chaziza, M. (2023) “The Global Security Initiative: China’s New Security Architecture for the Gulf”, The Diplomat, May 5.

    Cooper Ramo, J. (2007). Brand China. London: The Foreign Policy Centre.

    Hass, R. (2023) “China’s Response to American-led ‘Containment and Suppression’”, China Leadership Monitor, Fall, Issue 77.

    Hoon, C.Y. and Chan, Y.K., (2023) “Reflections on China’s Latest Civilisation Agenda”, Fulcrum, 4 September.

    Kissinger, H. (2012). On China. New York: Penguin Books.

    Leonard, M. (2008). What Does China Think? New York: Public Affairs.

    NATO (2022). “NATO 2022 Strategic Concept”, June 29.

    Oxford Analytica (2005). “Survey on China”, September 20th.

    Rudd, K. (2022). The Avoidable War. New York: Public Affairs.

    Rudd, K. (2017). “Xi Jinping offers a long-term view of China’s ambitions”, Financial Times, October 23.

     

    Feature Image: bloomberg.com – Xi Jinping on visit to Belgrade, Serbia on 07 May 2024 (Xi says China will “never forget” the U.S. bombing of its Embassy)

  • Between the Devil & the Deep Blue Sea: Tackling India’s Internal Security Challenges

    Between the Devil & the Deep Blue Sea: Tackling India’s Internal Security Challenges

    Our ability to develop and prosper, both as a society and a nation, are wholly dependent on the smooth functioning of our democratic institutions and their ability to faithfully uphold the tenets laid down in our Constitution.

    Our progress since Independence has not been without bumps along the road. Not only has the detritus of Partition haunted us, but we have also had to confront antagonistic neighbours intent on grabbing territory, creating divisions and curtailing our economic development and influence around the world. They have tried to do this by resorting to conventional operations, grey zone warfare, including using terrorist groups. In addition, we’ve had to overcome our internal troubles as well, what V.S. Naipaul referred to as a “million mutinies”, rebellions and insurgencies, for the most part, along our border regions. Undertaken by our disaffected citizens, in most cases with external support, aspiring to establish their own independent homelands because of ideological or religious motivations or out of a sense of frustration at being treated as second-class citizens within their own country.

    The response of the State and Central Governments to these internal challenges has invariably been to initially attempt some sort of half-hearted political accommodation or initiative aimed at preserving the status quo and giving themselves political advantage. Once this fails, as it is bound to, the Central Armed Police Forces or the Army are brought in, depending on the levels of violence, to neutralise the insurgency and regain political and administrative control. This can take anywhere from a decade to three or more. The Mizoram Insurgency, for example, commenced in 1966 and was successfully terminated with the agreement being signed between opposing sides in 1986, while the Punjab Insurgency lasted from the mid-80s to the mid-90s, though there are efforts to restart it.

    Unfettered exploitation of natural resources and minerals from those resource-rich regions by large corporations and their political acolytes has led to the displacement of tribals from their homelands and added to their economic woes. Given that the political, security and administrative establishments are wholly compromised and corrupt, the tribals have alleged that they have had little choice but to take up arms in an effort to break the nexus and get their rightful dues.

    We’ve had similar problems in our North-eastern States of Assam, Nagaland, Manipur and Tripura, which continue to persist in fits and starts, aided, and abetted by China. We have also faced a long-running Maoist rebellion in our hinterland, organised and conducted by tribals from those regions. Unfettered exploitation of natural resources and minerals from those resource-rich regions by large corporations and their political acolytes has led to the displacement of tribals from their homelands and added to their economic woes. Given that the political, security and administrative establishments are wholly compromised and corrupt, the tribals have alleged that they have had little choice but to take up arms in an effort to break the nexus and get their rightful dues.

    The issue we seem to have failed to comprehend is the transformation that has taken place in understanding what constitutes the basic elements of national security.

    Fortunately, good sense prevailed within the political and security establishment, and the military, other than limited support in casualty evacuation and surveillance by the Air Force was completely kept out of ant-Maoist operations. The military’s job is not to protect marauding corporates but our sovereignty from the depredations of inimical elements, both internal and external. The dynamics of the Military’s involvement in countering the Maoist insurgency would have undoubtedly had serious repercussions within the military’s functioning, and over a period of time, would have adversely impacted our existing governance structures, much in the manner that some of our neighbours have been so affected. The issue we seem to have failed to comprehend is the transformation that has taken place in understanding what constitutes the basic elements of national security. Until the end of the Cold War and before the advent of globalisation, national security had purely military and economic connotations with the stress on territorial control. This was achieved by controlling the flow of information, goods and services and the movement of people through various means, including physical barriers. The advent of the Info-Tech revolution and the consequent move towards globalisation made it increasingly difficult for governments to control access to and the free flow of information, ideas, digital services, and finances.

    As Professors, Wilson and Donan, note in their book, ‘Border Identities: Nation and State at the International Frontiers’ (UK, Cambridge: University Press, 1998), “International borders are becoming so porous that they no longer fulfil their historical role as barriers to the movement of goods, ideas and people and as markers of the extent of the power of the state.”

    Perforce, governments the world over have been forced into the realisation, for many at great cost, that it has become impossible to lock up people or ideas and isolate them from the global discourse. Thus, in the context of the security of the state, more than just ensuring territorial integrity, it is the security of the people through sustainable human development that is non-negotiable. We are today at a stage where, while traditional physical threats continue to pose serious challenges, especially from China and Pakistan, it is the non-military threats that are more dominant. These arise, on one side, from the host of cross-border insurgencies that afflict us because of ethnic, ideological, economic or religious conflicts, and on the other side, because of policies that emanate from politics of exclusion and economic exploitation. In both cases endemic corruption due to the nexus between the political-bureaucracy-security establishment and criminal elements involved in the smuggling of drugs and weapons and human trafficking remains the common thread. As a result, we not only face the threat of violence but also have to confront the increasing spread of religious radicalization.

    For example, in the Northeast, as my colleagues, Lt Gen J S Bajwa (Retd), Maj Gen N G George (Retd) and I, have pointed out in our paper, ‘Makeover of Rainbow Country: Border Security and connecting the Northeast’ (Manekshaw Paper No 62, Centre for Land Warfare Studies, 2016), “we are faced with a trans-border insurgency affecting our states that has metamorphosed into a serious law and order issue due to trans-national criminal syndicates having established linkages with armed gangs that are opposed to the existing political status-quo. This has also been accentuated with these groups being used by China and Pakistan for meeting their own nefarious designs…. Criminal syndicates have extended their reach to include complete control and dominance over all smuggling activities, be it of small arms, psychotropic drugs, livestock, or human trafficking. This economic clout has enabled them to subvert elements within the political parties, the bureaucracy, and the security establishment….”. Thus, it appears that the defining characteristic of on-going insurgencies is that they are nothing more than “businesses”, using all means at their disposal to make a profit. Thus, we see that has been that they have never crossed the threshold of violence or mass mobilisation that would lead to the next logical phase; from insurgency to civil war, where insurgent forces take on the military in conventional operations. These regions are further adversely impacted by poor governance, ineffective policing, agonisingly slow judicial processes, and unchecked criminal activity. The ability of the local populace to oppose the injustices heaped on them has been very subtly neutralised using the Security Forces and Police with wide ranging powers, including in some regions the use of AFSPA, to maintain the status quo. Our ability to develop and prosper, both as a society and a nation, are wholly dependent on the smooth functioning of our democratic institutions and their ability to faithfully uphold the tenets laid down in our Constitution. This is not feasible without sustained focus on providing high quality of universal education, emphasis on social justice and inclusion and an unvarying commitment to ensuring accountability and the rule of law. Focus on infrastructure development in border areas as well as ensuring free and fair elections, greater accountability and breaking the existing nexus between criminal groups and the local political and administrative establishment and unethical corporate houses. Clearly, all stakeholders have to accept that resorting to the use of force in order to ensure a stable security environment is an unviable option with very limited positives.

    The ability of the local populace to oppose the injustices heaped on them has been very subtly neutralised using the Security Forces and Police with wide ranging powers, including in some regions the use of AFSPA, to maintain the status quo.

    Finally, a word with regard to countering terrorist actions such as the one that targeted Mumbai on 26 November 2008. Much has changed since then with our major cites becoming far less vulnerable thanks to a quantum enhancement of the coastal surveillance infrastructure as well as better coordination, integration and demarcation of responsibilities amongst the stakeholders such as the Indian Navy, Coast Guard, local police and the intelligence agencies. In addition, the establishment of integrated National Security Guards (NSG) hubs in Mumbai and other metropolises ensures much speedier response as well as better coordination with local police and their Special Weapons and Tactics (SWAT) Teams. Efforts have also been directed to enhancing training of personnel and upgrading technical capabilities.

    Unfortunately, politics has played a major spoilsport and two important initiatives planned in the aftermath of the Mumbai attack, the establishment of the National Counter Terrorism Centre (NCTC) and its intelligence data exchange architecture (NATGRID) have not fully fructified. There can be little doubt that these initiatives, if pushed through as visualised, would have been of immense utility in ensuring our ability to prevent and respond to terror threats in a timely and effective manner. To conclude, it would be fair to suggest that we face an extremely difficult and challenging internal security environment that is deeply entwined in, and impacted by, our external threat perceptions. Of necessity, we must adopt robust policies, with the requisite capabilities, to be able to respond appropriately so as to be perceived as a ‘hard state’ by our neighbours. This would give us the necessary space andenvironment to push through policies focussing on sustainable human development, which is the only feasible option to ameliorate our internal security challenges.

     

    Feature Image Credit: the diplomat