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      in World Politics

      Why Are the Indian and Chinese Economies Decoupling?

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      Many experts argue India is the weaker power unable to take on China. In an article in Foreign Policy, James Crabtree argues that a trade war with China would be a bad idea for India. In his view, India’s “military is inefficient, underequipped, and dogged by procurement corruption scandals.” To develop its military strength, India needs a dynamic economy, and an “inward economic direction” would only benefit China in the long run. Therefore, an India–China decoupling is a terrible idea.

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      These analysts are wrong. Their argument against decoupling is based on three implicit assumptions. First, India is a deeply-divided country unable to act or respond decisively. Second, India is dependent on the Chinese economy for its growth. Third, China’s rise is inexorable and India has no option but to come to terms with it. These assumptions are true, but it is an error of judgment to treat them as unqualified truths.

      A Trip Down Memory Lane

      For Indians with longer historical memories than many of these experts, these arguments sound familiar. Anglo-Saxon publications have long hectored, advised and moralized on Indian issues. On July 5, 2014, the editorial board of The New York Times made a case against India’s membership of the Nuclear Suppliers Group. To be admitted, India needed “to sign the treaty that prohibits nuclear testing, stop producing fissile material, and begin talks with its rivals on nuclear weapons containment.”

      In response, Gurmeet Kanwal, a retired Indian brigadier-turned-defense analyst, called the editorial “partisan and condescending.” Some even saw it as neocolonial. He pointed to “the existential threat posed by two nuclear-armed states on India’s borders” that led India to develop its nuclear weapons capability. Kanwal argued that India had been a “responsible nuclear power” with a “positive record on non-proliferation” and had “consistently supported total nuclear disarmament.” In typical Sikh humor, he advised nuclear ayatollahs to focus on real proliferators and let go of the cap, roll-back and eliminate (CRE) stance they had adopted against India since the 1990s.

      Embed from Getty Images

      Just as India stood up to the US on the nuclear issue in the 1990s, it is capable of standing up to China in 2020. An India–China conflict is highly undesirable. Ideally, New Delhi and Beijing should be able to work something out over endless cups of tea. However, sanctimonious advice from foreign experts about dire consequences of an India–China decoupling has to be taken with a bucket, not a pinch, of salt.

      In 1998, India went nuclear despite dire predictions for its economy. Many in Washington assumed that India depended on the West for its economy. Barely seven years prior, India had experienced a serious financial crisis. The Gulf War and slowing exports to the US crippled an economy by rising deficits and increasing debt. The precipitous decline of the Soviet Union meant India no longer had a godfather to bail it out. So severe was India’s 1991 currency crisis that it had to pledge its gold reserves and liberalize its economy to get a bailout from the International Monetary Fund. In 1998, India was better off than in 1991 but certainly not in a strong position. Nuclear tests put it under immense pressure.

      At the UN, the Conference on Disarmament condemned Indian nuclear tests. In the preceding years, India had watched the West ignore the 1989 Tiananmen Square crackdown and fete China for its economic reforms. Condemnation for nuclear tests strengthened, not weakened, India’s response. It stood up to the West, ignored experts and upended nuclear apartheid. Today, India is again in a mood to defy experts and stand up to China.

      Like Love, Trade Is Complicated

      As troops amass on the India–China border, a full-scale economic war has broken out. It is leading to a structural break in the Indian economy. Both public opinion and political leadership is now committed to decoupling from China. In India, there is a ban on 59 Chinese apps by government authorities. Major trade bodies have formally announced boycotts of Chinese products. For instance, the Confederation of All India Traders (CAIT) has listed 3,000 such products. CAIT is a national umbrella organization with 40,000 smaller trade bodies and 70 million traders as members. The government has tightened country of origin rules for e-retailers and other sellers.

      Demand for Chinese products is declining. Xiaomi is no longer India’s top-selling phone. Samsung has replaced it. Increasingly, selling Chinese goods using Southeast Asian free trade agreements is becoming difficult. The existing business model of buying in China and selling in India is under pressure.

      In an additional twist, Indian tax authorities have conducted raids on Chinese companies and individuals for money laundering. It led to the arrest of a Chinese national. Apparently, he was married to a woman from India’s northeast border state of Mizoram, had spuriously obtained an Indian passport and been arrested earlier for espionage. It seems trade is not as simple as experts imagine it to be. Intelligence, influence and geopolitics are inextricably intertwined with trade, business and investment. In the India–China economic relationship, three largely forgotten factors are noteworthy.

      First, India enhanced trade ties with China not only for economic reasons but also geopolitical ones. Becoming a key market and investment destination for China was supposed to reduce the risk of conflict and wean Beijing off Islamabad. Aggressive Chinese actions have made India reconsider this strategy and change tack.

      Second, India’s manufacturing sector is reasonably well developed but has suffered from Chinese competition since China joined the World Trade Organization (WTO) in 2001. A 2018 parliamentary report concluded that Chinese imports were playing “a negative role for [India’s] domestic industry.” The report warned about the loss of jobs, an increase in bad debts for banks, a decline in tax revenues and a worrying dependence on China for critical products. It concluded that China does not play by WTO rules and “the problem of Chinese dumping is a matter of concern across the globe.”

      Embed from Getty Images

      India is not alone in having concerns about China’s abuse of WTO rules. A 2018 report to the US Congress expressed concern at “China’s continued embrace of a state-led, mercantilist approach to the economy and trade.” It detailed “substantial costs borne by WTO members as a result of China’s problematic trade regime” and  the challenges presented by its “non-market economic system.” Given China’s track record, there is a case to be made for India taking a more protectionist path.

      There is another tiny little matter. Protectionism has played a key role in industrialization for any latecomer. Furthermore, industrialization has been the key driver of economic growth. In a 2019 article, one of these authors observed that the first major act passed by Congress was the Tariff Act of July 4, 1789. Without protecting its infant industry, the US would not have emerged as an industrial power.

      Since 1978, China has followed the American playbook on steroids. It has powered through the largest and fastest industrialization in history. Its companies enjoy the advantages of infrastructure, cheap financing and political support. Therefore, they have been able to achieve economies of scale. As a result, Indian companies have been blown away. An India-China decoupling might give sectors from aerospace components to advanced pharmaceuticals a second chance.

      Third, Chinese imports into India are nice-to-have, not must-have, goods. Demand for them is elastic unlike the inelastic demand for energy from the Middle East and the US. An India-China trade war that leads to a decoupling of the two economies could lead to short-term pain but has a strong rationale for the longer term.

      The Shape of Things to Come

      In any case, experts forget that India is unlikely to turn entirely inward as it did after independence in 1947. Recently, billions of dollars have poured into India from the US. Reliance Jio, an Indian mobile internet company, raked in $15 billion in 10 weeks. This is indicative of a deeper trend. Given new geopolitical imperatives, India is now looking to boost economic ties with friendly powers. It wants Korean, Japanese, European and American firms to set up shop in the country. Foreign market players who can act nimbly would be in a good position to grab some of the approximately $60 billion China’s trade surplus with India. There are new investment, manufacturing and trading opportunities emerging as the status quo changes and a new order emerges.

      Many economists predict a short-term price shock as Chinese goods stop coming into the country. They forget that India has struggled with jobless growth even during the best of times. Decoupling with China could boost domestic manufacturing not only for large but also for medium and small industries. This would increase employment, tax revenues and even demand thanks to a multiplier effect. Improved job figures further increase political support for decoupling and decrease India’s need to subsidize agriculture so heavily. For decades, agricultural subsidies have put pressure on public finances. If a lower amount is spent on subsidies, pressure on the fiscal deficit would abate.

      To sum up, India has strong reasons to decouple and no longer consider WTO rules sacrosanct. A tectonic shift is underway. After World War II, a new rules-based order emerged. The end of the Cold War strengthened this order and led to visions that Western democracy was the final destination for all societies. With polarization and partisanship at home, Western democracies themselves are in peril. The order that emerged in 1991 is crumbling and a new one is about to emerge. History offers us lessons as to what to expect.

      In the past, India and China focused on their spheres of influence with the Himalayas keeping them apart. Both prospered. In this age of trade, peace and prosperity, a Chola empire based in the modern-day southeastern state of Tamil Nadu ruled Malaysia (Putrajaya), Indonesia (Srivijaya), Sri Lanka and the Maldives. The Middle Kingdom held sway over Mongolia, Korea and Japan. Both India and China could go back to sticking to their historic spheres and to trading with each other.

      At the moment, China has followed salami tactics and encroached on territory India claims as its own. China has also been meddling in Nepal, Myanmar and Sri Lanka, India’s key neighbors. Since  1963, China has been in a close alliance with Pakistan. Yet China has never played a role in the Indian subcontinent and cannot suddenly turn into an overlord here. Therefore, close India-China economic ties no longer make strategic sense.

      Additionally, China disingenuously claims to meet India halfway while insisting that the onus to improve the border situation lies entirely with its neighbor. This is a one-way, not halfway, diplomacy that suggests aggressive intent. The Chinese also seem determined to win the war of narratives and are enlisting the support of free market ayatollahs to do so. It is only natural that the Indian narrative is bound to be different. It is in sync with the new realities of the day, which drive India’s decision to decouple its economy from China. Trade, investment and deep economic ties are a jolly good thing with allies and friends, not with rivals and foes.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in Elections

      Donald Trump hopes for election boost from Kosovo-Serbia talks

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      The leaders of Kosovo and Serbia will meet at the White House on Thursday and Friday, in an encounter that some see as a push for a diplomatic win for Donald Trump to brandish during his re-election campaign.Kosovo’s prime minister, Avdullah Hoti, will meet with the Serbian president, Aleksandar Vučić, in talks that Trump aides say will be primarily about economic issues between the two countries, but may pave the way to a broader deal.The goal of the talks is “to create economic development that will then somehow change the dynamic amongst the political class”, said a senior adviser to Trump in a call with reporters earlier in the week. The adviser said it was not yet clear whether Trump would take part in the meetings – suggesting he would only meet the two leaders if there is a deal to be signed.Kosovo broke from Serbia after a war and Nato bombing campaign, and declared independence in 2008, but the two sides have no relations.The White House diplomatic push, led by the Trump loyalist Richard Grenell, has irritated some European diplomats, who say the EU’s long-running mediation process should be given priority.It has also prompted fears that a land swap could be on the table as part of the deal, which many believe would have knock-on effects in other parts of the Balkans. Grenell has long denied that a land swap is under consideration.Grenell, who has courted controversy as Trump’s ambassador to Germany and then as acting director of national intelligence, has also attracted criticism for his negotiation tactics. In April, Kosovo’s ousted prime minister Albin Kurti accused Grenell of mounting a coup to overthrow him so he could present Trump with a diplomatic success in an election year. “My government was not overthrown for anything else but simply because Ambassador Grenell was in a hurry to sign an agreement with Serbia,” said Kurti.A meeting at the White House planned in late June fell apart at the last minute after prosecutors at a court in The Hague announced they had filed a draft indictment against Kosovo’s president, Hashim Thaçi. The statement was released as Thaçi was already en route to Washington.Now, two months before the US election, the meeting will finally take place, with the emphasis on economic progress.“We can either sit around and continue talking about political issues that get us nowhere, or we can do something that President Trump thinks might work, and we’re going to test it to see if it works,” said the Trump adviser.The EU-brokered talks were on hold for two years after Kosovo imposed import tariffs on Serbian goods, but have recently resumed. Meetings in Brussels, including expert dialogue and top-level discussions, are planned for next week.The EU envoy for Kosovo-Serbia talks, Miroslav Lajčak, has said an EU-brokered deal to normalise relations between Belgrade and Pristina could be ready soon.“Let’s see how much time we need, but I am speaking about months, I am not speaking about years,” he said at a forum in Slovenia this week. “Both parties are committed, both parties are serious, respecting each other.” More

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      in US Politics

      Anohni on her new track R.N.C. 2020: 'It's me, screaming in the past, for the present'

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      I watched the Republican National Convention last week. It’s becoming harder to put into words the dread that many of us feel.What’s really happening? Toxic levels of corruption and collusion are devouring the US. Christian extremists want to turn the country into a religious state straight out of The Handmaid’s Tale.After bombarding us with media campaigns pressuring us not to wear masks in March and April, the US now accounts for 22% of all Covid-19 deaths worldwide. I personally know three New Yorkers who died in April, I believe as a result of this official guidance.Trump has stoked racist police violence in the US to even more atrocious heights. Scaring voters with fake tales of impending anarchy and “dark shadows”, he then promises that if re-elected he will crush BLM protesters and “restore law and order”. Is he getting this stuff from Steve Bannon or Mein Kampf? Probably both.Trump is hosting federal executions in the countdown to the election as another prong of his racist, fake “law and order” platform. Last Thursday, the US government defied Navajo tribal sovereignty and executed Lezmond Mitchell, injecting him with a massive quantity of pentobarbital in a death chamber in Indiana.Behind this curtain of carefully orchestrated chaos, the network of corporate lobbyists that form the core of the GOP pillage the US Treasury and dismantle scores of environmental regulations, driving the country and the world even more hopelessly into global boiling and mass extinction.Australian-born Rupert Murdoch blares his obscene propaganda into American homes, hypnotising viewers with lies, rage and fear-mongering. Meanwhile, 40,000 square miles of Australian wilderness burned last summer, killing over a billion animals. More than half of the Great Barrier Reef has collapsed in the last five years due to rapidly increasing ocean temperatures. The same kinds of awful, permanent losses are engulfing nature on every continent.For many people, economic suffering looms while Amazon, Facebook, Google, Tesla, Apple and others expand their global footprints, sucking dry local economies. Some of the CEOs pour the wealth of the world into colonial space programs. They fantasise that they might finally shed their dependence upon Mother Earth and become the heroic creators and patent-holders of life on Mars.Unlike the Koch brothers, who paid for the malevolent spread of climate change denial, today’s tech billionaires scent themselves with a pheromone of liberal philanthropy while monetising the dismantling of checks and balances that once helped to protect us. They take meetings with Trump, provide him with the viral platforms he needs to retain the presidency, advertise themselves as having done the opposite, and then hedge their bets in private. Huge swaths of California’s ancient redwood forests continue to burn around the perimeter of Silicon Valley.Incessant, nihilistic assaults on truth, empathy and the biosphere ensure that life on earth will become much, much worse.On the campaign trail in 2016, Trump’s team described him as the first presidential candidate since Harry Truman with “the guts” to “drop the bomb”. Trump stood there, grinning with pride, and a wave of nausea spread through me. I had the same feeling a few months ago, when I heard Trump utter the words “the Chinese virus”.What waits for us on the other side of this is a world undone by endless cataclysm and aching with senseless loss.The sound of this track, RNC 2020, is pretty rough. The loop is from a concert I did at a club in New York City in my early 20s. So that’s me screaming in the past … for the present.Can you visualize a different path forward? We all have to focus on this now, with everything we’ve got. More

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      in World Politics

      Can Colombia’s Former President Get a Fair Trial?

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      On Tuesday, August 4, via a short and unassuming tweet, the former president of Colombia, Alvaro Uribe Velez, informed the world that he was placed under house arrest. The news sent shockwaves throughout South America’s political circles and sparked protests across Colombia. Uribe’s house arrest order, issued by the supreme court of justice as part of a case investigating witness tampering and false testimony, is surprising and problematic for several reasons.

      For starters, it is the first time that a former president has been deprived of personal liberty in Colombia, a country where more than one recent head of state has questionable records, such as campaign financing by major drug cartels. Secondly, since March, Colombia has been in lockdown due to the COVID-19 pandemic, which means that individuals are for the most part already confined within their residences. Moreover, as former president and senator, Uribe doesn’t go anywhere in Colombia without a substantial security apparatus.

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      Thirdly, the former president is well known both nationally and internationally, which translates to extremely low flight risk and one that could have been addressed by merely confiscating his passport. Adding to the controversy of the supreme court’s order is the fact that, as recently as last year, individuals who pose actual security and flight risks, such as Revolutionary Armed Forces of Colombia (FARC) leaders Ivan Marquez and Jesus Santrich, were not preemptively detained despite probable cause and ended up fleeing Colombia to set up a dissident guerrilla movement.

      Lastly, Uribe should be presumed innocent until proven guilty, like any other citizen, as outlined in Article 29 of Colombia’s Constitution. However, it seems that given his high profile and political history, the supreme court is treating the former president differently. This is problematic for the rule of law in Colombia.

      Irregularities in the Process

      Under Uribe’s presidency, Colombia’s security was largely restored, narco-terrorism was fought head-on by the national government, numerous FARC leaders were captured, over a thousand drug traffickers were extradited to the United States, and large paramilitary groups demobilized under the auspices of the Justice and Peace Law. Uribe’s work and legacy, much of which was implemented in close coordination with the United States at the time, is also recognized internationally. One of the global voices against Colombia’s former president’s house arrest is US Vice President Mike Pence, who, on August 14, tweeted in solidarity, asking that Uribe be allowed to “defend himself as a free man.”

      Embed from Getty Images

      Given his former status as senator, Uribe’s case, which happens to be against left-wing Senator Ivan Cepeda, had Colombia’s supreme court as its original jurisdiction, in accordance with Article 235 of the constitution. Specifically, this case began in 2012 when Uribe filed a legal complaint against Cepeda accusing him of paying bribes to imprisoned criminals in exchange for testimony that would incriminate the former president and his brother for paramilitary activities during Uribe’s time as mayor of Medellin and governor of Antioquia. In 2018, an election year in Colombia, the supreme court flipped the accusation and charged Uribe with allegedly paying witnesses to testify in his favor and against Cepeda.

      Since its inception, the process against Uribe has been overly politicized and marred by irregularities, including the admission of illegally obtained wiretap recordings as evidence in the case. Over 20,000 illegal interceptions were made to Uribe’s cellphone, under a judicial order that was supposed to tap Congressmember Nilton Cordoba, not the former president. Making matters worse, as soon as the analyst from Colombia’s attorney general’s office in charge of the wiretap realized that the cellphone belonged to Uribe and not Cordoba, he notified his superiors. However, the illegal interceptions continued for nearly a month and were eventually submitted to the supreme court as evidence.

      There is a history of animosity between the former president and members of Colombia’s supreme court of justice due to alleged wiretapping of the court’s premises as well as judges’ phones by the security services during Uribe’s presidency. Compounded by the evident lack of procedural guarantees for a fair trial, Uribe resigned his seat as senator shortly after he was placed under house arrest and triggered a jurisdictional change. His case has now been passed on to Colombia’s attorney general and a lower court, in which Uribe expects a less politicized and more fair trial.

      The Need for Judicial Reform

      Although Uribe’s house arrest remains in force until a new judge takes over the case and decides whether to revoke or maintain the preliminary detention, public outcry has been heard throughout the country. The most salient example of an institutional double standard is the recent case of FARC commanders like El Paisa, who were never placed under house arrest pending trial as part of the 2016 peace process and then escaped to take up arms again. Observing this precedent, the judicial measure against Uribe is disproportionate, particularly since the former president has attended all of his court hearings as scheduled and been responsive to judicial inquiries.

      Finally, the controversy around the judiciary’s handling of Uribe’s case has rekindled the calls for constitutional reform in Colombia. Reforming the country’s complex judicial branch seems for many to be the only way to rescue the institutional mechanisms, which are currently failing within the Colombian justice system. In this time of uncertainty, the alternative of carrying out judicial reform would give a new direction to the presidency of Ivan Duque and would provide a unique opportunity for Colombia to emerge institutionally strengthened.

      One of the main issues with Colombia’s judicial system is that the country has not one but three top courts: the supreme court of justice, the council of state and the constitutional court. Another problem lies with the fact that the members of both the supreme court and the council of state select their membership themselves, without much executive or legislative oversight, albeit in accordance with Article 231 of the constitution. Having such a closed and endogamous nature has led to judicial malpractice and corruption in Colombia’s judiciary, such as the infamous “Cartel of Robes” scandal that saw supreme court judges abuse their independence to derail cases and stifle investigations by the attorney general in exchange for hefty bribes.

      While Alvaro Uribe’s case is likely to drag on for months, there is a higher likelihood that the process will have a lower profile and a more balanced outcome now that it has left the supreme court’s docket. Nevertheless, the judicial branch will now be increasingly seen as a politicized institution, and there are important voices in the country calling for both a consolidated supreme judiciary and a more transparent selection process for its members. Already in a bind due to the pandemic and its socioeconomic fallout, Colombia’s government must now address growing calls for constitutional reform in an increasingly polarized political climate.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in US Politics

      Trump says North Carolinians should vote twice – despite it being illegal

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      US elections 2020

      US president suggests people vote in person and by mail and if system works it will stop two votes

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      1:10

      Trump suggests people vote twice to test mail-in system, which would be illegal – video

      Donald Trump has suggested that people in the state of North Carolina should vote twice in the November election, once in person and once by mail, although doing so is a crime.
      “Let them send it in and let them go vote,” Trump said in an interview with WECT-TV in Wilmington, North Carolina, on Wednesday when asked about the security of mail-in votes. “And if the system is as good as they say it is then obviously they won’t be able to vote” in person.
      Voting more than once in an election is illegal.
      “President Trump outrageously encouraged” North Carolinians “to break the law in order to help him sow chaos in our election,” said the state attorney general, Josh Stein, in a tweet. “Make sure you vote, but do NOT vote twice! I will do everything in my power to make sure the will of the people is upheld in November.”
      The US attorney general, William Barr, told CNN that Trump “was trying to make the point that the ability to monitor this system is not good”. When told that voting twice is illegal, he said, “I don’t know what the law in the particular state says.”
      Barr said mail-in ballots for the election on 3 November could be vulnerable to fraud, echoing an argument Trump has made to denounce the use of voting by mail. Trump has previously said the voting method is susceptible to large-scale fraud, although experts say voter fraud of any kind is extremely rare in the United States.
      Voting by mail is not new in the US – nearly one in four voters cast presidential ballots in 2016 that way. A record number of mail-in ballots are expected for the election due to concerns about in-person voting during the coronavirus pandemic.
      Trump has accused Democrats of trying to steal the election by pushing the use of mail-in voting. The re-election campaign of Trump has recently sued states like New Jersey and Nevada for expanding access to mail-in voting.
      Democrats have said Trump and fellow Republicans are attempting to suppress the vote to help their side.

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