Selected Articles from Various News Paper: Civil Services Mentor Magazine - June 2016

Selected Articles from Various Newspapers & Journals

All about the Obama Doctrine

The first decade and a half of the 21st century has witnessed a fundamental change in India-U.S. relations unparalleled in the history of the two democracies. President Bill Clinton demonstrated a tilt towards India during his second term, and subsequently the George Bush presidency brought about a transformational shift in the relationship. Relations have been on an upswing ever since, with the Obama presidency proceeding on the same course. Discerning observers nevertheless see subtle differences in the approach of the Bush and Obama presidencies. Both Presidents have been warm towards India and appreciative of India’s democratic credentials. President Bush, early in his second term, dispelled any notions that the decision to reach out to India had a hidden subtext, viz . strengthening India to function as a counterweight to China. President Barack Obama has been more circumspect, as his world view includes a more accommodative attitude towards China.

The difference, according to strategic analysts, lies in their approach. Mr. Bush acted more on the basis of his instincts — an outstanding example being the manner in which he went out of his way to ensure the successful conclusion of the India-U.S. Civil Nuclear Deal without seeking any quid pro quo. Analysts argue that Mr. Obama is more a practitioner of realpolitik and tends to see most issues through this prism.

In the light of this, recent references to an “Obama Doctrine” should be of vital interest to Indian policymakers. The so-called doctrine is embedded in a series of interviews that Mr. Obama gave to Jeffrey Goldberg of The Atlantic magazine. Compiled into an essay, it takes on the character of a doctrine, though the President himself may be chary of acknowledging it as such.

That the President, while still being in office, should express his personal opinions in this manner in a series of interviews intended for publication is a surprise of sorts. One would have expected it to form part of his presidential memoirs, but clearly he intended his views to become known while still holding office. Hence, its value and the reference to an “Obama Doctrine”.

Mr. Obama withholds few punches in his interviews. He makes it amply clear that he has little regard for the Washington-based tribe of U.S. foreign policy experts (“The Washington playbook”), and even less for their enduring belief that military force is the answer to every problem. He evinces little interest in West Asian affairs and in the politics of oil unlike his predecessors. He is unduly harsh in his judgement of leaders of West Asian countries. On the other hand, he shows somewhat greater interest in the “Pivot to Asia” and the consequences of the rise of China and India in the region. All this signifies a radical shift in U.S. foreign policy priorities. It is uncertain whether policy circles in the U.S. have come to terms with the change.

Some of the harshest criticism is reserved for the leaders of Saudi Arabia with references to the West Asian sheikhdoms as “free-riders”. At the same time, he sees an emerging Iran as a bright patch as far as West Asia is concerned. Implicit in this is that the President is preparing to jettison Saudi Arabia — despite it having been the U.S.’s staunchest ally for the past half century — and readying to embrace Iran. Egypt, another long-term U.S. ally, is similarly seen as expendable.

Among other leaders Mr. Obama is contemptuous of is Russia’s Vladimir Putin — perhaps understandable because of events in Ukraine and the West’s debacle in Crimea. What is more surprising are his views on the leaders of France and the United Kingdom — especially the latter. This possibly stems from his experience of the Libyan imbroglio, for which he blames French President Nicolas Sarkozy and U.K. Prime Minister David Cameron. His pungent criticism of Mr. Cameron as a mere tactician lacking in strategic vision does sound the death knell for the “Special Relationship” that has been part of U.K.-U.S. entente since the end of the Second World War — unless it is resurrected by another President.

The impression conveyed is of realpolitik carried to an extreme with the core logic of the Obama Doctrine being: that the U.S. no longer needed to engage in geopolitical competition with powers like Russia and China; the collapse of countries like Egypt was of little consequence to the U.S.; the primary concern was to avoid risking the lives of U.S. citizens unless the vital interests of the U.S. were directly involved; and to get others to do the hard work of fighting on issues relating to ensuring a rule-based international order and defeating terrorism.

From India’s standpoint, there are several aspects of concern relating to the Obama Doctrine. India may need to “deep dive” into what exactly the doctrine signifies, at a time when the U.S. is anxious to firmly establish a strategic hand clasp, to “counter China’s assertiveness in the South and East China Seas”. India has no conflict of interest as far as the South and East China Seas are concerned. It risks provoking China if it gets more deeply engaged on U.S. insistence. Under the Obama Doctrine, the U.S. cannot be expected to come to India’s aid in the event of an India-China conflict along the disputed land border or anywhere else.

We can already discern how the doctrine is being played out to India’s north-west. The U.S. has been willing to sell F-16 fighters and attack helicopters to Pakistan, so that Pakistan can fight its battles in Afghanistan and the region — despite India’s concerns about this move. The U.S. has also been willing to placate Pakistan on the nuclear issue, even implying that Pakistan’s tactical nuclear weapons programme was possibly a response to India’s Cold Start doctrine. U.S. Defence Secretary Ashton Carter, during his recent visit, spoke of the strategic confluence between India and the U.S. as one of the defining moments of the 21st century. He also referred to the new Framework for the India-U.S. D

efence Relationship (signed in June 2015) as intended to increase strategic cooperation to help safeguard security and stability across the region and around the world.

Oceanic opportunities

For a region that has been historically seafaring, India in the modern era has been bafflingly inward-looking. It is therefore welcome to hear Prime Minister Narendra Modi say, as he did at the Maritime India Summit in Mumbai on Thursday, that “the maritime agenda will complement the ambitious infrastructure plan for the hinterland which is going on in parallel”. India has for long been slow, and ad hoc, in developing infrastructure to reap the economic opportunity its seaboards naturally provide. And having been Chief Minister of Gujarat, a State that stands out in port development, Mr. Modi has a keener sense of this untapped potential. As he said in Mumbai, apart from the length of the coastline, 7,500 km, “India’s maritime potential also lies in its strategic location on all major shipping highways.” There has been an increasing emphasis on maritime infrastructure, and his government has added weight to it. The ambitious Sagarmala programme intends to promote port-led development, improve the coastal economy, modernise ports and integrate them with special economic zones, and create port-based smart cities, industrial parks, warehouses, logistics parks and transport corridors. India has also begun to collaborate with neighbouring Bangladesh and Myanmar in building waterways and port infrastructure. This is essential as ultimately it’s economics that provides the necessary push to take forward strategic overtures.

On the strategic side too, India needs to firm up its maritime strategy. Speaking at the International Fleet Review in Visakhapatnam in February, Mr. Modi had observed that the ability to reap economic benefits from the oceans rests on the country’s capacity to respond to the challenges in the maritime domain. Last year before embarking on a tour of Indian Ocean littorals he remarked that the visit to the three Indian Ocean island countries reflected “our foreign policy priorities in India’s immediate and extended neighbourhood”. In fact, the Indian Navy played a pivotal role in containing piracy on the high seas and is positioning itself as the “net security provider” in the broader Indian Ocean region with capacity building, joint exercises and increased multilateral exchanges. Humanitarian assistance and disaster relief are the new area for building bridges, and the Indian Navy’s quick response to the 2004 tsunami reflected an enhanced preparedness. The new emphasis is two-sided — securing energy and trade routes to sustain economic growth and keeping a check on increasing forays by other countries into India’s backyard. Indian strategic interests in the larger Indian Ocean are converging with the U.S., reflected in the joint statement at the end of American Defence Secretary Ashton Carter’s visit. It reaffirmed the importance of safeguarding maritime security and ensuring freedom of navigation and overflight throughout the region, “including in the South China Sea”. It is also indicative of a change in India’s posturing which has traditionally been defensive. But it must also invite the caution that it is not in India’s interest to pick fights that do not draw from its own national interest.

Lessons from the Mallya case

It appears that not everyone agrees on the true significance of a flamboyant tycoon decamping with debts of Rs.9,000 crore owed to India’s banks. The gentleman is no ordinary businessman at that, having earlier been embraced by the country’s political parties that had rewarded him with membership of Parliament. That such an honour could have been bestowed upon Vijay Mallya, who only inherited wealth to make a lavish display of it when the country abounds with captains of industry who actually generate it, should alert us to how political patronage works.

When the incident had been analysed in the media as an instance of crony capitalism, a maverick economist had quipped that it may be better described as “crony socialism”. Perhaps he had had in mind that it is the public sector banks that had lent so fecklessly to Mr. Mallya, and these had for decades, been showcased as a symbol of Indian socialism. Bank nationalisation in the 1960s led to schemes such as branch expansion, priority sector-lending and the takeover of private banks teetering on the brink thus rescuing thousands of small depositors. But now, four decades later, it can hardly be asserted that the performance of India’s nationalised banking sector has been sterling, with inefficiency and poor service having been highlighted, and it taken the Pradhan Mantri Jan-Dhan Yojana to rectify their failure to advance the cause of inclusion on their own. But nothing quite matches the scale of the present scam, with public banks having lent such large sums of money to a single individual with indifferent capacity and without adequate collateral.

There is no question that the banks are responsible for the predicament in which they find themselves. How is it that several leading nationalised banks have separately lent such staggering sums to a dubious client struggling to establish himself in an highly competitive industry? There is reason to believe that Mr. Mallya was the beneficiary of pressure brought to bear upon the banks from the outside. And this could only have come from politicians who preside over the banking system in a governing capacity. If this is not the case, then we must worry seriously about how individual public officials can dispense such large sums of public money so freely. Are there no checks and balances in our public sector banks?

The term crony capitalism is used to describe a situation of private players being shielded from competition or vaulting over rivals due to the intervention of the ruling class. This usually takes the form of a relaxation of rules or granting of exclusive licences. The history of the United States in the 19th century is replete with examples of these. But things have improved substantially in that country, and in any case l’affaire Mallya is something worse. It is one in which the Indian public stands to lose directly. In the forms of crony capitalism considered above, the loss is indirect, usually in the form of higher prices. Even in the gigantic market intervention following the recent financial crisis in the United States, money had not been channelled to individuals.

Under the Troubled Asset Relief Program (TARP), the government had purchased assets of struggling banks with a view to ensuring that they did not collapse taking along with them the rest of the financial system. These assets were disposed of later at a profit by the government! The U.S. government had acted smartly, while in the Indian case the banks now find themselves saddled with loans made by them to an individual with negative net worth. The irony could not have been more stark. The U.S. government had intervened smartly in a society strongly committed to laissez faire. On the other hand, for a country with “socialist” written into its Constitution, our public banks have unduly favoured a hereditary businessman without a sound business plan but with lots of political cronies. Also, the banks had lent to a company that has been in the news for not having paid its employees for a noticeable period of time. Here, India’s public sector banks have acquiesced in the violation of employment rights.

In the Mundhra Scandal in the 1950s it had come to light that the Life Insurance Corporation of India had supported an indicted businessman by purchasing shares in his troubled companies. With advice that retains a freshness today, Feroze Gandhi had stated, “Parliament must exercise vigilance and control over the biggest and most powerful financial institution it has created, the Life Insurance Corporation of India, whose misapplication of public funds we shall scrutinise today.” Following Feroze Gandhi’s intervention, the then Finance Minister T.T. Krishnamachari had to resign and Haridas Mundhra was arrested. Actually, l’affaire Mallya represents something more sinister, for a number of publicly-owned banks were commandeered to favour a private party whose dubious reputation was common knowledge. Immediate revocation of the absconding parliamentarian’s passport would be appropriate. After all, it would be fair to say that the ease-of-doing-business, so championed by this government, must be balanced by the difficulty of evading the law. Now onto the second of the set of actions that may be taken by the government in this case. In a plea to the contrary made by the Reserve Bank of India (RBI) to the Supreme Court lies an idea with hidden potential. When handing over a list of defaulters of loans from banks, the RBI is reported to have requested that the names not be revealed. As far as the publicly-owned banks are concerned, this goes against an important principle applicable to the public sector.

It would be unfortunate if we are to allow a distinction made between “passive” and “wilful” defaulters to muddy the waters. The only question here is whether full disclosure will lead to better outcomes. There is reason to believe that it will. Details of every loan sanctioned by the nationalised banking sector, including the history of the borrower, the grounds on which viability has been ascertained, the guarantors, the collateral pledged and the officials involved may be posted on the website of the bank concerned. We also need to work towards a re-engineering of procedures. It has been suggested that fear of being scrutinised by the office of the Central Vigilance Commissioner has petrified loan officers in the public sector into inaction. It is of no use having a publicly-owned banking system that does not extend credit to sound projects on grounds of retrospective scrutiny. This can be taken care of by moving to a system of whetting loan applications through committees, thus allowing joint responsibility to come into play. Lack of transparency weakens our public banking sector. In the age of information technology and the Excel spreadsheet, the necessary transparency is literally just a click away.

Country without a pause

At a closed-door meeting with BJP office-bearers recently, Prime Minister Narendra Modi made a case for holding elections to Parliament, State legislatures and local bodies simultaneously. Last week, a group of ministers initiated a discussion with Election Commission officials on the proposal. Certainly the proposal is far from new, having been made earlier by top BJP leaders. L.K. Advani has advocated it on occasion, and the BJP’s manifestos for the 2009 and 2014 general elections promised to “evolve a method of holding Assembly and Lok Sabha elections simultaneously”. The reasons cited are to check election expenditure and to impart stability to State governments. As a general idea, simultaneity can hardly be faulted as it would check election expenditure, free the Central government from a populism that is forced on it by a constantly ticking election cycle, and end the repeated pause on decision-making because of the model code of conduct. It is a necessary debate that the Prime Minister has begun. But it must be evaluated with a clear focus on the problems it seeks to solve, as well as its practicability.

Yes, the early years of the Republic saw simultaneous elections to national and State legislatures. That this link was firmly broken by the early 1970s provides an inkling of the difficulties in mandating it for India’s Westminster-inspired parliamentary democracy. For instance, how do fixed-term legislatures square up with other constitutional and democratic processes, such as the requirement that the government command the confidence of the Lower House? This operates at many levels. In the event of a government losing its majority and no other party being able to mop up the numbers, it would be untenable to hold off elections for too long. In addition, fixed terms would militate against the freedom that a government has to go back to the people any time to refresh its mandate. Given that partisan stand-offs are inhibiting cooperation across the aisles, to dispense with the option of returning to the people for a refreshed mandate would be self-defeating. In fixed-term legislatures, as in the U.S., there is a clear separation between the legislature and the head of government. Such a system is far removed from that envisaged by the founders of our Constitution, who settled for a Cabinet system of government that comprises a constitutional head and the exercise of power through a Council of Ministers headed by the Prime Minister. The solution to excessive campaign expenditure and a much too focussed eye on the electoral cycle is better found in persuading political leaderships to develop self-discipline and to explain to the people the need for unpopular, but necessary, decisions. The sporadic advocacy of simultaneous elections by the BJP is informed by self-interest as well. An overlapping campaign would rejig the federal terms in its favour by allowing it to project its prime ministerial candidate against regional parties’ chief ministerial aspirants.

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Courtesy: Various News Paper