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Insights Daily Current Events, December 16, 2013

ARCHIVES

December 16, 2013

NATIONAL

Chinese troops apprehend Indians in Chumar

  • Chinese troops have apprehended five Indian nationals in the Chumar area of Ladakh, well inside the Indian territory, and took them to their side of the border perhaps the first incident of this kind along the Line of Actual Control (LAC) in an apparent bid to stake their claim on the area.
  • The five nationals were handed over to the Indian side by the PLA troops, after some efforts were made in this regard under the existing border mechanisms between the two countries.
  • The incident has taken place after PM Manmohan Singh had signed the Border Defence Cooperation Agreement (BDCA) with China in October, 2013 seeking to prevent any flare-ups between the armies of the two countries on the LAC.  The Defence Minister A.K. Antony recently had warned that the new border pact does not guarantee that nothing would happen in these areas in the future.
  • Transgressions by the Chinese troops have taken place often in Chumar, the only place along the Indo-China border where the Chinese do not have any direct access to the LAC.

Courtesy – http://www.hindustantimes.com/Images/Popup/2013/4/25_04_pg1a.jpg (image)

 Mind-Mapping:

  • Border issue between India and China since Independence – Aksai Chin & Arunachal Pradesh. Reasons for it.  What are the measures/steps taken by Government of India (GOI) in this regard? What was the outcome of such measures? What is LAC?
  • What was the objective with which BDCA was signed?
  • How do the recent transgressions of the Chinese troops effect/impact India-Chinese Relationship? How can this issue be solved?

For more about India-China relationship & Border Agreements refer our Insights Current Events Analysis, October 2013.

More tribes demand formation of council on line of Lepchas

  • With the formation of the Lepcha Development Board by the West Bengal government, there has been a demand for formation of a council on similar lines by other tribes in Darjeeling Hills.
  • They demanded a separate Limbu Tribal Development Council and inclusion of Limbu language in the schools of West Bengal.

Related Information:

Lepcha is a Tibeto-Burman language spoken in Sikkim, Darjeeling district in West Bengal in India, and in Nepal, and in several villages of Samtsi district in Bhutan. The tribal homeland of the Lepcha people is referred to as ‘hidden paradise’ or ‘land of eternal purity’. Most of the areas in which Lepcha is spoken today were once Sikkimese territory. The Lepcha are believed to be the aboriginal inhabitants of Sikkim. Today the Lepcha people constitute a minority of the population of modern Sikkim.

Courtesy – http://www.lepcha.info/

Mind-Mapping:

  • Why was Lepcha Development Board formed? Why are other tribes of West Bengal demanding for a similar board?
  • What are the issues/problems that tribal people face? Also relate to the recent issue with the tribes of Andaman & Nicobar Islands.
  • What are the provisions available in the Constitution of India, inorder to protect or safeguard the interests of the tribal people?
  • Significance of PESA Act in this regard?

INTERNATIONAL

India-Canada Bilateral relationship: Civil Nuclear ties, Energy Security, Investment

  • India and Canada are aiming for closer partnerships in civil nuclear energy and hydrocarbons with the dissipation of distrust that kept them estranged for 40 years after India had conducted a nuclear test in 1974.
  • In hydrocarbons tie-up, India will take first cargo of oil sourced from Canada’s east coast from the beginning of next year (January 2014). Indian refiners are interested in importing Alberta blended bitumen from its Saint John terminal. Canada’s ice-free marine terminal at Saint John would cater for Very Large Crude Carriers (VLCC), thus making transportation economical. (This would help Indian refiners as this product would be significant.)
  • This relationship would be supplemented with a “collaborative approach” in the civil nuclear sector, decks for which have been cleared with the signing of a civil nuclear accord and finalising of administrative arrangements. (Canada’s ties in the nuclear sphere had begun in the mid-1950s and lasted till India’s first nuclear test in 1974.)
  • India and Canada have just completed an energy dialogue which has been elevated from the bureaucratic to ministerial level.
  • The idea of developing shale oil and gas, mainly by the U.S. and Canada, has galvanized the geopolitics of the energy market. Three scenarios might emerge. First, the lowered gas prices will force key producers to readjust production and they may consider forming a cartel; second, gas may begin to be independently priced; and third, this independent pricing would ultimately have an effect on oil prices.
  • Also Canada is rich in Uranium, which would help India in its Energy security.
  • Both Prime Ministers had set the bilateral trade target at $15 billion by the end of 2015 fiscal. It would be assisted by a Comprehensive Economic Partnership Agreement (CEPA) (currently the negotiations for CEPA is going on). And with regard to Investments – Canadian pension funds are looking at India’s infrastructure requirements. The Canada Pension Plan Investment Board (CPPIB) had already announced investment of $200 million.

To know more about CEPA, CECA refer our Insights Current Events Analysis, October 2013.

Mind-mapping:

  • Reasons behind the distrust between the two countries (India & Canada) that kept them estranged for 40 years.
  • India’s approach towards meeting its energy needs? Steps taken by GOI in this regard.
  • Significance of CEPA, CECA. Difference between the two? The countries with which India has signed the pacts?
  • What do you understand by ‘geo-politics’? Significance of Geopolitics? Strategic relationship between the two countries?
  • India’s Nuclear Energy program?

Struggle in Ukraine reflects larger battle between Europe and Russia

  • There has been uprising in Kiev (Ukraine) over the Ukraine President’s refusal to sign far-reaching political and trade accords with the European Union (EU).
  • The West is regrouping after Russia and its hard realpolitik out manoeuvred Europe, which had relied on its soft power.
  • For both sides, the stakes are high. Western Europe is emerging from a five-year fiscal depression and is intent on renewing the eastward export of Western values; Russia is intent on blocking that advance and guarding its sphere of influence.
  • The Russia had threatened trade sanctions if Ukraine signed the pact with the EU. Russia also indicated a potential willingness to spend billions in a bailout for Ukraine, to protect its military and financial interests, which include Black Sea naval bases and transnational gas pipelines.
  • Whereas, the Western countries, by contrast, had mostly confined themselves on insisting that the Ukraine President to listen to his many citizens who want closer ties to Western Europe.

Mind-Mapping:

Strategic importance of Ukraine to both Russia and EU.

Kosovo, as an independent nation

  • Kosovo had declared independence from Serbia in 2008. However it is still not Kosovo is recognised by the United States and a majority of EU members. But five, including Spain, which is battling separatist movements of its own, refuse to recognise it.
  • Serbia is also vehemently against recognising Kosovo’s independence, and Russia, a staunch Serbian ally and a veto-wielding member of the U.N. Security Council, has blocked Kosovo’s U.N. membership, stifling its economic and political development.

Mind-mapping:

  • Is Kosovo an independent country? Issue with Kosovo.
  • Why has there been an opposition for Kosovo’s independent status? Stakeholders involved- what are their reasons for supporting as well as opposing Kosovo’s independent status? Stand taken by the United Nations (U.N) in this regard?

Courtesy – http://upload.wikimedia.org/wikipedia/en/e/e5/Kosovo_1913-1992_CIA.jpg (image)

Ireland gets final IMF payout as it exits rescue

  • The International Monetary Fund (IMF) has approved the 12th and last review of Ireland’s progress under its three-year rescue program allowing a final $890 million in support of its financial rebuilding.
  • Ireland has pulled back from an exceptionally deep banking crisis, significantly improved its fiscal position, and regained its access to the international financial markets.
  • The IMF along with the European Commission, Denmark, Sweden and Britain took part in the €85-billion ($117 billion) rescue of the country, which aimed to stop a deep balance of payments crisis as the country along with many others across Europe struggled in the economic downturn.

Challenges ahead:

  • Ireland still faces significant economic challenges. Unemployment is too high, public debt sustainability remains fragile and heavy private sector debts and banks’ slow progress in resolving nonperforming loans weigh on domestic demand.
  • Continued concerted policy implementation is therefore necessary for Ireland to recover fully from the crisis.

Mind-mapping:

  • Role and function of IMF and its relevance in the contemporary world (relevance to India)?
  • What was Euro-crisis all about? Reasons behind it? Its impact on India and other developing countries?

ECONOMICS

The real winners at Bali

  • At the 9th Ministerial meeting (on December 6th, 2013) at Bali in Indonesia, trade Ministers, representing the 159 members of the World Trade Organization (WTO), managed to reach an agreement. The fact that an agreement was finally possible was seen as more significant than the issues on which a consensus was reached. This is because the WTO and the Doha round, in particular, was losing its relevance off-late.
  • Days before the Bali meet, discussions, among trade officials, were leading to nowhere. It was widely feared that the Bali ministerial would go the way of all its predecessors.
  • The Doha development round was launched way back in 2001, soon after the terrorist attack in the U.S. in a bold move to infuse confidence in world trade. There were number of negotiations that took place during the 12-long years yet it failed to produce a single agreement.
  • WTO’s relevance, especially Doha negotiations and the very basis of multilateral trade that the WTO has been propagating was being questioned. Thus, as member-countries started reposing faith in bilateral agreements among countries and regional pacts to reap short-term gains, world trade was getting divided, making the eventual move towards multilateral trade that much more difficult. India and other developing countries, even while actively pursuing the bilateral route and regional pacts, had every reason to worry over the long-term consequences of the drift away from multilateral trade.
  • In many ways, the Bali agreement was driven by a fear that the big emerging economies would be left out of two giant trade pacts in the offing. Specifically, the U.S. and the EU have launched negotiations to conclude a trans-atlantic trade agreement. Japan and ten other Pacific Rim countries are getting close to finalising a Trans-Pacific Partnership. India, Indonesia, Brazil and Russia were unlikely to figure in the above pacts. But with a revived WTO, now the emerging economies can have a voice in the global trade.

Role of the new WTO Secretary-General, Roberto Azevedo:

  • The role of the new WTO Secretary-General, Roberto Azevedo, has been very significant. Before the Bali meet, there were apprehensions that a career diplomat from Brazil, a developing country, would not quite fit the role. Neither the E.U. nor the U.S. had backed his candidature unequivocally. In these circumstances, Mr. Azevedo pulled off a deal, which, under WTO rules, requires unanimous support from all members.
  • A revived WTO is good for all countries. Its success in years to come will depend how the more intractable parts of the Doha round are taken care of.

Implications on India:

  • The Bali Declaration has major implications for India and other developing countries. Of the two main issues ‘food security’ and ‘trade facilitation’ on which the agreement was reached, the former concerns India and other developing countries, which need to subsidise food for the poor, while the latter is significant for developed and developing countries
  • The core discussions on agriculture centred on two viewpoints on the price benchmark for the valuation of food stocks that a country can legally hold. India wanted current prices to be the basis, but that was not acceptable to the U.S. and many others. Among other reasons, it would involve amending the Uruguay Round agreements. India, as an alternative, proposed an interim solution.
  • The U.S. suggestion for a sunset clause of four years was not acceptable to India. A final deal was struck to have an interim agreement until a more permanent arrangement was worked out. So, obviously, many more rounds of discussions are on the cards.

Mind-mapping for this topic already done in the previous current events

A mission to secure currency for bitcoin

  • With India’s first bitcoin exchange gearing up to start operations hopefully by March,2014 hundreds of investors, enthusiasts and banking officials have come on a mission to convince the government that the virtual currency is enduring and serious.
  • Started in 2008, bitcoin is the most prominent amongst a group of digital currencies – money that exists in the form of computer code, that do not have a central issuing authority. These virtual currencies are stored in electronic wallets and can be traded on online exchanges and converted into cash.
  • At India’s first bitcoin conference organised by digital currency awareness organisation CoinMonk – the top issue was how to convince the government and regulators that the bitcoin ecosystem would be a valuable economic innovation and not the currency of choice for money laundering and illegal drug purchases.
  • According to the Director of Business Development at Buttercoin, bitcoin can help solve the problems of the unbanked rural population. And also it can be used as a potential remittance tool.

To know more about Bitcoin refer our Insights Magazine, November 2013

Mind-mapping:

  • What is Bitcoin? What implications would it have if Indian Govt. accepts Bitcoin?
  • What is the stand taken by RBI with regard to bitcoin?
  • What is the global scenario? Does legalizing/ accepting Bitcoin has more disadvantages than advantages, if so how?