Coronavirus II - Fallout

The ongoing corona story seems to have many angles which hitherto have been revealed to the world at large. While containing the epidemic has been the priority of everyone, some seemingly innocuous aspects have been noticed as regards China’s tackling of the disease. China’s conduct has not been exemplary during these trying times. As the disease started spreading, the countries in China’s neighborhood especially in South East Asia started imposing restrictions on Chinese tourists and business travelers. The visitors were screened for infections and even banned from travelling inside their country. China took offence to these measures taken by the countries which were basically just preventive measures. Due to the long incubation period, these countries were justified in taking these precautions. But China threatened to take retaliatory action saying that it has a long memory and will remember this kind of behavior.  In fact China has been greatly worried about its prestige and foreign image and is unnecessarily sensitive about how its citizens are being treated abroad. It is trying to bully smaller countries into towing its own line on how they should conduct themselves in this crisis.  

There is also a political angle to this. In a dictatorial system like in China, everything is done by the government. The government draws its legitimacy from the success of its policies rather than an electoral process, as in a democracy. If the population is well provided for in all respects, everything is fine. However in an emergency situation like the current outbreak, any mishandling will cause a massive political fallout as the people who have been micromanaged in all aspects of their lives suddenly find their infallible leadership making mistakes which affect them adversely. In the current scenario the Communist party of China could be fighting for its own legitimacy.

This existential crisis has made the Chinese Communist Party take offense to any precautionary measures taken by other countries. The Chinese propaganda machine has not slowed down in this crisis. In fact it has got into higher gear. One private conglomerate, namely Tencent, recently published data which showed the number of people infected and those who have died to be vastly higher than what the government authorities have been saying. The company removed that data after some time. Now it has denied publishing any such figures on its site.

The death of the whistle blower doctor Li Wenliang who first messaged his colleagues about the new virus but was accused of spreading rumors, has blown a storm on Chinese social media. There is an out poring of grief for the doctor. People are calling him a hero and are criticizing the government for accusing him, instead of listening to him in those early days when the infection could have been better contained.

The political impact of the virus seems to be worse than the human or economic one for the Chinese government. Some citizens are demanding the right to free speech. Will this grow into an online or even offline movement for more personal freedom? Only time will tell. On the economic front experts say if China can control the epidemic in a month or so the impact could be restricted to a couple of quarters. However if the disease spins out of control, the impact could be more profound. The story is still unfolding and updates keep coming 24/7. There may have to be another part to this story if the number of new infections does not go down soon.

Cornavirus I - The Show Stopper

The outbreak of the Coronavirus has been a bit of a shock to the world. There have been pandemics before, but this one looks serious. It has already affected more than 20,000 people across China and as yet does not show any signs of abating.  The number of people who have died has crossed 400. Medical laboratories, hospitals and other institutions across the world are racing to find a treatment.

The infection was detected by a Chinese doctor in Wuhan. He warned his medical school group alumni on social media about the new virus and asked them to take care. This message went viral. The Chinese authorities who monitor each and every word uttered or written on social media, arrested the doctor. He was charged with spreading rumors. The authorities obviously did not want the world to know that something was amiss. The result was, this initial clampdown on the outbreak prevented effective measures which could have been taken immediately. It took the Chinese authorities a month to acknowledge the new outbreak. The virus was already spreading then. Only after the Chinese government realized this was something which could not be hushed up, did they declare the presence of the new epidemic.

Moreover it was the holiday season and a lot of people went out of the Wuhan city area, as well as to other parts of the country. This helped spread the virus to other parts of the country. Now after almost two months from the initial outbreak the world is fully alerted and measures are being taken to contain the spread. The virus spreads by air, so close proximity to the infected person can give you the infection. Similarly confined/closed places help to spread the disease.

While diseases and epidemics are not new the world over, they are getting more severe. The Coronavirus though less lethal than the SARS, is spreading rapidly. Within a month at least 30 countries have reported confirmed cases of the virus. This just shows how much the world is integrated. International travel of course exacerbates any epidemic like this.

While measures are now being taken to control and find a treatment for the disease, another dimension to this has come to the fore. The economic fallout. Trade and commerce have been affected by disease outbreaks since ancient times, but in our world with its fast paced life everything gets magnified. This is the first time the economic fallout has made headlines in a big way. Even during the earlier epidemics like Bird/Swine flu and SARS the economics of the epidemic did not come into the picture so much as this time.

Countries have started evacuating their citizens from China, especially from Wuhan city and its surrounding area. The city has been locked down with severe restrictions on movement of people. Companies have had to stop production and distribution of goods and services. Businesses outside China have been affected because supply chain logistics have gone haywire. In today’s complex world a health emergency spills over and affects every other field. World stands to loose billions of dollars in trade especially where China is involved, because of the preventive measures which have kicked in across the globe.

A seemingly insignificant snippet of news appeared in the press regarding information about the disease. Tencent, the Chinese conglomerate has published figures which they claim to be ‘real data’. According to their data the real number of infected people are about 1,54,000 and the number of dead is around 24,000 as on 8^th of February. After publishing, this data was removed by the company. These figures are a lot higher than put out by the Chinese government. Though the authenticity of this data is yet in question, it shows that even in a pandemic situation the Chinese propaganda machine is working at full throttle.

While a clinical profile of the outbreak is awaited which will help to tackle the disease effectively, the future of human/animal epidemics may have to be viewed with some pessimism. In the history of human epidemics the corona virus is not a new story, but the latest chapter makes for some grim reading

US Iran crisis - the India angle

The latest edition of the gulf crisis between Iran and America has put India in a spot. At the best of times,  a very delicate balance needed to be maintained when dealing with any country in the region. India has had to play a balancing act with Saudi Arabia, Iraq and Qatar on one side, and Iran on the other. It cannot afford to take sides in this conflict. It has to watch from the sidelines and hope the crisis does not spill over into the rest of the region. It’s a complex chessboard and with many players. Maintaining diplomatic relations with all the players in the region is like walking on thin ice at the best of times.

Iran is India’s largest supplier of crude oil. India also purchases considerable amount of crude from Saudi Arabia, Kuwait and Oman. So India’s crude basket is well spread in the region. Iraq is a recent supplier which came into the picture after India stopped buying from Iran due to American sanctions. Recently the USA has also become a supplier of crude. This has diversified India’s oil purchases which may or may not be strategically significant, but it is said, that this purchase is a consolation for the Trump administration in order to play down its refrain against India regarding the balance of payments between the two countries.

India has been developing the Chabahar port in Iran as a gateway to landlocked Afghanistan, as Pakistan is  not considered to be a dependable conduit for passage of goods. The project got delayed due American sanctions on Iran on account of its nuclear program. Recently however, the US was willing to exclude this port from the sanctions on the condition that the Revolutionary Guards of Iran are in no way connected to the project. This port is in direct competition to the Gwadar port in Pakistan’s Balochistan province, which is being developed by China as a part of their CPEC project (China Pakistan Economic Corridor), and which China wants to continue into Central Asia and Europe. The current crisis has cast a shadow over the Chabahar project. This project is crucial for India, both as a corridor to central Asia and as an alternative trade route to what China is building in Pakistan. Now India’s apple cart will certainly be affected if matters get out of hand. An encouraging development is  that the call President Trump made to PM Modi to discuss the situation. It shows that the US is sensitized to the concerns of its allies in the region. It knows that India is directly affected by any disruptions in the gulf region. 

There are other more subtle factors which have had their effect on Indo Iran relations. Iran is not happy as India has taken a long time to develop the Chabahar port. This happened due to American sanctions on Iran. No international company was ready to invest in the port or even provide equipment for the project as that would bring US retaliatory action. Work on the project started only after the US and Iran signed their treaty which constituted a delay of several years. The Trump administration recently had shown its readiness to exclude the port from the the re-imposed sanctions. But after the US drone strike which killed the Iranian General Suleimani, the project has come under the shadow of war clouds again. Iran has indicated that if India is unable to take up the project work expeditiously, it will consider handing it over to China for completion. This does not fit anywhere into India’s plans, as it would thwart India’s primary objective of a trading route with Afghanistan and central Asia. The region is throwing new challenges and it remains to be seen how Indian foreign policy deals with them. The recent news that Iran has pulled its punches and pared down its attack on US bases in Iraq should come as a relief to all in the region. Since this retaliatory attack by Iran on American assets did not kill any personnel, but only damaged some structures, it can be reasonably assumed that the leadership in Iran is taking action to vent public anger, and that it is fully aware of the consequences of escalating tensions. There is too much at stake here for any country to take unilateral action.  War is simply not an option.

The tension in the region appears to be subsiding but the situation is fluid and there are new developments happening everyday. It would not be wise or prudent to try to predict anything, however obvious it may look. Hence this article may have to have a sequel, as and when the turn of events merit.

Indian economy – the focus on reforms

The slow down in the Indian economy has been debated endlessly for the last four months or so. Ever since the growth slipped from a peak of around 7 percent in 2016-17 to less than 5 percent in December 2019. The picture that is being painted is rather bleak.  The economic parameters are predicted to get even worse.  While there is no telling when the cyclical graph will swing up, it would do good to take a look at some of the good things that have been happening. In the din of the naysayers, we have been missing some positives affecting the big picture. While they may not be a remedy for the, situation at hand, it could be a silver lining to an otherwise grey cloud.

There is now more clarity regarding the bankruptcy laws. Earlier any big business group finding itself in trouble  had just to call some high level secretary in the finance ministry and get its problems solved. A company facing financial difficulties would take the help of minister or a senior secretary in the ministry and try to get some conditions waived for the benefit of its troubled business. But after the introduction of the bankruptcy rules, this is no more possible.  No politician or any person holding public office can give succor to an ailing business, however big it may be.  Case in point is the Essar Steel company owned by the Ruias.  Having piled up debt due to operating losses the company is about to be taken over by the Arcelor Mittal group. No political interference has been allowed in this deal. All the heavy political connections of the Ruias have not helped them to keep the ownership of their business. This game is now played by the rules.

The sales figures of Automotive sector has seen some growth for three consecutive months, ending December.  This growth is attributed to the heavy discounts given by various manufacturers during the festive season. Not all the manufacturers have managed to sell more but the overall growth of the sector has been positive.  This sector is considered the bell weather of the economy. Not too much should be read into this trend but the feel good factor definitely gets a boost here.  

One more positive is that the inflation in the economy has been largely controlled. The government has not given in to the temptation of increasing the money supply in the economy in order to kick start spending. Oil prices have been largely favourable for the country and that has helped to keep overall  prices in check.

All is not well in the economy, that is obvious. Indian economy needs structural changes. The government has to sell off its loss making businesses.  One good example is the BPCL sale. This is a profit making PSU. The fact that the government has put it on the anvil shows the commitment of the government to get out of running businesses.  

Another positive is that the accuracy of economic data is being questioned. An overhaul was needed in the  methodology adopted by the various government agencies to gather economic data. A new expert panel will pave the way to improve accuracy in the whole process.   

Job creation is still not happening at the rate it is expected to. But there are indirect forces at work here. The world economy is sluggish and there is uncertainty regarding future investments. The US China trade war is affecting markets in no small measure.

The Indian economy will not be out of the woods in the short term considering that the world economy finds itself in a cyclical trough. But it is encouraging to know that the government has not lost sight of the reforms that it set out to implement. This bodes well for the country in the future.

South China Sea – Heading for a confrontation?

For the better part of the last decade the South China Sea has been in the news quite frequently.  The sea lanes in this part of the world carry one third of the world trade by sea. Over the years, all countries around this rim have had disputes regarding territorial waters.  The exclusive economic zones have been disputed between Vietnam, Myanmar, Malaysia , Indonesia , Cambodia, Brunei, Thailand, Philippines and Taiwan.  The sea here is almost landlocked.  The disputing countries share borders and inevitably, their claimed territorial waters overlap. All these countries being comparable as to their economic and military strengths, there was never any possibility of a war breaking out between them. Their governments knew they could not win in a sustained or even a short war. Even a small skirmish would disrupt the economy of the entire region. So there were local confrontations between fishing boats of these countries or an occasional show of strength by their navies.  On top sat the USA which had cobbled together a loose group of these Pacific rim countries mainly to stop Russian economic influence from spreading in this region.  This obviously was a cold war era arrangement.  Incidentally  there are many islands in these waters which are also claimed by some  of the mentioned countries.  

There is much wealth in these waters. Fishing is an important occupation as well as a major source of income for the countries. There is oil and natural gas under the sea, largely unexplored.  This dispute would have continued for decades as the countries had stalemated each other.  But matters took a different turn with the rise of China. While there was perfect competition between the earlier disputing countries, now an elephant had entered into the room.

The rise of China was always a worrying factor for the countries of the Pacific Rim. A soft American hegemony, buttressed by generous  economic and military aid kept the smaller countries in line and under the American umbrella. A few years ago, China  trotted out a new map of the region and claimed the entire South China Sea as its own. Their ‘nine dash line’ as they call it, brushes against the territorial waters of all the disputing countries.  China started reclaiming the Paracel, Spratly islands and the Mischief reef located in these waters as well, in order to establish a military presence there.  In response the Philippines went to the United Nations for redressal of the dispute.  The UNCLOS ruled in favour of Philippines and asked China to vacate the entire area and stop their occupation of the islands. Predictably, China has refused to heed the UNLCOS (United Nations Convention on Law of the Sea)  ruling and is now in the process of establishing a missile base as well. Since the Trump administration seems to be uninterested in continuing American leadership in this region, the smaller countries have been feeling the heat from China. Since these countries find themselves wholly unprepared to face China in a military or economic confrontation, they are trying to get third countries involved in this situation.

 Japan and India are not party to this dispute. They have their disputes with China, but those disputes concern their respective borders with China, either land or maritime. Vietnam recently asked India to explore for oil in its territorial waters.  There is also a pact between the two countries for exploration for other resources. India may sell military equipment and missiles to some of these countries to gain influence to counter China.  Now that the big countries who are not direct parties to this dispute are getting involved,  its become a cauldron of a potent mixture.  China has a double layered strategy in this game. It openly disputes the claim of the smaller countries on one hand, but has invested heavily in these countries through its Belt and Road initiative.  A sort of carrot and stick policy.

Meanwhile, the US, India, Australia and Japan have formed a loose group to keep an eye on this important region.  Called the QUAD group, they have given themselves the task of keeping the major sea lanes in these waters open and free for trade and to resist Chinese advances. Though, given the huge economic potential of the region, it could be predicted that better sense will prevail, and no nation will take the extreme step of going to war, the possibility of this simmering dispute to become an open confrontation cannot be denied.

The Climate Emergency Report - a wakeup call - Part II

The report is not all negative. It has praised some governments and institutions for taking steps to reduce pollution. Even before the report came out various entities including indivisuals, institutions, governments at various levels had started work to check climate change. An unprecedented mobilization is taking place. An organization called Climate Emergency Declaration has been formed to coordinate awareness campaigns and action in response to this emergency. Universities, clubs, private businesses, government bodies and citizens forums, are all coming forward to declare climate emergency and contribute positively to community and government action.

As mentioned earlier a lot of work had already started before the climate emergency report was published.  The scientists mention certain steps that need to be taken. These steps will improve the vital signs of climate deterioration. Humans will need to make certain lifestyle changes on a world-wide basis in order to achieve these goals. The report says that certain climatic changes may be too far gone to reverse. Humans will have to adapt to the changes and bring about transformations in the way they interact with global ecosystems.

The report says energy generation and consumption needs to be monitored. World needs to shift to renewable energy sources immediately. Use of energy should not lead to pollution as happens now. Extraction of fossil fuels and food production and consumption has caused a lot of damage to the environment. The report especially mentions meat production. The global per capita meat consumption has been increasing for decades.  The meat industry consumes a huge amount of water which is disproportionate to the people it feeds. Humans have to shift to a vegetarian diet immediately to conserve water.

Rising human population on the planet has been a worrying factor. A large number of people will need to consume a large amount of resources to sustain themselves. They also cause more pollution as the waste they generate is at a very high level. The report also touches on other vital factors like the world economy, income disparity and short lived pollutants. The scientists are emphasizing that mankind has to change its ways immediately. Nature gave us enough time to bring about changes in our societies. Political and economic considerations were given priority over environment. Now the time is running out. In some cases the tipping point may already have been reached. The vital signs of climate health have to be monitored and we have to see that they improve. If the signs do not improve, then we are not doing enough. Its either swim or sink.

In the past governments have been less than enthusiastic about taking drastic measures to mitigate or even counter the deterioration in climate quality. Making drastic changes disrupts livelihoods of a large part of the of the population which any government is reluctant to do.   However this time the scientists have the bit between their teeth and they may not take no for an answer.

 It is good for the world that such a report has come out. The scientists involved, saw the slow pace of changes that were taking place. This report will wake up one and all and make them do something. It says in no uncertain terms that if humans do not act to stop the deterioration in earth’s climate, their survival on this planet will be in question.  The authors of the report have upped the ante. The governments did not pay attention to the earlier warnings by various scientific organisations and scientists. This time by publishing an emergency report the scientists have made sure their warnings will not be ignored. 

The Climate Emergency Report - a wakeup call - Part I

Sometimes it takes a shock to get things to move in the right direction. This is especially true when coordinated public action is needed. May be this was the aim of the 11,258 scientists who came together to publish a report on climate change in November 2019. The report touches on a broad range of disciplines and warns of severe consequences if climatic conditions are allowed to deteriorate any further..

This is the first time that such a report has been published by a large number of scientists coming together. They say it is an emergency. The report is headed by two scientists from Oregon State University, Bill Ripple and Christopher Wolf along with William Moomaw from Tufts University joined by other scientists from Australia and South Africa.

What the Climate Emergency Report says is that humans on earth have to change the way they live, and immediately. There is no time frame for this. Man has to act now. The scientists have given some policy goals for the governments of countries and for the people of the world in general.

The scientists say that 40 years of climate negotiations have not yielded any substantial gains as far as reducing pollution is concerned. Now matters have gone to the extent that the authors decided to put the word ‘emergency’ in the report heading.  Till to date none of the climate reports go to this extent to highlight the urgency of the matter. As to how soon action should be taken, the report is unequivocal. The policy implementation has to be done immediately. For the duration of the climate negotiations the governments did not take this crisis seriously as economics always carried greater weight than physics or science. Governments are concerned with the here and now rather than what happens 10 years or more in the future.  And while the governments were dithering on taking difficult decisions, the process of climate change has accelerated. Authors of the climate report say that disaster will be upon us in a short time. There will be untold suffering and the world will never be the same again.

Over the years numerous studies were done to gauge the impact of human progress on the environment. To illustrate just how human activity has affected the earth adversely, we can take an example. The report says that three main gases in the atmosphere which have caused the most damage are Carbon Dioxide, Methane and Nitrous Oxide. There is a cascading effect due to the rise in level of these gases as compared to others, and one thing has led to another. The higher proportion of these gases has led to an increase in global surface temperature, which has caused the polar ice caps to start to melt. This is going to play havoc with marine life. Melting polar icecaps have caused ocean temperatures to rise. Sea plankton which is crucial to the ocean food chain is very sensitive to changes in water temperatures. If the plankton is affected adversely by temperature changes, marine life will follow suit. A small imbalance in the proportion of atmospheric gases leads to a major adverse impact on the environment.   

The climate emergency report is an unprecedented action taken by scientists on a global scale. Scientists were known to just advise the government on climate change. It was left to the governments to take any action they saw fit. This is the first time scientists have taken governments to task regarding action to be taken. In the face of this report everything has to take a back seat. Politics and economics will have to give way to science. Climate change is an existential threat, the report says. The report has caused the general public to sit up and take notice. Besides their studies, this is probably the biggest achievement of the scientists involved in this emergency report.