CUTS Washington Monthly Brief
#14, May 2019
A mandate to perform even better amidst challenges that are even greater

India’s elections results were declared on May 23, 2019. It was an unprecedented electoral sweep by Narendra Modi led National Democratic Alliance.  His Bharatiya Janata Party yet again proved to be, this time with higher margins, the single largest party in the lower house of Indian parliament. This election result has destroyed the traditional practice of winning elections on caste and faith dynamics. Inclusive development and better governance is the new narrative. 
 
This happened as Modi Government in its first term did introduce policies and implement programmes for the benefit of people at the grassroots.  The government also undertook regulatory reforms which reflected in India’s constantly improving position on the World Bank’s Ease of Doing Business rankings, among others.
 
There was also a thrust on improving infrastructure connectivity among coastal areas, mainlands and hinterlands. The objective was to provide last mile connectivity for both trade and the movement of people.  Put together, coupled with various other things, this has brought back the Modi Government in its new avatar, better known as Modi Sarkar 2.0. 
 
The mandate is a reflection of increased expectations of people of India. It is a mandate for ‘’Leaving No One Behind’’. The people want the government to build on what has to be delivered and address critical economic concerns such as reviving economic demand and creating jobs through increase in productivity across agriculture, manufacturing and services.
 
On the global front, trade wars between the U.S. and China and tensions between the U.S. and Iran are the predominant issues. The former is adversely affecting the growth of global markets while the latter threatens oil supplies from Iran, affecting India amongst other countries. These global challenges have far wider ramifications; therefore, balancing external and internal environment will remain a crucial task for Modi Sarkar 2.0.

 
Pradeep S. Mehta
Editor
P.S. China is a dominant supplier of rare earths used for high technology and defence products. Will the disruption of rare earths supplies to the U.S. by China prove to be a massive retaliation in the face of the on-going trade war?  


 
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This is the fourteenth 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.
 
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The US-China trade war is the biggest threat to the “fragile” global economy, the OECD says
That’s the global economy’s outlook, according to Laurence Boone, the chief economist of the Organization for Economic Co-operation and Development. In a report published today, the Paris-based institution said that after a sharp slowdown in economic growth in the second half of last year, growth has stabilized.
 
Canadian Soybeans Come Under Heavier Chinese Scrutiny
Chinese customs authorities have escalated their inspections of Canadian soybean imports, with at least two shipments rejected this week, according to a memo from the lobbying group representing growers of the seed.
 
The US Bumpy Trade Relations with China
U.S. trade relations with China are on the downward spiral. The efforts of making a deal were recently dampened when both countries failed to agree to a deal and the U.S resorted to tariff escalation while attracting counter measures from China.  On this, a series of developments in the month of May are compiled by CUTS WDC for the ready reference of our readers. 

Can China’s Loss Be India’s Gain?
While all the world’s attention is on US President Donald Trump slapping crippling 25% tariffs on Chinese imports, India has managed to avert a looming crisis in its trade relations with the ‘tariff king’. The May 3 deadline for the withdrawal of dutyfree benefits for Indian exports under the Generalised System of Preferences (GSP) came and went.

Cotton market unravels amid US-China tariff battle
Global cotton prices have plunged, hit by the effects of the U.S.-China trade conflict along with swelling American production. Cotton futures on the New York market dropped to around 65 cents per pound on May 13, touching the lowest level since August 2016. Prices of raw cotton -- the material for cotton fabric -- had been rising from February to early April, based on optimism that U.S.-China relations would improve.

 

India becomes lowest-cost producer of solar power
India has finally bagged the tag of the lowest cost producer of solar power globally. The country-wise average for the total installed costs of utility scale solar PV in 2018 ranged from a low of $793 per Kilowatt (Kw) – around Rs 5.5 crore per Megawatt -- in India to a high of $2,427 per Kw in Canada, the International Renewable Energy Agency (IRENA) said today.
 
China needs it, the US has it, but why might a trade war energy deal not be the easy win it appears to be?
On paper, a healthy energy trading relationship between China and the United States would be mutually beneficial. China is the world’s largest energy importer, while the US is, over the next year, poised to become a net exporter. These simple facts have led many to suggest that a deal on energy trade would be low-hanging fruit in otherwise testing negotiations to strike a wider accord to end the trade war.
 
The Department of Energy Is Now Referring to Natural Gas As ‘Freedom Gas’
On May 7, Energy Secretary Rick Perry — the dark-horse pick for Trump’s most competent Cabinet member — announced in Brussels that the U.S. intends to double liquefied natural gas exports to Europe by 2020. Comparing energy diversification to the American effort to liberate occupied Europe in World War II, Perry said that “the United States is again delivering a form of freedom to the European continent.”

Renewable energy needs a reforms push to attain green energy targets: Study
Renewable energy needs a reforms push from the newly elected government to achieve the envisaged target of 275 Gw by 202, a study said. Despite marked strides in green energy propped up by policy initiatives, more reforms in the pipeline should be sped up, US-based think-tank Institute for Energy Economics & Financial Analysis (IEEFA) noted in the study.

Next Govt will weigh factors, decide on oil import: India to Iran
India told Iran that a decision on importing oil will be taken “after the elections”, and after weighing factors including “commercial consideration, energy security and economic interests”, sources said. While Delhi has previously maintained that commercial, economic and energy security factors will determine its decision, but this is the first time it has left the decision to the next government that comes to office after May 23.

 

Why SAARC gave way to BIMSTEC 
Narendra Modi has invited leaders of Bimstec (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) to his swearing-in ceremony on May 30. This diplomatic gesture to fellow nations along the Bay of Bengal highlights the diminishing returns from India’s other regional group — Saarc. In 2014, Modi had invited leaders of the Saarc.

Indian Foreign Policy Challenges in Modi Sarkar 2.0
According to many experts, Modi Sarkar 2.0 faces crucial foreign policy challenges particular in the realm of economy. On this, a series of news/opinions published during May are compiled by CUTS WDC for the ready reference of our readers.  
 
US, Japan to work with India, other countries to promote free, open Indo-pacific: Shinzo Abe
The US and Japan will work with countries like India, Australia, ASEAN, UK and France to “forcefully” promote the idea of a free and open Indo-Pacific, Japanese Prime Minister Shinzo Abe said Monday, amidst China flexing its muscle in the strategically important region.
 
The US, Iran and India Conundrum
Since the U.S. withdrew from JCOPA and retracted its sanctions relief to Iran, middle-east has converted into an epicentre of geopolitics.  U.S. waivers to some countries to buy Iranian oil have also been withdrawn. The conflict has intensified with continuous threats of wars from U.S. and Iran on each other. It has severely affected India’s supplies of crude oil from Iran. Major Powers including European Union perceive India to be an important peacemaker.  On this, a series of developments in the month of May are compiled by CUTS WDC for the ready reference our readers.
 
Inching closer to the brink: on JCPOA
As the U.S. provokes Iran, the onus is on Europe to somehow stand by its end of the nuclear deal. There is no dearth of conflicts in West Asia. The Israeli-Palestinian conflict has defied resolution for seven decades. The fight against the Islamic State and its offshoots in Iraq and Syria has drawn in the U.S., Russia, Iran and Turkey, while the civil war in Yemen has heightened tensions between Saudi Arabia and Iran.

 

How US ban on Huawei will pull down global tech industry?
The U.S. decision to blacklist Huawei, which needs prior approval from the Donald Trump administration to source technology components from local companies, will impact the global tech supply chain, linked closely to the $105 billion business of the world’s top supplier of telecoms network equipment.
 
A Mandate for Action
The Indian electorate has shown great wisdom in returning the Bharatiya Janata Party (BJP) to power with even a bigger majority than before. Narendra Modi’s victory has been stunning, more so because until the exit polls appeared, this scale of success was ruled out, the likelihood of the BJP falling short of numbers was seriously discussed and Opposition leaders entertained the possibility, until the last minute, of forming a government by stitching together an alternative coalition to the National Democratic Alliance (NDA).
 
Making America Carbon Neutral Could Cost $1 Trillion a Year
Democrats from Capitol Hill to the presidential campaign trail see climate change as a winning political issue, and they’re competing to outdo one another with ambitious plans to halt the rise in planet-warming greenhouse gases in the atmosphere over as small as a 10-year period.

It’s actually a fight for global dominance
A BBC drama that debuted this week has a terrifying final five minutes. President Donald Trump, in his last days in office, launches a nuclear strike against an artificial Pacific Ocean island built by the Chinese — this is supposed to be in 2024 as Trump’s second term is ending.
 
The impact of rapid technological change on sustainable development
This report is a response to General Assembly resolution 72/242, in which the Commission on Science and Technology for Development is requested, through the Economic and Social Council, to give due consideration to the impact of key rapid technological changes on the achievement of the Sustainable Development Goals. The report was presented at the twenty-second session of CSTD meeting on May 13-17, 2019.
 
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