1.India-Israel (The Business standard)
2.Handling Pyongyang (The Indian Express)
3.Explained: China’s bond connect program
1.India-Israel (The Business standard)
Synoptic line: It throws light on recent visit of Prime Minister of India to Israel. (GS paper II)
- India and Israel has recently elevated their ties to the “strategic partnership” level with a vow to do “much more together” to combat growing radicalization and terrorism and pitched for “strong measures” against those financing and providing sanctuaries to terror groups.
- The visit is symbolically overdue, as it is the first time Indian prime minister is in visit to Israel 25 years after the two countries established diplomatic relations, and 14 years after Israeli prime minister Ariel Sharon’s visit to New Delhi.
India, Israel ink 7 pacts
India and Israel signed agreements to step-up cooperation in key sectors like space, agriculture and water conservation-
- MoU signed between Department of Science & Technology and Israel’s National Technological Innovation Authority for setting up of $40 million worth India-Israel Industrial R&D & Technical Innovation Fund.
- Ministry of Drinking Water & Sanitation, and Israel’s Ministry of National Infrastructure, Energy & Water Resources signed a pact on National Campaign for Water Conservation in India.
- The second water conservation was signed between Uttar Pradesh Jal Nigam and the Ministry of National Infrastructure, Energy & Water Resources on state water utility reform in India.
- In the farm sector, the two countries have agreed upon India-Israel development cooperation – a three-year work programme in agriculture from 2018 to 2020.
- They also agreed for cooperation between the ISRO and the Israel Space Agency (ISA) regarding cooperation in atomic clocks.
- Besides, separate MoUs were signed between ISRO and ISA for cooperation in GEO-LEO optical link, and in electric propulsion for small satellites.
- India and Israel also agreed to set up a $40 million fund for industrial Research and Development, and innovation fund, with both countries contributing $20 million each.
Post independence relations
- After independence India formally recognised Israel, however its Israel policy was driven by the principled stand of solidarity with the Palestinian cause and India’s international approach on issues as aligned with its domestic needs.
- India continued with its pro-Palestine policy in line with its principled stand and the sentiments of its large Muslim population, coupled with the fact that more and more Indians were heading to the gulf nations and it was fast emerging as a major source of remittances.
- In addition, India was also dependent on the Arab nations for oil supply to meet its energy needs. Emergence of the Non-Aligned Movement (NAM) in 1950 further drove India away from taking any pro-Israel stand openly.
- India recognized Israel in 1950, but its principled support for Palestinian self-determination and a practical desire to remain on good terms with the Arab world prevented India from establishing full diplomatic relations with Israel until 1992. The end of the Cold War and the changing landscape of Middle East politics had provided India powerful incentives to change course.
- For the past 25 years, India has generally conducted its Israel policy with little fanfare and with careful attention to the sensitivities of Palestinians and their international backers. Under the recent PM this has changed now government has officially delinked India’s relationship with Israel from the question of Palestinian self-determination. India’s ambassador to Israel recently stated that “we can deal with the Palestinians and Israelis separately, on their own merits.”
Importance of Israel
- Israel is set to topple the US as the chief exporter of arms and ammunitions to India with Barak missiles, surveillance drones and other big league defence deals. In fact, an unstable US regime has left Israel worried and its strategic think-tanks are considering India as an important alternative.
- Israel has become one of the foremost technology superpowers in areas such as rainwater harvesting, use of oceanic water and using that for irrigation in the most dry land. Israel has transitioned from a water-deficit state to a water-surplus state, and has pioneered the water desalination technique, something that’s absolutely significant in the era of climate change, rapid loss of fresh water bodies, and rise in seawater levels. In India, tormented by an unruly monsoon and languishing agriculture sector reeling under alternating droughts and flash floods, the use of salt water imported from Israel assumes immense importance.
- One of the reasons that Israel and the West are really important for India is that China can outspend India any day and every day, the West and Israel focus on the quality of technology and that becomes a massive force equalizer, Israel, Europe and America do not sell to China, and that’s really the biggest aspect of that India and Israel relationship.”
- Recognizing the importance of fostering wide ranging knowledge-business partnership for industries, R&D institutions and government agencies from both countries, Israel warmly welcomed India’s offer to be the “Partner Country” for the annual Technology Summit to be held in India in 2018.
- Reaffirming the importance of bilateral defence cooperation over the years, it was agreed that future developments in this sphere should focus on joint development of defence products, including transfer of technology from Israel, with a special emphasis on the ‘Make in India’ initiative.
Question: Can we say that India and Israel are natural partners? How Israel can contribute in India’s defence set-up?
2.Handling Pyongyang (The Indian Express)
Synoptic line: It throws light on the recent missile testing by North Korea and its security implications. (GS paper II)
- North Korea has made significant strides in developing its weapons program in recent months, successfully testing multiple new ballistic missile systems, but other countries, such as Iran, Russia, and China, are also rapidly advancing their missile capabilities. “Many countries view ballistic and cruise missile systems as cost-effective weapons and symbols of national power,”
- North Korea marked a milestone by firing an intercontinental ballistic missile that soared high into space before turning around and landing in the sea near Japan. North Korea’s test of its Hwasong-14 ballistic missile, according to the experts if the missile had had been fired on a normal trajectory instead of at a high altitude, it would have reached about 6,000 kilometres enough to put Alaska within range. It is potentially one more step towards catastrophe in one of the world’s most perilous regions.
- North Korea is still a third-world economy, with rampant human rights abuses, sanctioned by its neighbours. Yet despite all of this, after decades of single-minded determination, a tiny impoverished country stands on the threshold of completing a long-coveted goal that only the United States, Russia and a handful of others have accomplished i.e. building nuclear-armed ICBMs.
- Testing an ICBM [intercontinental ballistic missile] represents a new escalation of the threat to the United States, its allies and partners, the region and the world. Global action is required to stop a global threat.
- The UN Security Council will hold an emergency meeting on after North Korea said it had successfully tested its first intercontinental ballistic missile. The threat, is dubbed as “the worst problem on earth,” has only grown more alarming over time.
- While China and Russia have called for concessions on both sides, the US so far has made no public move to open talks, instead opting to engage in a renewed military show of force with its South Korean ally.
- Russian President while mentioning China said both leaders wanted “peace and stability” on the Korean peninsula. It is very important to push forward joint initiative on settling the Korean problem with a view of immediately freezing the ballistic missile strikes and also dealing with the US deployment of weapons in South Korea. The US administration has pursued a goal of denuclearization and increased pressure via imposing sanctions and working with regional neighbours.
- Prime Minister of India on his recent US visit, agreed to collaborate more closely with the global sanctions regime against Pyongyang, to which India is the second-largest exporter. These sanctions have done little to stall North Korea’s missile and nuclear programme, though.
- Even after nearly two decades to the Cold War, there are still thousands of nuclear warheads in the world. They are held by just nine countries: the US, Russia, Britain, France, China, Israel, India, Pakistan and North Korea
- There is time to review of the sanctions regime, in favour of an alternative approach that would give Pyongyang tangible rewards in return for tempering its nuclear-weapons ambition’s irresoluteness and incoherence.
- North Korea is barred under UN resolutions from developing missile and nuclear technology. But still it is proliferating its missile program, the United States maintains the Pyongyang must first halt its missile launches and nuclear test however China which is Pyongyang’s main ally, is pushing for talks between world powers and North Korea on dismantling the nuclear program.
Question: North Korea is recklessly testing its missile arsenal. Will it have any implications on regional security?
3.China’s bond connect program (GS paper III)
- China and Hong Kong have launched a bond trading link that brings the world’s third-largest debt market one step closer to widespread acceptance in international investors’ portfolios.
- The so called Bond Connect will allow foreign fund managers to trade in China’s $9tn government, agency and corporate debt markets.
- he new Bond Connect scheme, which was keenly awaited for months, allows large foreign investors such as banks and pension funds to buy and sell mainland Chinese bonds through offshore accounts in Hong Kong.
- China’s bond market, the third largest in the world, is estimated to be over $9 trillion in value and is expected to double in size over the next five years. Yet foreign investors own less than 2% of the overall bond market, thanks to China’s policy of raising significant barriers to the free entry and exit of capital.
- Moreover, People’s Bank of China, of late has been tightening monetary policy to squeeze out liquidity, which has, in turn, led bond yields in China to be higher than in many developed economies.
- So it was no surprise that investors rushed in to make use of the scheme to trade in Chinese bonds and later announced their entry. It is noteworthy that the present move to liberalise bond investment comes after the Chinese authorities took significant steps to ease the purchase of mainland stocks by foreign investors.
Why it is a significant step?
- Bond Connect is a significant step in China’s march towards a more open capital account. First, the inflow of foreign capital will help Beijing control the yuan.
- In time, the scheme will boost the borrowing potential of the Chinese sovereign as well as of corporations, while improving bond market liquidity by offering access to a wider pool of international capital.
- The entry of more private capital into the Chinese economy can encourage investments in economic projects as well.
- Also, after the inclusion of the yuan in the International Monetary Fund’s basket of currencies in 2016, the present bond reform gives a further boost to the Chinese currency. In the long run, greater participation of foreign investors in Chinese financial assets will increase the usage of the yuan, and thus aid Beijing’s efforts to internationalise the currency.
- This trend will also help bring more stability to China’s financial markets, known for their high levels of volatility, by improving transparency and the quality of business practices.
Question– How China’s bond connect program will further open up China’s economy to world financial markets? What will be its impacts over India?