- Hidden debt rising for partners of China’s BRI plan
- Afghan withdrawal &AUKUS: A Biden doctrine
- Urban missions to get big outlay
- Bihar’s Demand for special status to continue
Hidden debt rising for partners of China’s BRI plan
A new study has found under-reported debts to the tune of $385 billion in projects carried out in dozens of countries under China’s Belt and Road Initiative (BRI), with a rise in “hidden” debt on account of an increasing number of deals struck not directly between governments but structured through often opaque arrangements with a range of financing institutions.
GS-II: International Relations (India and its neighborhood-relations, Agreements involving India and/or affecting India’s interests)
Dimensions of the Article:
- What is Belt and Road Initiative (BRI) One Belt One Road (OBOR)?
- India’s Perspective of the BRI/OBOR
- Steps taken by India to Counter the BRI/OBOR
- About the study on Debts due to BRI
- China’s Debt-trap Diplomacy
What is Belt and Road Initiative (BRI) One Belt One Road (OBOR)?
- One Belt One Road (OBOR), also called the Belt and Road Initiative (BRI), the brainchild of Chinese President Xi Jinping, is an ambitious economic development and commercial project that focuses on improving connectivity and cooperation among multiple countries spread across the continents of Asia, Africa, and Europe spanning about 78 countries.
- Initially announced in the year 2013 with the purpose of restoring the ancient Silk Route that connected Asia and Europe.
- The project involves building a big network of roadways, railways, maritime ports, power grids, oil and gas pipelines, and associated infrastructure projects.
- The project covers two parts:
- The first is called the “Silk Road Economic Belt,” which is primarily land-based and is expected to connect China with Central Asia, Eastern Europe, and Western Europe.
- The second is called the “21st Century Maritime Silk Road,” which is sea-based and is expected to will China’s southern coast to the Mediterranean, Africa, South-East Asia, and Central Asia.
- Landlocked Nepal has also joined OBOR by signing a deal that will help it improve cross-border connectivity with China, and Pakistan is set to benefit from the $46 billion China Pakistan Economic Corridor (CPEC) that will connect southwestern China to and through Pakistan, allowing access to Arabian Sea routes.
India’s Perspective of the BRI/OBOR
- As China launched its OBOR in 2013, India displayed a lukewarm response to the proposal in view of its opacity and one-sided control with Beijing.
- However, Chinese empirical planning has ensured project inroads into the entire IPR with economic and strategic challenges to India in its immediate neighborhood in South Asia.
- India has been among the very few countries which didn’t attend Belt and Road Forum (BRF) in May 2017, attended by heads of 29 states and representatives from 100 countries, including the US and Japan.
- The principle opposition of India to CPEC is about the ‘core concerns on sovereignty and territorial integrity’.
- Even though the present ruling party has ensured strong relations with New Delhi, Chinese economic influence is evident.
- With Bangladesh formally joining OBOR initiative in 2016, New Delhi is making concerted efforts to maintain its balance.
- The political turmoil in Nepal in recent past has occasionally disturbed the strong relations with New Delhi.
- While recent cancellation of a few projects displays Nepal’s sensitivity towards ‘debt–trap’, it’s response to New Delhi led BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) exercise recently gave opposing signals.
- As China offers its ports for trade with land-locked Nepal, New Delhi is required to put up lot of economic and diplomatic efforts to ensure long term bonding with Nepal is closely maintained.
- While BRI has manifested itself as CPEC on India’s western front, the eastern side would be covered by CMEC (China Myanmar Economic Corridor).
- With MoU already signed, it intends to connect Yunnan province in China to Kyaukpyu port in Burma.
- The project would provide China an alternate route from Strait of Malacca for hydrocarbon supply, along with increased Chinese strategic presence in Bay of Bengal.
- With the change in government, the ‘debt trap’ has most glaringly been exposed with Hambantota port project in southern Sri Lanka.
- As present government realized its inability to pay off the huge debts and unviability of the project, the port was leased to Chinese for 99 years, a stark similarity to history of Hong Kong leasing to British Imperial powers.
- While Colombo has presently warded off possibilities of PLAN usage of these assets; future is uncertain considering the continuation of Chinese ‘cheque book diplomacy’.
- Maldives is the most glaring example of strategic value of BRI for Beijing.
- A small archipelago in Indian Ocean, its strategic location at the prime SLOC makes it a key asset.
- The years of Indian diplomatic, economic, and even military support has been dwarfed by the huge Chinese investment in a short time period.
Steps taken by India to Counter the BRI/OBOR
- India has taken its own steps to provide practical alternatives to BRI which are economically viable and strategically balance Chinese spreading sphere of influence.
- India has rightly transformed its ‘Look East’ policy to ‘Act East’ policy. Strong relations with Vietnam, pursuance of Trilateral Highway project, proposed Mekong-Ganga Economic Corridor, strengthening BIMSTEC and developing maritime relations with Indonesia and Singapore are steps in this ambit.
- Further with ‘Go West’ strategy, India is pursuing to be a partner in International North South Transport Corridor, ensuring access to Central Asia.
- India’s interest in development of strategic Chabahar port in Iran is viewed as a counter to Gwadar. Additionally, India and Japan are also collectively working on ‘Asia Africa Growth Corridor’ (AAGC).
- On the strategic front, India has donned the role of a ‘Net Security Provider’ in the Indian Ocean Region (IOR).
- The Indian Navy, transforming its operational philosophy to ‘mission-based deployment’ is playing a key role in ‘securing the seas’.
- Through the conduct of joint naval exercises such as Malabar, Varuna, MILAN, coordinated patrol with neighbouring regional navies; participation in RIMPAC (Rim of Pacific Exercise), KOMODO multinational exercises; goodwill visits to foreign ports and HADR (Humanitarian Assistance and Disaster Relief) – the Indian Navy has built strong partnerships with strategic partners.
- Further, through strong security relations with the IOR countries such as Seychelles, Mauritius and Oman and leading role in promoting collective security forums like Indian Ocean Naval Symposium (IONS), India has gained a leading and respectful position in the IOR.
About the study on Debts due to BRI
- A new study by AidData, a development research lab at the College of William & Mary in the U.S., has found that the Chinese debt burdens among many countries under China’s Belt and Road Initiative (BRI) are substantially larger than previously estimated.
- Notably, most of this debt remains hidden from the country’s accounts as an increasing number of the project deals are being struck not directly between governments but structured through often opaque arrangements with a range of financing institutions. Hence they remain systematically under-reported to the World Bank’s Debtor Reporting System (DRS).
- Currently, nearly 70% of China’s overseas lending is now directed to state-owned companies, state-owned banks, special purpose vehicles, joint ventures, and private sector institutions. This leads to what experts have termed as opaque lending practices of China.
- The study estimates that the average government is under-reporting its actual and potential repayment obligations to China by an amount that is equivalent to 5.8% of its GDP and collectively, these under-reported debts are worth approximately $385 billion.
- 42 countries now have debt exposure to China in excess of 10% of GDP. India ranked 23rd in the list of top recipients of Chinese loans from 2000 to 2017, receiving $8.86 billion.
China’s Debt-trap Diplomacy
- Research shows developing countries owe much larger debts to China than was earlier believe.
- They allege many loans to build infrastructure projects using Chinese contractors in strategically located developing nations are a form of debt-trap diplomacy.
- China is accused of extending excessive credit with the intention of extracting economic or political concessions when countries cannot honour their debts. This raises fears that China’s credit to countries such as Pakistan, Sri Lanka and Nepal could be a strategic disadvantage for India.
- There are reports about China using relatively high valued interest loans with short maturity lengths to fund mostly non-viable projects. This invariably impacts the ability of the borrowing nations to repay the debt back to China. This sort of predatory lending has resulted in debt distress in many borrowing countries.
- Chinese institutions use collateralisation to mitigate repayment risk and have been able to take over strategic assets in some countries. Also in some cases, the borrowing countries have been forced into accepting economic concessions in exchange for debt relief. For Example:
- Sri Lanka has had to hand over the Hambantota port to China over a 99-year lease due to the inability to repay back the Chinese loans.
- China has also secured a large swathe of land in the strategic Pamir mountains from Tajikistan in exchange for debt forgiveness.
- China has thus been able to use debt to establish a dominant position in the international development finance market.
- The financial and economic dominance may also be converted into political leverage which can be used to influence domestic and foreign policy decisions of indebted countries.
-Source: The Hindu
Afghan withdrawal &AUKUS: A Biden doctrine
In early July, when the U.S. was fast-tracking the troop pullout from Afghanistan, President Joe Biden said, “America didn’t go to Afghanistan to nation-build”. He said the U.S. met its strategic objectives in Afghanistan — bringing Osama bin Laden to justice and disrupting al-Qaeda’s networks.
After completing the withdrawal from Afghanistan, the Biden administration did not waste any time to announce its most ambitious new alliance — the AUKUS.
GS-II: International Relations (Foreign Policies and Treaties affecting India’s Interests)
Dimensions of the Article:
- About the U.S. Afghanistan War
- Why is the U.S. pulling back?
- America’s Mistakes
- About AUKUS
- Why was AUKUS needed?
- About the Biden Doctrine that is taking shape
About the U.S. Afghanistan War
- The United States invasion of Afghanistan occurred after the September 11 attacks in late 2001 and was supported by close US allies which had officially began the War on Terror.
- Its public aims were to dismantle al-Qaeda and deny it a safe base of operations in Afghanistan by removing the Taliban from power.
- US President George W. Bush demanded that the Taliban hand over Osama bin Laden and expel al-Qaeda; bin Laden had already been wanted by the FBI since 1998.
- The US and its allies rapidly drove the Taliban from power by December 2001, and built military bases near major cities across the country. Most al-Qaeda and Taliban members were not captured, escaping to neighboring Pakistan or retreating to rural or remote mountainous regions during the Battle of Tora Bora.
- Inside Afghanistan, the NATO coalition troops led by the U.S. quickly dislodged the Taliban regime and established a transitional government.
- In 2003, the then U.S. Defense Secretary announced that major military operations in the country were over.
- The U.S. focus shifted to the Iraq invasion, while in Afghanistan, western powers helped build a centralised democratic system and institutions. But that neither ended the war nor stabilised the country.
Why is the U.S. pulling back?
- Presidents, starting with Barack Obama, had promised to bring American troops back home from Afghanistan after the U.S. had reached the conclusion long ago that the war was unwinnable.
- In 2015, the Obama administration had sent a representative to the first-ever meeting between the Taliban and the Afghan government that was hosted by Pakistan
- Later, President Donald Trump appointed a special envoy for Afghanistan with a mandate to directly negotiate with the Taliban.
- In the agreement, the Trump administration promised that it would withdraw all American troops from Afghanistan by 2021.
- Donald Trump’s 2017 policy on Afghanistan, was based on breaking the military stalemate in Afghanistan by authorising an additional 5,000 soldiers, giving US forces a freer hand to go after the Taliban, putting Pakistan on notice, and strengthening Afghan capabilities.
- However, the US realised that the Taliban insurgency could not be defeated as long as it enjoyed safe havens and secure sanctuaries in Pakistan, the US changed track and sought Pakistan’s help to get the Taliban to the negotiating table.
- The negotiations began in September 2018 with the appointment of Ambassador Zalmay Khalilzad to initiate direct talks with the Taliban. After nine rounds of US-Taliban talks in Qatar, the two sides seemed close to an agreement.
Learning from History
- First, the U.S. went into Afghanistan without considering history sufficiently – i.e., from when Afghanistan was invaded by great powers in the 19th and 20th centuries as well.
- The British empire, which feared a Russian invasion to India via Afghanistan, sent troops to the country in 1839, ousted its ruler Dost Muhammad and established a client regime of its ally, Shah Shujah. But the British had to withdraw in the face of Afghan resistance, mostly by Pashtun warriors; while retreating in 1842, all of the British and Indian troops, except one doctor, were massacred by Afghans.
- In 1979, the Soviet Union sent troops to Afghanistan to salvage the country’s nascent communist regime, orchestrated a coup and established a friendly regime. The Soviets, faced with a bloody Mujahideen resistance (which was bankrolled and trained by the U.S., Saudi Arabia and Pakistan), had to pull back in 1989 in ignominy.
- Once they invaded Afghanistan, the U.S., given the mistakes the British and the Soviets committed, could have had a strategically focused campaign, targeting its enemy, al-Qaeda, which was behind the September 11 attacks.
- The U.S. should have gone after the terrorists, destroyed their networks and then withdrawn, but it wanted to topple the Taliban and rebuild a centralised “democratic” state in Afghanistan.
- After the Taliban regime was toppled and al-Qaeda driven back into the caves and mountains, the U.S. still had a chance to stabilise the country with help from its different factions and leave.
- The Taliban sought modest terms — Mullah Omar, their leader, should be allowed to return home. But the Americans rejected the offer and promised to destroy the Taliban in every corner of the country.
- The Taliban are an indigenous militancy with deep roots in Afghanistan’s Pashtun majority. Toppling them from power was easy, but defeating them in their country was not.
- The U.S. took Pakistan’s tactical support for its war on terror for granted, overlooking the fact that Pakistan had deep strategic ties with the Taliban.
- When the U.S. declared victory in Afghanistan prematurely and went on to invade Iraq in 2003, it became easier for Pakistan to assist the Taliban’s regrouping, at a time when the Afghan government was grappling with corruption and infighting on ethnic lines.
Surrender to the Taliban
- For the U.S., with the war becoming increasingly unpopular at home, President elects of the U.S. had to promise to wind it up. The U.S. has also been shifting its focus to East Asia where China is rising.
- The U.S. could have opted for a more orderly withdrawal. Instead, it surrendered to the Taliban’s terms to pull back its troops
- The Taliban have not defeated the Afghan troops yet. The Afghan government has about 200,000 battle-hardened soldiers, including the U.S.-trained elite special forces. The government still controls most of the country’s population centres. The U.S. should have used this stalemate, coupled with mounting pressure on Pakistan, to extract concessions from the Taliban.
- A new trilateral security partnership for the Indo-Pacific, between Australia, the U.K. and the U.S. (AUKUS) has been announced.
- An important aspect of this partnership would involve a trilateral 18-month effort to help Australia acquire nuclear-powered submarines.
- The partnership would also involve a new architecture of meetings and engagements between the three countries and also cooperation across emerging technologies like AI, quantum technologies and undersea capabilities.
- This trilateral grouping would be security-focused, implying that it would be different from — but complementary to — arrangements such as the Quad.
- The U.S. has announced that the new partnership is aimed at advancing strategic interests and upholding the international rules-based order, and promoting peace and stability in the Indo-Pacific.
- The three countries alongside Canada and New Zealand already share extensive intelligence through the Five Eyes alliance.
Why was AUKUS needed?
- Australia has felt increasing pressure from an assertive China. In order to balance this threat, Australia has been trying to strengthen its partnerships with India, the U.S. and the U.K to strategically balance out China.
- The U.S. too has been shifting its focus to the Indo-Pacific region given the potential of the region and also the increasing assertiveness of the Chinese whom it considers a challenger to its global dominance. In this regard, it has been focussing on strengthening bilateral partnerships with its traditional partners in Asia like Japan, South Korea, Thailand, the Philippines, and new partners like India and Vietnam. It has also been promoting new formations like the Quad.
- The U.K. has expressed its vision to engage more deeply with the Indo-Pacific.
About the Biden Doctrine that is taking shape
- At the outset, the U.S. decision to withdraw from Afghanistan appears as the U.S.’s strategic reluctance in avoiding taking responsibility to defeat terrorism globally and had also raised credibility questions on America’s power.
- However, a closer analysis with respect to the recent developments points to a rather strategic framework being adopted by the U.S. based on pragmatic realism.
- The U.S. would limit its focus on preventing terrorist attacks on the American homeland and would rather focus its attention on dealing with the geopolitical contest with China. This approach would allow the U.S. to retreat from other conflict theatres, and refocus its resources on tackling China’s rise. Tackling China’s rise is vital to America’s interests because an increasingly powerful China could challenge the U.S.’s global pre-eminence.
- This marks a drastic change given the liberal internationalism policy followed by the U.S previously, which saw it use its military and political power to address humanitarian issues and internal conflicts in some countries.
- Notably, however, despite the overwhelming signalling being given to China on U.S. intentions in the Indo-Pacific through the AUKUS alliance, the U.S. President ruled out a new Cold War in his UNGA address given recently.
-Source: The Hindu
Urban missions to get big outlay
The revamped versions of the Swachh Bharat Mission-Urban (SBM-U) and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) that Prime Minister Narendra Modi will launch would include convergence with the corresponding missions for rural areas and outcome-based funding for cities – according to top Ministry of Housing and Urban Affairs (MHUA) officials.
GS-II: Social Justice and Governance (Government Policies and Initiatives, Welfare Schemes, Issues arising out of the Design and Implementation of Government Initiatives)
Dimensions of the Article:
- Swachh Bharat Mission
- Swachh Bharat Mission-Urban (SBM-U)
- SBM-U 2.0
- AMRUT – Atal Mission for Rejuvenation and Urban Transformation (2.0)
Swachh Bharat Mission
- Swachh Bharat Mission (SBM) or Clean India Mission is a country-wide sanitation campaign launched on the day of Gandhi Jayanti, 2014.
- The Main objectives of SBM are:
- Elimination of open defecation,
- Eradication of Manual Scavenging,
- Implementing Modern and scientific municipal solid waste management and
- Bringing behavioural change regarding healthy sanitation practices.
2 missions of SBM
- Swachh Bharat Mission (Urban): Implemented by the Ministry of Housing and Urban Affairs (M/o HUA) for urban areas. Swachh Bharat Mission-Urban (SBM-U) recently achieved its target of creating Urban India Open Defecation Free (ODF)
- Swachh Bharat Mission (Grameen): Implemented by the Ministry of Drinking Water and Sanitation (M/o DWS) for rural areas. Swachh Bharat Mission (G) Phase-I: The rural sanitation coverage in the country has increased from 38.7% to 100%. More than 10 crore individual toilets have been constructed since the launch of the mission. All rural areas in all the States have declared themselves ODF as on 2nd October, 2019.
Swachh Bharat Mission-Urban (SBM-U)
- The Swachh Bharat Mission – Urban (SBM-U), launched on 2nd October 2014 aims at making urban India free from open defecation and achieving 100% scientific management of municipal solid waste in 4,041 statutory towns in the country.
- Phase 1 of the mission lasted till October 2019. Phase 2 will be implemented between 2020–21 and 2024-25.
- Current status of Swachh Bharat Mission-Urban (SBM-U)
- Since its launch in 2014, Swachh Bharat Mission-Urban (SBM-U) has made significant progress in the area of both sanitation and solid waste management.
- 4,324 urban local bodies have been declared Open Defecation Free, which has been made possible through the construction of more than 66 lakhs individual household toilets and over 6 lakhs community/ public toilets, far exceeding the Mission’s targets, the statement highlighted.
Success of Swachh Bharat Mission-Urban (SBM-U)
- SBM-U was launched with a twin objective of making urban India Open defecation Free along with 100% scientific solid waste management.
- Almost all urban India is now Open-Defecation-Free (ODF).
- Scientific processing of solid waste, which stood at less than 20% at the start of the Mission in 2014, has more than tripled and now stands at 65%.
- In the Swachh Bharat 2.0, the government is trying to tap other aspects under the Swachh Bharat mission including safe containment, transportation, disposal of faecal sludge, and septage from toilets.
- Under this mission, all wastewater will be treated properly before it is discharged into water bodies, and the government is trying to make maximum reuse a priority.
- It also focuses on source segregation of garbage, reduction in single-use plastic and air pollution, by effectively managing waste from construction and demolition activities and bioremediation of all legacy dump sites
- It will be implemented over five years from 2021 to 2026 with an outlay of Rs.1.41 lakh crore
- This will be a continuation of the Swachh Bharat Mission (Urban), with the following components for funding and implementation across all statutory towns, viz.
- Sustainable sanitation (construction of toilets)
- Wastewater treatment, including fecal sludge management in all ULBs with less than 1 lakh population (this is a new component added to SBM-U 2.0)
- Solid Waste Management
- Information, Education and Communication, and
- Capacity building.
- At the end of the Mission, the following outcomes are expected to be achieved:
- All statutory towns will become ODF+ certified
- All statutory towns with less than 1 lakh population will become ODF++ certified ,
- 50% of all statutory towns with less than 1 lakh population will become Water+ certified
- All statutory towns will be at least 3-star Garbage Free rated as per MoHUA’s Star Rating Protocol for Garbage Free cities
- Bioremediation of all legacy dumpsites.
AMRUT – Atal Mission for Rejuvenation and Urban Transformation
- Atal Mission for Rejuvenation and Urban Transformation (AMRUT) is a Centrally Sponsored Scheme that was launched in 2015, by the Housing and Urban Affairs.
- AMRUT aims to ensure that every household has access to a tap with the assured supply of water and a sewerage connection.
- The Priority zone of the Mission is water supply followed by sewerage.
- AMRUT also aims to reduce pollution by switching to public transport or constructing facilities for non-motorized transport and to increase the amenity value of cities by developing greenery and well-maintained open spaces.
- An Apex Committee (AC), chaired by the Secretary, MoHUA and comprising representatives of related Ministries and organisations supervises the Mission.
- The Components of AMRUT are:
- Capacity building,
- Reform implementation,
- Water supply,
- Sewerage and septage management,
- Storm water drainage,
- Urban transport and
- Development of green spaces and parks.
- The reforms aim at improving delivery of citizen services, bringing down the cost of delivery, improving financial health, augmenting resources and enhancing transparency. It also includes replacement of street lights with LED lights.
AMRUT 2.0 mission
- AMRUT 2.0 mission will help in making cities self-reliant. It will ensure water security across the cities.
- This mission has been launched with the aim of providing 100 percent coverage of water supply to all households in 4,700 urban local bodies.
- This target will be achieved by providing 2.68 crore tap connections and 100% coverage of sewerage across 500 AMRUT cities.
- An outlay of Rs 2.87 lakh crore has been sanctioned for this mission.
-Source: The Hindu
Bihar’s Demand for special status to continue
The CM of Bihar said that his government had not dropped the demand for special category status for Bihar.
Prelims, GS-II: Polity and Governance (Centre-State Relations, Federalism, Constitutional Provisions)
Dimensions of the Article:
- What is Special Category Status (SCS)?
What is Special Category Status (SCS)?
- Special category status is a classification given by the Centre to assist development of states that face geographical and socio-economic disadvantages.
- This classification was done on the recommendations of the Fifth Finance Commission in 1969.
- It was based on the Gadgil formula. The parameters for SCS were:
- Hilly Terrain;
- Low Population Density And/Or Sizeable Share of Tribal Population;
- Strategic Location along Borders With Neighbouring Countries;
- Economic and Infrastructure Backwardness; and
- Nonviable Nature of State finances.
- SCS was first accorded in 1969 to Jammu and Kashmir, Assam and Nagaland. Since then eight more states have been included (Arunachal Pradesh, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura and Uttarakhand).
- There is no provision of SCS in the Constitution.
- Special Category Status for plan assistance was granted in the past by the National Development Council to the States that are characterized by a number of features necessitating special consideration. Now, it is done by the central government.
- The 14th Finance Commission has done away with the ‘special category status’ for states, except for the Northeastern and three hill states. Instead, it suggested that the resource gap of each state be filled through ‘tax devolution’, urging the Centre to increase the states’ share of tax revenues from 32% to 42%, which has been implemented since 2015.
Benefits to States with SCS:
The Centre pays 90% of the funds required in a centrally-sponsored scheme to special category status states as against 60% or 75% in case of other states, while the remaining funds are provided by the state governments.
Unspent money does not lapse and is carried forward.
Significant concessions are provided to these states in excise and customs duties, income tax and corporate tax.
-Source: Hindustan Times