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IASbaba’s Daily Current Affairs – 24th Aug 2017

INTERNATIONAL

TOPIC: General Studies 2:

India and its International relations.

Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

Mr. Trump’s new assertive policy in Afghanistan

In news:

In a recent speech Trump had declared that the US “can no longer be silent about Pakistan’s safe havens for terrorist organisations, the Taliban and other groups that pose a threat to the region and beyond.” His announcement of the decision to send more troops to Afghanistan reflects a realisation that the U.S. does not have many options in dealing with its longest military conflict.

New strategy:

Mr. Trump’s strategy can be summed up as Obama-plus — it builds on the premises of the Obama plan of additional troops and regional diplomacy. But unlike Mr. Obama, who set a timetable for the withdrawal of troops, Mr. Trump is ready for an open-ended engagement.

Trump said the focus of the American mission should narrow down to fighting terrorists, not rebuilding Afghanistan “in our own image”.
Trump directly called Pakistan a country that shelters terrorists. He demanded that Pakistan’s support to cross-border terror “will have to change” and “change immediately”.
He also wants India to play a greater role in providing economic and developmental assistance to Afghanistan.

Mr. Trump’s generals want to avoid the kind of vacuum left behind by the Soviet withdrawal in the late 1980s that plunged Afghanistan into a protracted civil war; the Taliban eventually took over. U.S. President Donald Trump’s decision to deepen the country’s military engagement in war-torn Afghanistan signals a significant shift in the position he has held for years. Mr. Trump had campaigned to end American involvement in foreign conflicts and was particularly critical of the Afghan war, which he said was “wasting” American money.

Precarious security situation in Afghanistan:

Sixteen years since George W. Bush ordered the American invasion of Afghanistan and toppled the Taliban regime, the insurgents are on the ascendent again.
More than half the country’s territory, mostly in rural, mountainous areas, is now controlled by the Taliban, while the Islamic State has set up base in eastern Afghanistan.
In recent years, both the Taliban and the IS have carried out a number of terror attacks in the country, including at highly fortified military locations, raising questions about the very survival of the government in Kabul.

Implications for India:

On Pakistan:

Delhi welcomed “President Trump’s determination to enhance efforts to overcome the challenges facing Afghanistan and confronting issues of safe havens and other forms of cross-border support enjoyed by terrorists.”

India has welcomed Mr. Trump’s strategy, as the U.S.’s objectives in building a stable Afghanistan and ending Pakistan’s sponsorship of terrorism are exactly in line with India’s own goals for the region.
If Washington has the political will to carry through the promised pressure on Pakistan to stop hosting terror sanctuaries on its soil is not yet known. Delhi has good reason to be cautious in its assessment of what the Trump Administration can compel the Pakistan Army to do today.
On Trump’s affirmation that India ought to do more, Delhi pointed to India’s significant past efforts to promote economic reconstruction in Afghanistan. It added that India “will continue these efforts, including in partnership with other countries”.
Few countries have gotten away so long with what Trump has accused Pakistan of doing: Pakistan shelters “the same organisations that try every single day to kill our people. We have been paying Pakistan billions and billions of dollars at the same time they are housing the very terrorists we are fighting.”
Turning the words of that speech into actions of the ground will not be easy.
The Pakistan Army will try and find ways to limit Trump’s fire and fury. It will not be easy, however, for Pakistan to abandon its investments in cross-border terror. It would try and finesse the issue of terror sanctuaries.

On Afghanistan:

It is equally important for Delhi to note the shift in Washington’s thinking on the Indian role in Afghanistan.

When it came to Pakistan and Afghanistan, the Bush Administration drew a red line for India. It cautioned Delhi against too large a role in Afghanistan. The Obama Administration began with the proposition that the answer to Afghanistan might lie in promoting a resolution of Pakistan’s Kashmir dispute with India. It required intensive diplomacy from India to fend off these initiatives.
Until recently, Washington believed that India’s rivalry with Pakistan is part of the problem in Afghanistan. Today Trump might be betting that by invoking a larger Indian role in Afghanistan, he might add to the pressures on Pakistan to cooperate with the US.
For Delhi, the question is not whether Trump’s Afghanistan strategy is a glass half-full or half-empty. It is about seizing the opportunity opened up by his new policy to raise India’s profile in Afghanistan

Way ahead:

Delhi’s current emphasis must be on taking advantage of the Trump discontinuity in the American policy towards the Subcontinent. A positive Indian approach would involve three elements — economic, security and diplomatic.
Economic: India must ramp up its economic diplomacy in Afghanistan to bring immediate benefits to Kabul amidst the deteriorating conditions in the country.
Security: Delhi must step up security cooperation with Afghanistan, especially in the training of its police and armed forces and intelligence sharing.
On the diplomatic front: India must counter the emerging argument that Trump’s new approach will intensify the “Indo-Pak rivalry” in Afghanistan and the old one that Kashmir holds the key to peace in Afghanistan.
Delhi must remind the world of India’s commitment to regional cooperation with Afghanistan and Pakistan, in an atmosphere free of terrorism.

Conclusion:

Trump’s new Afghan strategy could be a potential game-changer for South Asia or a brief exception to the familiar pattern of US-Pak relations. While recognising the potential shadow between Trump’s words and deeds (as his strategy is not yet very clear despite the speech), Delhi must bet on its own activism that can influence future outcomes in Afghanistan.

Connecting the dots:

President Trump has in a recent speech declared that the US can no longer be silent about Pakistan’s safe havens for terrorist organizations, the Taliban and other groups that pose a threat to the region and beyond. Discuss how such a rhetoric against Pakistan can go a long way in solving Pakistan sponsored terrorism.

ECONOMY

TOPIC: General Studies 3

Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

Investment models.

The Justice B.N. Srikrishna committee on bilateral investment treaty (BIT)

Background:

The recent report of the Justice B.N. Srikrishna committee, constituted to prepare a road map to make India a hub of international arbitration, has recommended many changes in Indian arbitration law and institutional mechanisms to promote arbitration in India. Its recommendations on bilateral investment treaty (BIT) arbitration assume importance as India is currently battling 20-odd BIT disputes. These recommendations are largely on the issue of managing and resolving BIT disputes.

Recommendations of the Srikrishna committee:

Dispute management:

For better management of BIT disputes, the committee recommends the creation of an inter-ministerial committee (IMC), with officials from the Ministries of Finance, External Affairs and Law.
It also recommends hiring external lawyers having expertise in BITs to boost the government’s legal expertise; creating a designated fund to fight BIT disputes; appointing counsels qualified in BITs to defend India against BIT claims; and boosting the capacity of Central and State governments to better understand the implications of their policy decisions on India’s BIT obligations.
The most significant recommendation is the creation of the post of an ‘international law adviser’ (ILA) to advise the government on international legal disputes, particularly BIT disputes, and who will be responsible for the day-to-day management of a BIT arbitration.

Issue:

Augmenting the government’s expertise on BITs and designating a single authority to deal with all BIT arbitrations is a laudable suggestion. However, this recommendation will amount to duplicating the existing arrangement to offer advice on international law, including BITs, to the government.

Solution:

The Legal and Treaties (L&T) division of the External Affairs Ministry is mandated to offer legal advice to the government on all international law matters including BIT arbitrations. Instead of creating a new office — which will only intensify the turf wars between ministries, and deepen red tape — the L&T division should be strengthened. This division could be made the designated authority to deal with all BIT arbitrations and thus act as the coordinator of the proposed IMC.
The IMC should have a member from the Commerce Ministry as well. This ministry, while dealing with India’s trade agreements — that also cover investment protection — works in tandem with the Finance Ministry. Thus it is only prudent that both be a part of an IMC on BIT dispute management.

Dispute resolution:

In resolving BIT disputes, the committee has made some useful interventions such as mentioning the possibility of establishing a BIT appellate mechanism and a multilateral investment court.

Issue:
The committee’s conclusion that the investor-state dispute settlement (ISDS) mechanism, given in Article 15 of the Indian Model BIT, provides an effective mechanism for settling BIT disputes between an investor and state is problematic for the following reasons:

First, Article 15 requires foreign investors to litigate in domestic courts at least for a period of five years. Assuming that proceedings end in five years but the investor is not happy with the outcome, the investor can initiate a BIT claim provided it is done within 12 months from conclusion of domestic proceedings. Out of these 12 months, the next six months must be spent trying to amicably settle the dispute with the state. If not, then the investor has to serve a 90-day notice period to the state, and only after this can she actually submit the dispute for BIT arbitration. In short, even if an investor is extremely alert, she only has a window of three months to actually submit a dispute for BIT arbitration. Such strict limitation periods dilute the effectiveness of the ISDS mechanism.
Second, there are many other jurisdictional limitations given in Article 13 that also limit the usefulness of ISDS.
Third, the ISDS mechanism in the Indian Model BIT extends from Articles 13 to 30 covering issues such as appointment of arbitrators, transparency provisions, enforcement of awards, standard of review, which have a bearing on the efficiency of the ISDS mechanism.

The report is silent on all these critical issues.

Larger issue:

BIT arbitration has three aspects: jurisdictional (such as definition of investment), substantive (such as provision on expropriation) and procedural (ISDS mechanism). While the commission’s mandate was to focus on BIT arbitration, i.e. on all the three parts, strangely, it narrowed it down to just the procedural aspect.

Conclusion:

Despite making some useful suggestions, the committee has lost an opportunity to push for the recalibration of the Indian BIT regime, which has oscillated from being pro-investor to being pro-state.

Connecting the dots:

The recent report of the Justice B.N. Srikrishna committee, constituted to prepare a road map to make India a hub of international arbitration, has been released. Discuss critically its recommendations on bilateral investment treaty (BIT).

Also read: Bilateral Investment Treaties and concerns