Tag Archives: india

Greek Debt Unsustainable: the Wikileaks Cables

Greek protests in front of Greek parliament

2011 Euro-crisis, Wikileaks Cables

Discussing the Greek financial crisis with her personal assistant on 11 October, German Chancellor Angela Merkel professed to be at a loss as to which option–another haircut or a transfer union–would be best for addressing the situation. (The term “haircut” refers to the losses that private investors would incur on the current net value of their Greek bond holdings.) Merkel’s fear was that Athens would be unable to overcome its problems even with an additional haircut, since it would not be able to handle the remaining debt. Furthermore, she doubted that sending financial experts to Greece would be of much help in bringing the financial system there under control. Within the German cabinet, Finance Minister Wolfgang Schnaeuble alone continued to strongly back another haircut, despite Merkel’s efforts to rein him in, while France and European Commission President Jose Manuel Barroso were seen to be in favor of a gentler approach. European Central Bank President Jean-Claude Trichet was solidly opposed, with IMF Managing Director Christine Lagarde described as undecided on the issue. Finally, Merkel believed that action must be taken to enact a Financial Transaction Tax (FTT); doing so next year, she assessed, would be a major step toward achieving some balance in relief for banks. In that regard, the Germans thought that pressure could be brought to bear on the U.S. and British governments to help bring about an FTT.

Euro-crisis Wikileaks Cables: EU Summit: Germans Prepared to Oppose Special Solutions for Greek Financial Crisis

…German Chancellery Director-General for EU Affairs Nikolaus Meyer-Landrut provided on 14 October, 2011 an overview of what Berlin planned to ask for and would be prepared to support. First, the German government wanted solutions that work within the context of current European legislation; accordingly, it would not agree to giving the European Financial Stability Facility (EFSF) a banking license, establishing a joint EFSF-European Central Bank Special Purpose Vehicle, or any other measures that would require legislative changes among the member states. On the other hand, the Germans would support a special IMF fund into which the BRICS (Brazil, Russia, India, China, and South Africa) nations would pool funds for the purpose of bolstering eurozone bailout activities. Meyer-Landrut also believed that a resolution of the Greek crisis will require greater private-sector involvement than was first thought, and that the eurozone must look beyond the technical aspects of a deal and focus instead on the actual progress that Greece will have to make, as regards both legislation and implementation. It was his further opinion that a full-term team will have to be ensconced in Athens for the purpose of monitoring the situation.

Bay of Bengal: ports against fishing

Strait_of_Malacca. Image from wikipedia

Bangladesh’s Chittagong, has… become a bottleneck. The Bangladeshis are modernising it… China is putting $200m towards upgrading the airport at Cox’s Bazar, the country’s southernmost tip, to attract investment and tourists.

Myanmar’s …new government, keen for foreign inflows to help rebuild the economy, has been approving projects that sat idle for years. Sittwe is one, but it looks small compared with the Dawei project on Myanmar’s Tenasserim coast… a deepwater port, industrial zone and highways to connect it with distant Bangkok, estimated to cost $8.5 billion.Thailand’s rulers dabbled for centuries with the idea of building a canal across the Kra isthmus, which would link their own gulf directly to the Andaman Sea and save days of costly shipping through the Strait of Malacca. Dawei should do the trick…. The Japanese are taking advantage of Myanmar’s opening to build a riverine port called Thilawa, south of Yangon.

The Chinese are exploring ways round their own Malacca-strait dilemma. They have been building new oil and gas pipelines across the whole of Myanmar starting from a new port-terminal at Kyaukphyu, near Sittwe….China’s activity in the Bay of Bengal is purely “defensive” [some say] but Indians versed in the “string of pearls” theory, which sees Chinese-built ports encircling India, will not be much comforted.

Amid the sometimes airy speculation, it is relatively easy to predict the effects on the repurposed waters of the bay. Yugraj Yadava, the director of an environmental watchdog in Chennai, says increased shipping is already eroding traditional livelihoods and polluting the sea. About 31% of the world’s coastal fishermen live and work on the Bay of Bengal, and they stand to lose huge tracts to the port-builders (and to rising sea levels, too). Mr Yadava says the bay still has some of the world’s healthiest natural fisheries, but they are under threat, not least from non-native species that stow away in long-haulers’ ballast.

Collisions between fishing vessels and commercial ships are becoming more frequent, as are snagged nets. All this will probably accelerate in the next few years. Before the Bay of Bengal falls victim to its new-found popularity, it might be good if some of its beneficiaries were to build a transnational maritime authority, to limit the damage.

Excerpts, The Bay of Bengal: New bay dawning, Economist,Apr. 27, 2013, at 40

Rio+20 Earth Summit; agenda and prospects

The Rio+20 United Nations Conference on Sustainable Development is much bigger than its [three] predecessors — Stockholm in 1972,-

Can NGOs be Foreign Agents? India Investigates Protests against its Nuclear Plant

The government intensified its drive against NGOs it suspects of being hostile to national interests, with the home ministry zeroing in on 77 organizations whose activities will be scrutinized following a crackdown on four NGOs for allegedly fanning protests against the Kudankulam nuclear plant.

A meeting chaired by finance minister Pranab Mukherjee on Tuesday was told by home ministry officials that the NGOs, mostly from the US and Europe, needed careful monitoring to check whether they were violating rules that guide funding and mandate their actions. The NGOs will be placed on a watch list with the external affairs ministry asked to ensure visa applications of their members are scanned….Most of the NGOs on the “watch list” receive funding from US and European countries…..However, Congress on Thursday supported the government’s moves with party spokesperson Manish Tewari saying that India’s attempts since the 1980s to achieve energy security was regularly thwarted by international interests. “This should be kept in mind by agencies probing the cases,” he said….People’s Movement Against Nuclear Energy (PMANE) convener S P Udaykumar has denied any links to foreign funds and has said he is associated with Swedish NGO Idea only in a research capacity. PMANE has served a defamation notice to Prime Minister Manmohan Singh for blaming foreign NGOs for being insensitive to India’s energy needs.  Government sources insist the agitators are fundamentally opposed to nuclear energy and argue that while China races to increase its power capacity, India’s attempts to cover a growing deficit are being stalled. The PM’s remarks were followed by bank accounts of four NGOs being frozen. CBI and Tamil Nadu police have filed cases.

The tough talking against NGOs could also escalate into a diplomatic row with the government adamant on acting against those it believes are responsible for funding domestic NGOs involved in political or semi-political protests or activities.Local protests organized at Kudankulam have derailed the commissioning of the first 1000 mw unit of the 4780 mw nuclear power plant in Tamil Nadu. The Rs 14,500 crore nuclear project has been built with Russian collaboration. Two units are nearly complete but as of now the bare minimum staff needed to ensure the plant systems are in working order is able to access the site…..PMANE has denied allegations that it is being funded by American NGOs to organise the protest.

Excerpts, Government intensifies drive against NGOs, to scrutinize workings of 77 more organizations, The Economic Times of India, Mar. 2, 2012

Is India Abandoning Legal Action against Biopiracy?

From the Press Release of Environmental Support Group Feb. 7, 2012

In a shocking development, the Karnataka State Biodiversity Board [India] has resolved in its 19th meeting held on 20th January 2012 that it will not prosecute institutions and companies who violate the Biological Diversity Act.This highly controversial and illegal decision was taken in the context of reviewing [Environmental Support Group] ESG’s complaint of biopiracy against Monsanto and its Indian subsidiary Mahyco who along with their collaborators (University of Agricultural Sciences, Dharwar; Tamilnadu Agricultural University, Coimbatore; Indian Institute of Vegetable Research, Lucknow; Sathguru Foundation, Hyderabad; United States Agency for International Development and Cornell University, New York) wilfully violated the provisions of the Biological Diversity Act by illegally accessing 12 varieties of brinjal endemic to India and genetically modifying it, resulting in a patented product – B.t. Brinjal. This constitutes biopiracy, a criminal violation punishable with prison sentences.

The resolution passed by the Board is as follows: “The subject was deliberated and it was clarified that the subject comes under the purview of the National Biodiversity Authority. Therefore, it was resolved that it is for the National Biodiversity Authority to take necessary action at their end against institutions/companies regarding alleged violations of provisions under Biodiversity Act 2002.”

There is little doubt that this controversial resolution was passed to unhook Monsanto and its collaborators from biopiracy charges. It is tenable to draw such a conclusion as the current action agitates against the consistent position held by the Board that ESG’s complaint of biopiracy has merit and action must be initiated against the violators per the advise of the National Biodiversity Authority….This retrograde decision flies in the face of an assurance given to Parliament by Smt. Jayanti Natarajan, Indian Minister of State for Environment and Forests, as recently as on 28 September 2011. The Minister had stated that “(b)ased on preliminary information placed before it, the National Biodiversity Authority has recommended in principle to initiate legal action against alleged violators for violation of various provisions of the Biological Diversity Act, 2002”. …

This is more than likely to encourage more cases of biopiracy by corporates and thus seriously compromise biodiversity heritage and the food and social security that it extends to millions. Further, it will allow the loot of our natural wealth for maximising corporate profits by agricultural, biotech and pharmaceutical companies, while irreversibly jeopardising the economic and ecological security of present and future generations.

Excerpts from PRESS RELEASE, Karnataka abandons obligation to prosecute violators of Biological Diversity Act, Environmental Support Group, Feb. 7, 2012

The Future of Nuclear Industry after Fukushima:unbeatable renaissance

US investors have been far too focused on the domestic policy toward nuclear power plants and the long lead time required building new reactors. But the reality is that the nation has only one new reactor under construction right now and nine in advanced stages of planning. Compare that to the 27 reactors under construction in China and the 50 additional reactors in advanced stages of planning.  While the US has growth stories of its own, the growth story for nuclear power, much like the growth story for oil and natural gas demand, is centered in the emerging markets.

61 reactors are under construction around the world, with a total maximum capacity of 65 GW. Furthermore, as Jim Fink describes in his recent Investing Daily article, Investing in Nuclear Power Remains a Compelling Choice , in addition to the 61 nuclear reactors under construction right now, 150 more are planned to come online over the next 10 years.

China is home to almost half of all nuclear power capacity (measured in GW) under construction. If we add in India, Russia and South Korea, the total jumps to well over 80 percent. The US, France, Canada and other developed markets are building reactors, but these projects account for only a tiny share of the 65 GW of capacity under construction.

Emerging markets have been even more vociferous in their defense of nuclear power. Five days after the earthquake crippled the Fukushima Dai-ichi plant, China halted approvals for new reactors until a safety review could be conducted and new safety plans put in place. But inspections are already winding down, and the country plans to release its new safety plan and resume approvals in August. Senior Chinese officials have indicated that the country will meet its target of 70 GW of nuclear power capacity by 2020 despite the post-Fukushima freeze.  China can rightfully claim that its fleet of reactors is among the safest in the world because the country is building third-generation plants such as the Westinghouse AP1000, an advanced reactor that can be cooled without access to external power sources. This feature would have prevented the partial meltdown at Fukushima.

Russia also ordered a safety review of its nuclear power plants, but the government has unequivocally stated that it will not abandon nuclear power and will continue to build new power plants. Russia also continues to build plants in other nations, including planned Russian-designed reactors in Turkey and Belarus. In fact, the latter deal was inked after the earthquake hit Fukushima Dai-ichi.

Russian Prime Minister Vladimir Putin has long been a proponent of nuclear power and has criticized Germany’s anti-nuclear stance on several occasions. For example, at a conference in late 2010, Putin chided German business leaders about the country’s plan to gradually phase out its nuclear reactors, observing that “The German public does not like the nuclear power industry for some reason” and adding “I cannot understand what fuel you will take for heating.” He followed up this comment with an incisive joke: You do not want gas, you do not develop the nuclear power industry, so you will heat with firewood?…Then you will have to go to Siberia to buy the firewood.”

But Germany’s decision to accelerate the closure of its nuclear plants will have Russian gas producers laughing all the way to the bank: Germany will need to import more natural gas to offset lost nuclear power capacity and provide baseload power to support the country’s growing dependence on renewable energy sources. Germany already imports more than half of its natural gas from Russia.  Russia’s aggressive build-out of nuclear plants in recent years is partly motivated by a desire to free up more natural gas for export. Ironically, this means that Russia is building nuclear power plants to support Germany’s efforts to shut down its domestic reactors.

Finally, India also ordered a safety review of its nuclear reactors, but Prime Minister Manmohan Singh has emphasized repeatedly that India must make use of nuclear power to meet its growing demand for electricity and emissions targets. Singh stated that safety standards for new Indian reactors would be world-class and that the country stands by its target of increasing nuclear capacity from about 5,000 megawatts ( MW ) today to 20,000 MW by 2020. Singh stated that further expansion is possible after 2020, though no firm decisions have been made.

In the immediate aftermath of Fukushima, many speculated that the Fukushima disaster would strangle the global nuclear renaissance. This jaundiced projection hasn’t come to fruition. Countries that were already anti-nuclear have hardened their stance, but the growth story is intact in China, India, Russia and other emerging markets. In short, the worst accident since Chernobyl has had a surprisingly modest impact on the global nuclear power industry.

Elliott Gue, Developing Markets Driving Growth for Nuclear Energy, NASDAQ, Aug. 3, 2011

Nuclear Deals: India and the Nuclear Suppliers Group

Confident in the large market it offers to the world’s nuclear suppliers, India has decided to shrug off new restrictions by a 46-nation cartel on the transfer of uranium enrichment and reprocessing technologies that potentially have military applications.

India, which has refused to sign the Nuclear Non-proliferation Treaty (NPT) on the grounds that it is discriminatory, pulled off a diplomatic coup in 2008 by securing a special waiver from the 46-nation Nuclear Suppliers Group (NSG).  Following a plenary in Noordwijk, the Netherlands, the NSG announced on Jun. 24 that it would “strengthen its guidelines on the transfer of sensitive enrichment and reprocessing (ENR) technologies,” diluting the clean waiver granted to India and exempting it from full-scope international safeguards.  Nuclear energy experts in India told IPS that the NSG’s move may be prompted by commercial concerns and an attempt to squeeze India into buying nuclear equipment in a market rapidly narrowing down in the wake of the Fukushima disaster.

“Given the present climate for nuclear energy, countries like France, Russia and the United States, which have already signed major nuclear commerce deals with India, are unlikely to back off”….India has ambitious plans to raise its nuclear power generation from the current 4.7 gigawatts to over 20 Gw by 2020. Besides Areva, Russia’s Rosatom and General Electric from the U.S. are among corporations negotiating for deals worth more than 100 billion dollars.

In an apparent warning to the NSG, India’s foreign secretary Nirupama Rao told television interviewers on Sunday that there are “leverages” that could be applies to countries unwilling to enter into nuclear commerce with India.  Rao said the U.S., Russia and France had, since the NSG announced its new policy, made known that they would stand by their commitments to India.  French ambassador to India Jerome Bonnafont confirmed in a Jul. 1 press statement that “this NSG decision in no way undermines the parameters of our bilateral cooperation,” and that France remained “committed to the full implementation of our cooperation agreement on the development of peaceful uses of nuclear energy signed on Sep. 30, 2008.”Coming after the decision of exemption from the full-scope safeguards clause, adopted in favour of India in September 2008, it (NSG decision) does not undermine the principles of this exemption,” the statement said.

Excerpt, Ranjit Devraj, INDIA: Unfazed by Nuclear Suppliers’ New Rules, Inter Press Service, July 6, 2011

 

 

Groups Against the Individual: human rights

When one category of citizens is singled out for privileged treatment, are the rights of others infringed? Phil Eidsvik, a Canadian salmon-fisher, thinks the answer is yes. He hopes his country’s newly re-elected prime minister, Stephen Harper, recalls a pledge he made five years ago: to oppose “racially divided fisheries programmes”, in other words, giving special fishing rights to indigenous groups.

But given the storm that Mr Harper’s comment provoked—he was accused of stoking white nativism—he is likely to proceed cautiously. And legal moves are now afoot to broaden the rights of indigenous fishermen. At present Canada upholds the rights of aboriginal groups to engage in traditional, subsistence fishing; hence regulators often open a fishery to a particular indigenous group for a limited time before a commercial catch begins.

One tribe, the Lax Kw’alaams, is fighting a legal battle for special rights in the field of commercial fishing, too, challenging the government’s contention that commercial harvesting only began with the arrival of whites, and so is not a traditional activity of Canada’s first inhabitants. All this horrifies Mr Eidsvik, who argues that the rights of other fishermen (including indigenous ones) are violated when a stretch of water is allocated to a particular tribe. “The individual is completely lost in the conflict over group rights,” he says, speaking for the British Columbia Fisheries Survival Coalition, an NGO.

Among the world’s liberal democracies, Canada stands out for the entitlements it grants to one group of citizens and for its open acknowledgment that there are hard trade-offs between individual rights and group rights. From South Africa to India, many countries have “affirmative action” policies, with the aim of correcting past wrongs by allocating a disproportionate share of jobs or educational places to groups that apparently need a leg up. But critics of the Canadian system say it goes further; it creates two levels of citizen by excluding indigenous people from conservation rules, and by exempting tribes from the accountability rules that other groups must follow. It is one thing to offer benefits to citizens who are felt to need them, another to water down the principle of equal citizenship.

Canada may be egregious, but, in one form or another, most democracies have to weigh the demands of groups against the rights of individuals—and getting the correct balance has become harder in the age of identity politics, when arguments about culture and even religion have replaced older ones over economics and class. Ostensibly at least, France has remained at the far end of the spectrum from Canada. French officials like to contrast their own policy of equal citizenship with the sloppy communautarisme—rights for specific groups—that some countries, including multicultural Britain, tolerate.

Whatever lies behind that French rhetoric, the question of group entitlement has been thrown into sharp relief in all rich democracies by the recent arrival of migrants whose “cultural practices” are at odds with any liberal understanding of rights. Extreme examples include the stigmatising of children accused of witchcraft; the practice of female genital mutilation; domestic violence; and forced marriages with partners in distant lands. Whenever those practices are tolerated, the victims are deprived of basic human rights—and the perpetrators enjoy a peculiar leniency.

As countries wrestle with those problems, realities often differ less than theories do. At least in the recent past, the French authorities turned a blind eye to polygamy among north African migrants. And if there are British inner cities where the Queen’s writ (in respect of equality of the sexes, say) hardly runs, something similar applies to the ghettos of Marseilles…

If the Arab uprisings prevail, will the resulting elected governments impose the will of the majority group—Sunni Muslim in Syria or Tunisia, Shia in Bahrain? Or will they be genuine liberal democracies, with guarantees that members of minorities will be treated no better and no worse than anybody else? That question is impossible to answer in advance, though there are many vulnerable groups, from the Christians of Syria to the Tuareg nomads of the Maghreb, who have reason to fear they might fare worse under free, universal suffrage than they did under secular despots.

Compared with the chaos that could accompany any regime change in the Arab world, decision-makers in stable places like Canada or France have an easy time of it; they are free to experiment and negotiate. And in any lively democracy, groups—defined by language, religion or simply voluntary association around an idea or a pastime—will bargain vigorously over things like language teaching or zoning rights for mosques. But a dangerous line has been crossed, and a bad signal sent to other places, if, in the name of group rights, the principle of equality before the law is openly breached.

Excerpt from Group rights v individual rights: Me, myself and them, Economist, May 14, 2011, at 75

Made in the USA is coming back

Labour arbitrage—taking advantage of lower wages abroad, especially in poor countries—has never been the only force pushing multinationals to locate offshore, but it has certainly played a big part. Now, however, as emerging economies boom, wages there are rising. Pay for factory workers in China, for example, soared by 69% between 2005 and 2010. So the gains from labour arbitrage are starting to shrink, in some cases to the point of irrelevance, according to a new study by BCG.

“Sometime around 2015, manufacturers will be indifferent between locating in America or China for production for consumption in America,” says Mr Sirkin. That calculation assumes that wage growth will continue at around 17% a year in China but remain relatively slow in America, and that productivity growth will continue on current trends in both countries. It also assumes a modest appreciation of the yuan against the dollar.  BCG predicts a “manufacturing renaissance” in America.

[However, while t]he opportunity for labour arbitrage is disappearing fastest in basic manufacturing and in China. Other sectors and countries are less affected. As Pankaj Ghemawat, the author of “World 3.0”, points out, despite rapidly rising wages in India, its software and back-office offshoring industry is likely to retain its cost advantage for the foreseeable future, not least because of its rapid productivity growth.

Nonetheless, a growing number of multinationals, especially from rich countries, are starting to see the benefits of keeping more of their operations close to home. For many products, labour is a small and diminishing fraction of total costs. And long, complex supply chains turn out to be riskier than many firms realised. When oil prices soar, transport grows dearer. When an epidemic such as SARS hits Asia or when an earthquake hits Japan, supply chains are disrupted. “There has been a definite shortening of supply chains, especially of those that had 30 or 40 processing steps,” says Mr Ghemawat.

Firms are also trying to reduce their inventory costs. Importing from China to the United States may require a company to hold 100 days of inventory. That burden can be handily reduced if the goods are made nearer home (though that could be in Mexico rather than in America).  Companies are thinking in more sophisticated ways about their supply chains. Bosses no longer assume that they should always make things in the country with the lowest wages. Increasingly, it makes sense to make things in a variety of places, including America.

Excerpts from Multinational manufacturers: Moving back to America, Economist, May 14, 2011, at 79

Nuclear Jitters: Enough to Stop Nuclear Power?

The additional fear inspired by the Fukushima disaster will be reflected in soaring costs for nuclear power worldwide, largely owing to demands for improved safety and insurance. Indeed, nuclear plants are prone to a form of panic transference: should a reactor of one design go wrong, all reactors of that type will be shut down instantly around the world.

In India, the dilemma is this: it has 20 nuclear plants in operation, with an additional 23 on order. With the country desperately short of power, and requiring energy to grow, concerned citizens are asking if nuclear is still the answer for India.

Prime Minister Manmohan Singh has cautiously announced a “special safety review” of all plants. “Not enough,” say about 50 eminent Indians, who at the end of March demanded a review of the country’s entire nuclear power policy for “appropriateness, safety, costs, and public acceptance”. The group also called for an “independent, transparent safety audit” of all nuclear facilities to be undertaken with the “involvement of civil society organisations and experts outside the department of atomic energy”. Until then, they demanded a moratorium on all nuclear activity and a revocation of recent clearances. This is as explicit as opposition can get.

How have other countries reacted? France, a global leader in nuclear power, initially avoided most of the global anti-nuclear concerns. But now it too is promising to upgrade its safety procedures, including a reassessment of the potential effects of natural disasters on nuclear plant operations, conceding that the occurrence of more than one natural disaster simultaneously had not been considered previously.  China, which has 77 nuclear reactors at various stages of construction, planning, and discussion, has said that it will embark on a wide-ranging review, but Russia has announced that it will go ahead with its programme.

The US has just two under construction on its own territory, despite being the principal exporter of reactors. Meanwhile Denmark, Greece, Ireland and Portugal are strongly anti-nuclear, and Switzerland has stopped all nuclear power projects.  All of this will lead to cost evaluation and escalation. According to a study conducted by former Indian government minister Arun Shourie, the price of uranium could rise to $140 per pound, close to its record high.

Excerpt, Jaswant Singh, Now is not the time for energy-starved India to increase nuclear dependency, Guardian, April 29, 2011