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9 PM Daily NEWS Brief

9 PM Daily Brief – 19 January 2016

brief of newspaper articles for the day bearing
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[1]. AIIB formation signals structural alignment of Europe and Asia

The Hindu

Context:-

The Asian Infrastructure Investment Bank (AIIB) was launched on Saturday.

It is a a 57-nation lender, in which India and Russia are also major partners

Lending in dollars:-

The bank would lend only in U.S. dollars, defusing speculation that Beijing would use the institution to promote the internationalisation of the yuan.

The move is likely to channelise China’s foreign exchange reserves, which have so far been mainly siphoned into low-yielding U.S. treasury bonds.

Changing geopolitical architecture:-

New structural linkages between Europe and Asia through these developmental banks that have emerged outside the post-war Bretton Woods framework are changing the global geopolitical architecture, with Eurasia at the core.

Eurasia as core:-

Analysts point out that launch of the AIIB is another example of the reinforcement of economic bonds between Europe and Asia.

In fact, the run up to the formation of the bank opened cracks within the Atlantic Alliance.

Despite U.S. objections, European countries including Britain, France and Germany joined the AIIB. Australia and South Korea — top U.S. allies in the Asia-Pacific — also decided to participate in the development bank as its founding members.

EBRD:-

China also quietly became the 67th member of the European Bank for Reconstruction and Development (EBRD).

In 1991 it was formed to reinforce the unipolar world that had emerged following the Soviet Union’s collapse. Its focal area of interest was Eastern Europe, which was no longer under Moscow’s shadow, and had to be rapidly integrated in the western institutional web.


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China’s role:-

China is now the linchpin of the evolving world financial architecture.

The EBRD head, acknowledged that China, which was steering a Eurasian Silk Road connectivity initiative, was now a major pivot of global economy.

China’s growing economic and political clout had been accomplished in little over two decades of the Soviet Union’s collapse.

In recent years because of signs of weakness in the eurozone and so on, those countries in Eastern Europe have been trying to diversify their sources of investment.

The eastern European countries that have been looking for investors from Western Europe are now widening their portfolio and that includes China. It is a big win for our countries of operation to get China on board.

Not rivals:-

Far from being a rival, the New Development Bank of Brazil-Russia-India-China-South Africa (BRICS) grouping is also set to work closely with the AIIB.

Both “formal and informal” channels of communication for coordination had been established between the AIIB and the New Development Bank of the BRICS.

A “hotline” would be stabilised between the NDB and the AIIB, which were new institutions coming together with a completely different approach.


Opinions & Editorials


[1]. Towards a life of dignity and independence

The Hindu

Context:-

It was the United Nations’ International Day of Persons with Disabilities on December 3, but with a difference in Delhi. The 2015 commemoration coincided with 20 years of the passage of the relevant law, The Persons with Disabilities Act, 1995 — the first-ever legal protection in post-independent India exclusively targeting people with disabilities.

Accessible India Scheme:-

The Sugamya Bharat Abhiyan scheme was launched during the official function to mark the day for the disabled.

The Accessible India initiative aims to achieve a barrier-free environment within a specific time frame in relation to the built structures, transportation and in the arena of information and communication technology.

The new Bill on disabilities

It seeks to accord legal recognition to as many as 19 categories of disabilities, as opposed to just five under the current law.

The vacancies sought to be reserved in education and employment is close to twice the current proportion.

It incorporates penal provisions to ensure better enforcement.

[2]. Essential Start – Up Lessons 

The Indian Express

Context:-

In the light of the Start up India initiative the author discusses the aspiration, the reality and the stretch goal of this initiative.

Aspiration:-

Developing solutions:-

Wherever similar problems have been identified and partly solved elsewhere, we should unabashedly borrow solutions, giving credit where it is due.

There is a real opportunity here for Indian entrepreneurs to provide solutions to the developing world, much as the United States has provided solutions for the developed world.

The mobile money solutions from East Africa and low-cost medical diagnostics from India have speedily disseminated across the developing world already, as ready proof-of-concept.

There is some commonality across the classes of problems.

Would be entrepreneurs:-

We should also be mindful not just of those who are already entrepreneurs, but those who aspire to be.

Their voices are unheard in these web surveys.

These would-be entrepreneurs would likely put capital scarcity high up on their list of problems, as they would the difficulty of getting relevant skills to further realise their potential.

We should think of “start-up” and “stand-up” as applying to the broadest swathes of our society, not just e-commerce and mobile apps, as important as these are.

Reality:-

The substantive reality, it’s encouraging that policy machinery is coming into place.

We now have a structure in place within NITI Aayog for the Atal Innovation Mission (AIM), with appropriate governance to provide a forum to discuss issues and monitor policy progress

Stretch Goals:-

Stretch goals are simply goals that force us to “stretch” our capabilities beyond our usual performance.

Measuring Progress:-

All these policy initiatives will not amount to much if we don’t measure our progress.

What to measure and How to measure should be decided.

For this we need to have some short-run and medium-run goals.

For Example: – A short term goal can be to dramatically upgrade and expand our incubator ecosystem.

There is much that can be done to link the incubators on the input side to the university and laboratory ecosystem and on the output side to corporates .

Start up characteristics in Bureaucracy:-

In a start up one adopts a risk-taking and experimenting attitude, and works as part of a team.

Both these dimensions should be implemented in the government machinery more than they currently do.

Since entrepreneurship is a team sport, we need different policy initiatives of the government to work in concert, rather than in silos — for example, the AIM, the financial inclusion policies of the finance ministry and the RBI, the skill development attempts of that ministry, and the ministry of science and technology’s efforts to upgrade the scientific infrastructure.

[3]. Re-Imagining the Middle East 

The Indian Express

Context:-

The author suggests the approach that needs to be taken by India in its diplomatic ties with the Middle East.

Outdated Understanding:-

If Delhi has struggled all these years to find the balance in coping with the Arab-Israeli dispute, it must now deal with far more pressing challenges arising from the intra-Arab conflicts, the deepening sectarian faultlines and the mounting rivalry between Saudi Arabia and Iran.

India’s traditional anti-Western prism too looks outdated in understanding the region.

Changing Circumstances:-

Shrinking US Influence:-

After failed Western interventions in Iraq, Libya and Afghanistan, US Government is refusing to drag America into a new regional quagmire in the Middle East.

America may still be the most important power in the Middle East. But its hegemony is being chipped away on both the supply and demand side.

Emerging Russia:-

After four decades of marginalisation in the Middle East, Russia is actively intervening in the region.

End of Hostility between US and Iran:-

Extended hostility between the US and Iran has begun to ease after the resolution of the nuclear dispute between Tehran and the international community.

This has sent a chill down the spine of many Arab regimes that have long relied on American power as the guarantor of regional security.

Changing equations:-

The normally cautious Saudi Arabia has assembled a coalition of more than 30 countries to support its new regional activism.

The contestation between Riyadh and Tehran is now the dominant reality in Syria, Iraq, Bahrain and Yemen.

New Regional Dynamics:-

The new regional dynamic is illustrated by two other visits to the Middle East this week. One is by President Xi Jinping, who is travelling this week to Saudi Arabia, Egypt and Iran, and the other is a surprising dash to Riyadh and Tehran by Pakistan Prime Minister Nawaz Sharif, accompanied by the army chief, General Raheel Sharif.

China’s Role:-

China, which has largely kept itself away from the politics of the region, now looms large as a long-term economic and political partner.

China is now the largest importer of oil from the region. It wants to complement it by promoting Beijing’s “one belt, one road” initiative.

China has put itself in the middle of the Afghan peace process, and stepped up its political engagement with both Iran and the Arabs.

The Chinese navy has operated in the Gulf of Aden since 2008, and has begun to build a military base in Djibouti. Beijing is also likely to expand its arms sales and military assistance to the region.

Pakistan’s Agenda:-

The rare joint foreign visit by the Pakistan PM and the army chief underlines the impact of Gulf geopolitics on the subcontinent.

Although Islamabad is presenting the foray as an effort to “mediate” between Saudi Arabia and Iran, it is more a tightrope walk between a neighbour and a longstanding benefactor.

It is also about relieving the tension between Saudi pressure to join the war against Iran and the widespread internal opposition to it.

Like Pakistan, Bangladesh, too, is under intense pressure to pay back the Saudis.

Way forward for India:-

The emerging Middle East has little in common with India’s outdated perceptions of the region. Persisting with the traditional political timidity and posturing will cost India dearly.

To secure India’s vast and vital interests in the Middle East and to prevent the fires there enveloping the subcontinent, Delhi needs to liberate its policy from narrow domestic political considerations, look beyond oil and diaspora, and embark on a substantive strategic engagement with the region

[4]. The Big Fish 

The Indian Expresss

Context:-

The dominant banking culture in India is accused of working like a net that lets the big defaulters, including industrialists who have spent unwisely and lost huge amounts of money, escape without any penalties by restructuring their debts, while catching only the small borrowers.

SDRs:-

The RBI initiated the Strategic Debt Restructuring (SDR), which allows creditor banks to convert their unpaid loan into equity and take a majority ownership of the troubled firms.

This then allows the banks to look for new owners and redeem their investment. But till now, the SDR has been used by banks in nine cases, and there are question marks on its efficacy as an instrument to enforce compliance.

Pending Bankruptcy Bill:-

The government can help the RBI’s cause by passing the long-pending bankruptcy code. One of the key reasons why large defaulters tend to get away is that they can seek legal recourse, which is a very long-drawn-out process in India.

Under the proposed bankruptcy code, a solution will have to be found within 180 days.


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[5]. Right track

The Indian Express

Context:-

The first broad-gauge locomotive has rolled into the capital of Tripura on a trial run.

Agartala was the second northeastern city to get on India’s metre-gauge railway map in the 1990s.

Connectivity:-

Following further safety inspections, passenger services will commence in March, and travellers will be able to ride directly to Kolkata and points west and south. A bus service already connects the two cities.

But the route cuts through Bangladesh and excludes travelers without passports, which means most Indians on the move.

For non-passport holders who cannot afford airfares, the new rail link will be crucially important.

These lines will assume significance in the coming decades, when international rail links through Asia are expected to play large roles in trade and tourism, leaching traffic away from air and road networks.

Greater Political Impact:-

The political impact could be even more valuable than the efficiencies offered by rail transport.

The railway system has served India as a great unifier, binding together diverse cultures in a web of steel.

This will reduce the psychological distances which seem to sequester the Northeast.

[6]. Building the International Solar Alliance

The Business Standard

Context:-

Launched on the first day of the COP21 climate negotiations in Paris, it set the stage for India’s proactive and forward-looking leadership on climate change and the transition to a less carbon-intensive growth trajectory.

The main aims of ISA include reducing financial risk across a larger global market, encouraging cooperation on technology, building capacity, and increasing energy access.

Steps to create niche for ISA:-

Selecting the DG:-

A dynamic DG can draw attention to the alliance, build relationships with member states and other international institutions, interact with the media regularly, and develop a strategic plan.

The appointment of a DG will take time and will require consensus among member states. But a good choice would make the difference between leadership that can articulate and execute a vision and one that fails to grasp ISA’s potential.

Create a core ISA coordination group:-

Since its launch, the ministries of new and renewable energy, external affairs and other agencies have been discussing informally and working together to keep the ISA wheels moving.

A dedicated inter-ministerial group will be needed to distribute the workload, allocate funds, maintain contact with member states, and prepare related documents.

Issue a white paper on ISA governance:-

ISA is an inclusive multilateral institution but there is as yet lack of clarity on its governance structure. How will decisions be taken? Will contributions impact voting rights? How will the needs of advanced and emerging economies and those of smaller member states be balanced?

A paper outlining alternative governance models would draw in ideas from member states and other stakeholders and inform deliberations in subsequent meetings.

Launch an ISA website:-

The website should feature the ISA declaration, list of members and observers, minutes of meetings, proposed activities, a meeting calendar, governance structure, and, eventually, outcomes of ISA activities.

Issue monthly ISA briefings:-

Until a dedicated DG and secretariat are in place, regular press briefings and monthly updates to all ISA member countries would build support. The more ISA is in the news, the more its activities and potential will get attention.

Assess all proposals through a “value-add” lens:-

A number of ideas are beginning to come forward on what other institutions (private, public and inter-governmental) could do to shape ISA’s agenda, such as mobilising investments or deploying projects in member countries.

A “value-add” perspective – and measuring each initiative against stated aims – would help ISA specify its unique proposition for the benefit of members and investors rather than overlapping with other organisations..

Kick-start bold initiatives:-

It would be useful to launch one or two bold initiatives, which could capture the imagination of ISA members.

An “Energy Storage Prize” (to promote cross-country research and development collaborations) and a “Solar Rooftop Financing Initiative” (a financing challenge common to many countries) could trigger interest from innovators, project developers, bankers and other investors.

Establish formal links with private sector platforms:-

Many other renewable energy-focused organisations do not have strong links to the private sector. ISA can distinguish itself by giving private sector consortia observer or associate member status, encouraging them to design and implement ISA programmes, and build relationships for targeted investments.

Announce an ISA summit and expo:-

An annual or biennial summit and expo would draw further interest. Just as International Renewable Energy Agency organises its General Assembly around the time of the World Future Energy Summit in Abu Dhabi, the ISA summit could be held alongside RE-INVEST in New Delhi.

Build an ISA headquarters in New Delhi:-

ISA will need its recognisable location, branding and identity. On 25 January, Prime Minister Modi and President Hollande of France will jointly lay the foundation stone of the ISA building.

 The headquarters’ design should convey ISA’s vision, its open and inclusive governance, its emphasis on practical solutions and scale, and its purpose of delivering clean energy access to millions.


By: ForumIAS Editorial Team


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