CUTS Washington Monthly Brief
#9, December 2018
The new Defense Secretary has the template set for him
As the world prepares to move into 2019, President Trump’s cabinet will also see a significant change with Secretary of Defense James Mattis all set to quit office two months ahead of his scheduled departure. 

Many experts have called this development as a setback for the US allies as well as for the core American interests spelt out by President Trump himself. In other words, President Trump’s vision of ‘America First’ which acquires a fuller meaning through burden sharing needs seasoned leadership of the kind provided by Jim Mattis, the outgoing Secretary of Defense. 

In a short time, Mattis not only successfully displayed bi-partisan credentials needed to steer complex issues at home but was also successful in working with allies and other strategic partners around the world. With respect to India, one of his outstanding achievements has been in seeking waiver for India from the Countering America's Adversaries Through Sanctions Act (CAATSA). 

While it remains to be seen if his successor, the current Deputy Secretary of Defense Patrick Shanahan, will be able to leave as impressive a trail, it will certainly help to continue the momentum created by Mattis. Some of this includes finding a diplomatic solution with Iran, seeking UN and regional help in dealing with Taliban, finding new avenues to work with China and asking tough questions on cavalier use of force by some of the countries participating in active conflicts around the world.

With respect to India, the momentum of trust and prospects of mutually compatible and scalable defense relationship looks increasingly likely. This momentum needs to be translated into tangible outcomes where both countries respect their sovereignty, strategic interests and economic considerations.

The responsibility is now upon the shoulders of new Secretary of Defense: Patrick Shanahan. All power to his elbows as he assumes this highly complex role in a significantly challenging world. 

A very Happy New Year to all!

                                                                                                                                     Pradeep S. Mehta
P.S. Pundits are painting a very gloomy picture for 2019 as a consequence of the trade wars. We need to think of ways to counter the negative outcomes. 
Message for our Readers

This is the ninth edition of the monthly brief from the Center, which carries select published news or comments on a relevant issue. There are equally important issues which may have been missed out to keep the Monthly Brief short and swiftly readable. Readers are encouraged to send their own views and suggestions at: 


China releases nationwide ‘negative list’ in show of openness, but will it make any difference?
Beijing on Tuesday sought to demonstrate its willingness to open up its markets with the publication of its first unified “negative list” of the business sectors that are off limits to foreign, and in some cases domestic, investors.
Trump announces second round of farm aid to offset trade damage
President Donald Trump announced his administration was planning to disburse a second tranche of aid as part of a $12 billion package meant to assist American farmers stung by retaliatory trade measures enacted by China and other foreign governments.
China to suspend extra tariffs on U.S. cars, spare auto parts
China pressed on with its trade war truce with the United States, announcing that it will suspend extra tariffs added to U.S.-made cars and auto parts for three months from January 1. The move is another sign that the ceasefire has not been derailed by the recent arrest in Canada of a top Chinese telecom executive at the behest of the United States.
EU, India and China ‘new trilateral’ at WTO, says US
The US called the European Union (EU), India, and China the new “trilateral” at the World Trade Organization (WTO) as it rejected a proposal from the three sponsors for salvaging the highest court for global trade disputes from becoming dysfunctional in the next 12 months, saying Washington’s concerns about the functioning of the court remain unaddressed.
Trump-Xi both get trade war wins with harder issues unresolved
Donald Trump and Xi Jinping emerged from their high-stakes dinner meeting in Argentina with a ceasefire agreement on tariffs that delivered enough for each to claim an initial win. Xi won a temporary halt to additional trade hostilities against his nation’s slowing economy as the two presidents agreed to work toward a substantive agreement within 90 days.


How Energy Companies Will Survive When Renewable Energy Is Free
Envision Energy founder and CEO Lei Zhang likes to look at the numbers. And when he looked at the numbers behind the falling cost of renewable energy, he began to worry. "We are convinced renewable energy is going to be dominating," said Lei, who heads the Shanghai-based energy company. "It is going to give us almost, close to zero cost of energy, eventually. So we started to be worried. What’s the future of the energy company if you actually have almost-zero cost of energy?".
India mulls building natural gas reserves
India is considering building emergency stockpiles of natural gas, on the lines of strategic oil reserves, to deal with supply disruption amid the country’s growing dependence on fuel and its import. The government wants domestic consumption of natural gas, a cleaner fossil fuel, to rise two-and-a-half times by 2030 and is encouraging big public and private investments in gas production, import, transport and distribution infrastructure.
Government plans to pay five Iran banks for oil imports
India will use escrow accounts of five Iranian banks held with UCO Bank to deposit money for oil purchases from the Middle East producer to overcome US sanctions. Iran will use part of the deposits for purchasing essential goods from India and to meet expenditure incurred by its diplomatic missions in the South Asian nation, the people said, asking not to be identified because the information isn’t public. All spending will be in Indian rupees.
India to see USD 300-bn investment in energy in coming decade: Dharmendra Pradhan
India will see an investment of about USD 300 billion over the next decade in setting up of refineries, oil and gas pipelines and expansion of city gas distribution network as it builds infrastructure to cope with the massive demand surge, Oil Minister Dharmendra Pradhan said. Speaking at KPMG's ENRich 2018 energy conference here, he said India is the third largest energy consumer in the world after the US and China and its energy demand will grow three-fold by 2040
Blockchain can revolutionise the energy industry in Africa
In Africa, the demand for electricity largely exceeds supply. Nigeria’s shortage of 173,000MW (for a nation whose current energy needs is around 180,000MW) gave rise to large-scale imports of noisy and polluting power generating sets. Most sub-Saharan African countries experience the same. In rural areas in Rwanda, where over 70% of the population lives, only 18% of the population has access to electricity.


Chabahar tidings: on Indian taking over port operations in Iran
The opening of the first office of Indian Ports Global Limited at Iran’s Chabahar and the takeover of operations of the Shahid Beheshti port is a milestone in India’s regional connectivity and trade game plan.
China-US Contention Has Opened Up Space for Other Powers, Including India
Whether China succeeds in her internal reordering and her external quest for primacy depends to a considerable extent on how the US and China handle their relationship.
Don’t be so deferential to China; leverage conciliatory mood to correct imbalances
Parliament’s standing committee on external affairs has expressed concern that the Indian government’s “conventionally deferential foreign policy” towards China is not being reciprocated. This is a rather late realisation. In the 1950s, China took full advantage of India’s refusal to oppose its territorial expansion and annexed Tibet without any opposition. Its current aggrandisement continues to be matched by India’s reticence.
How Europe Will Try to Dodge the US–China Standoff in 2019 (MUST)
In 2019, European governments will have to decide whether to side with the US in this new strategic stand-off or chart their own course. While Europeans are increasingly sceptical about the Chinese leadership’s goals and methods, they do not share the Trump administration’s determination to stem China’s rise; and they do not want to find themselves trapped on one side of a new political-economic cold war.
India-US-EU Combine Halts China's Belt and Road Initiative at the UN
In a significant expression of international will, references to China’s Belt Road Initiative (BRI) have been deleted from all UN resolutions, bringing an end to Beijing’s “wordplay diplomacy” and dealing a blow to its biggest strategic gambit.


US must brace itself for losing No. 1 status
What a difference two decades makes. In 1997, China’s gross domestic product was about 11 per cent of the US’s. By 2017, it was up to 63 per cent: But this overstates the difference in living standards between the two countries, since prices are generally lower in China. In purchasing power-parity terms, China’s economy became the world’s largest in about 2013. So which country’s economy is really bigger?
65 US universities oppose Trump administration’s visa policy changes for foreign students
As many as 65 top US universities, including Harvard and MIT, have challenged the Trump administration in a court against its new stringent visa policy for foreign students, warning that the new ‘backdating’ rule will have a detrimental effect on America’s higher education system.
Why Indian IT firms are hiring teams overseas
The fundamentals of India’s $118 billion technology outsourcing industry rest on a few key pillars. Teams of engineers are cheaper here than in developed markets, for one. The time zone difference with the US, which meant teams here could work while coders in North America slept, making code development a round-the-clock operation, was deemed a major advantage.
Why Indonesians fight like Avengers for globalizations
It was a remarkable moment: during his speech at the World Economic Forum on ASEAN this September, Indonesia’s President Joko Widodo said he was an Avenger, fighting for free trade. “I and my fellow Avengers stand ready to [keep] Thanos from wiping out half of the population,” he said. “We must prevent trade wars from becoming the infinity war.” (He didn’t say who Thanos was.) 
Eminent policymakers, economists, activists in US discuss issues being faced in India
Leading experts from diverse fields such as the government, academia, economy and banking converged at the prestigious Columbia University in the US and discussed the Indian economy, blockchain, education, women's rights and the MeToo movement in India.
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