📰 India, Russia sign S-400 missile deal after summit
U.S. says sanctions waiver will be given only on transaction-by-transaction basis
•India and Russia on Friday concluded the contract for five S-400 ‘Triumf’ missile systems, one of the biggest defence deals in recent times, after the annual summit between Prime Minister Narendra Modi and Russian President Vladimir Putin.
•The announcement of the deal, which could attract sanctions from the United States, was made in a joint statement issued by both sides. “The sides welcomed the conclusion of the contract for the supply of the S-400 long range surface to air missile to India,” said the statement.
No pact on frigates
•However, the two sides failed to conclude two other major deals, for stealth frigates and assault rifles, that were reportedly ready, as officials said further negotiations were needed.
•“India gives top priority to its relations with Russia. In this rapidly changing world, our relations have become more relevant,” Mr. Modi said, after the meeting, his third summit with Mr. Putin this year.
•Significantly, the agreement for the estimated $5.43 billion (Rs. 40,300 crore) S-400 system was not referred to by either leader in their press statements.
•It was also the only agreement not included with eight others exchanged in the presence of Mr. Modi and Mr. Putin, a possible move to avoid the controversy engendered when the last such deal for Rafale aircraft in 2015 was announced directly by the Prime Minister.
Will come in 24 months
•Deliveries of S-400 will begin in 24 months, at the end of 2020, a government source told The Hindu . As per procedure, the source also said that India would pay about 15% in advance, likely through the rupee-rouble mechanism both countries use for trade in their own currencies.
•The U.S. has warned the deal would invoke sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA) law, which penalises defence purchases from Russia, Iran and North Korea, as soon as the first payment is made, unless President Donald Trump grants a “waiver.”
•On Friday, the U.S. Embassy issued a statement warning that any waiver for the S-400 deal would only be considered on a “transaction-by-transaction basis.” “We cannot prejudge any sanctions decisions,” its spokesperson added.
•A government source rejected the U.S. statement, saying that the S-400 missile system deal was done in the “national interest.”
•“The negotiations [for the agreement] preceded CAATSA by a long period of several years. It fulfils a certain defence requirement for India and the government has taken the decision in the national interest,” the source said.
•The two leaders reserved most of their time during Mr. Putin’s brief 22-hour visit for one-on-one interactions, spending three hours at dinner on Thursday and nearly two hours on Friday in intense talks.
📰 Interaction between youth of Russia and India will be a great addition to ties, says Putin
The Russian President, Prime Minister Modi interact with young talents from two countries.
•Interaction between young people of India and Russia, especially schoolchildren, would perhaps be the “most important addition” to the “unprecedented level” of bilateral ties and serve as a basis for a long-term cooperation, Russian President Vladimir Putin said here on Friday.
•Prime Minister Narendra Modi and Mr. Putin interacted with some young talents drawn from India’s Atal Innovation Mission (AIM) and Russia’s SIRIUS educational centre.
•Mr. Modi, in his remarks, urged the youth of both countries to work on innovation to improve the life of the poor and the needy.
•An MoU was also signed between AIM and SIRIUS to further their cooperation.
•“With cooperation of your counterparts, I am sure the interaction between young people, especially between schoolchildren, would be a great addition, and perhaps the most important addition, to the unprecedented level of India and Russia relations that we see these days,” Mr. Putin said.
•Mr. Modi expressed his delight in meeting students of both countries, and pitched for having sustained exchange programmes.
•“This (Russian students’ visit to India) should be taken forward. Indian students should visit Russian institutions, and more and more such exchanges should take place. Indian and Russian students together must think what can they do to make lives simpler for people, especially the poorest, to improve their way of living,” he said.
•The Prime Minister also asserted that every generation must have a “scientific temper” whether a person turns into a scientist or not.
•“Without innovation, (the development) of the world will come to a standstill,” he said.
•During the interaction, the two leaders also took a few questions from both Russian and Indian students, on subjects such as value of teachers, scientists and areas of research.
•Mr. Putin said one student asked about the areas of research to work on. “One area is artificial intelligence. But without human intelligence, at least at this stage, it is impossible to fathom that an AI would be created. In order to continue with that, those who deal with cognitive sciences understand that the main thing is to work as a part of a team.”
📰 Pence speech signals new Cold War
Analysts say China will be forced to dig in for a prolonged multi-front battle with the U.S.
•U.S. Vice-President Mike Pence’s accusations in a stinging speech on Thursday, warning of a tougher approach towards Beijing may have been familiar to China’s leaders. But until now such remarks were delivered in private, in fairly decorous terms, and rarely threatened direct action.
•The surprise this time for Beijing was the magnitude of alleged offences piled up in one public indictment, ranging from suspected interference in U.S. politics to China’s stomping on the freedoms of its own people. Nor had the U.S. ever before told China: “We will not stand down.”
•Publicly, China responded with a certain weariness, calling the speech “very ridiculous,” creating “something out of thin air”, but also warning that “no one can stop” the Chinese people from advancing.
•But behind closed doors, Mr. Pence’s remarks probably left few doubts among China’s leaders that Washington was embarking on a Cold War that would force the country to dig in for a prolonged multi-front battle with the U.S. , analysts said.
•Some of Mr. Pence’s declarations, like saying Washington’s trade policy most likely caused a 25% fall in China’s largest stock exchange in the first nine months of the current year, could be dismissed as inaccurate, since trade tensions were one of several factors.
•But it was unmistakably clear that the era of Washington holding out a hand to Beijing to become a “responsible stakeholder” in world affairs alongside the U.S.— a phrase used in 2005 by Robert B. Zoellick, then the Deputy Secretary of State — was over.
•“This will look like the declaration of a new Cold War, and what China may do is more important than what it will say about Pence’s speech,” said Zhang Baohui, professor of international relations at Lingnan University in Hong Kong.
📰 ICMR recommends vaccine for lions
Confirms Canine Distemper Virus killed Gir lions.
•The Indian Council for Medical Research (ICMR) has confirmed that the Canine Distemper Virus (CDV) was responsible for lion deaths in the Gir forest of Gujarat and recommended that the remaining lions be vaccinated to prevent further outbreaks. This goes against recommendations by wildlife biologists that wild animals shouldn’t be vaccinated.
•“The scientists of ICMR-NIV (ICMR-National Institute of Virology) have recommended the existing CDV vaccine which should work as a protective intervention for Gir lions,” said a press statement on Friday from the institute.
•Though 21 lions reportedly died between September and October, the Pune-based ICMR-NIV found CDV responsible for the death of 5 Asiatic lions in Gir. The genetic sequence of the virus was compared to available CDV sequences and it was found to be related to the East African strains.
•“It would be stupid to vaccinate wild lions because it’s likely to compromise their immunity against future infections. These are wild animals and not ones in a zoo,” Y.S. Jhala, a senior scientist at the Wildlife Institute of India had told The Hindu on Thursday.
•An anonymous ICMR official said administering a vaccine at best, could protect unaffected animals.
•“We routinely administer vaccines to humans. So I don’t see why wild animals’ immune systems should behave very differently,” the person said in a phone conversation. However, the NIV was yet to determine if the vaccine, currently available to treat CDV, matched the strain of the virus circulating in the lions. This matching determines the efficacy of the vaccine.
•CDV causes a highly contagious and life-threatening disease in dogs. It also affects different wild carnivores viz., wolves, foxes, raccoons, red pandas, ferrets, hyenas, tigers, and lions. The prevalence of this virus and its diversity in wildlife of India has not been studied. Only a few reports are available regarding the detection of CDV in captive wild carnivores which included tigers and red pandas. A report in 2016 from Etawah, Uttar Pradesh about CDV infection was confirmed by the Indian Veterinary Research Institute. There dogs were considered to be the primary source of infection and virus transmission, the ICMR added.
•In the past, CDV had wiped out 30% of the total population of lions in Serengeti forest areas in East Africa. Considering the threat posed by CDV, ICMR has requested the Government of India to take immediate steps to save the Gir lions, which are heading towards extinction. As a precautionary measure, 300 shots of CDV vaccine have been imported from the U.S.. ICMR has also recommended that the animals should be placed in 2-3 different sanctuaries.
📰 Avoiding the currency basket case
Internationalisation of the rupee will serve India well
•The Indian rupee was once a multilateral currency, its usage prevalent across the Indian Ocean in places as varied as Java, Borneo, Macau, Muscat, Basra and Zanzibar. The historic dhow trade ensured that the Gulf had a familiarity with the rupee for over five centuries, with Oman utilising the ‘Gulf rupee’ till 1970.
Colonial rupee
•The accession of George V to the throne in 1911, enshrining his rule of the British Raj, led to the issuance of a new rupee coin. The colonial rupee leveraged the Mughal rupee’s popularity, facilitated by trading communities, migration and the Raj’s hegemony. The annexation of Sindh, Ceylon and Burma further encouraged the primacy of the rupee in these areas. Meanwhile, a number of Indian merchant communities had established themselves in such regions, aiding in its convertibility.
•Even after Independence, Dubai and other Gulf states were using RBI-minted Gulf rupees until 1966. Between the 1950s and 1970s, gold smuggling was rampant on the Konkan coast, with a number of Gulf businesses buying gold cheaper in the Gulf in rupees and smuggling it to India. Only the devaluation of the Indian rupee in 1966, after the 1965 war, led to such nations switching to their own currencies. Now, only Nepal and Bhutan regularly conduct bilateral trade with India in rupees.
•The rupee’s valuation is often of concern. The value of the rupee itself has varied over the years too – contrary to WhatsApp rumours, the rupee was never equal to the U.S. dollar. In 1947, the rupee-dollar rate was at Rs. 3.30. The aforementioned devaluation in 1966 raised it to Rs. 7.50, reaching Rs. 32.4 by 1995. This decline was precipitated by a variety of factors – wars with Pakistan and China, the adoption of Five Year Plans requiring foreign loans, political instability and the Oil Price Shock of 1973. Of late, the rupee has been declining given higher oil prices and FII outflows from stocks and bonds. The ongoing U.S.-China trade war, Iran sanctions and further upward movement in oil prices will continue to test the rupee’s valuation.
•While such see-saws do happen, the Reserve Bank of India and the Ministry of Finance do have a number of options for stabilisation, including overtly intervening in the forex market, selling non-resident Indian bonds (as last done in 2013) and conducting a sovereign bond issuance. In addition, the rupee’s dependency on the U.S. dollar must be reduced – India should consider formalising the rupee payment mechanism with friendly countries such as Russia, with a focus on reducing its overall current account deficit. We must continue to guard against fiscal profligacy, with any slippage viewed negatively by the currency markets, further encouraging investors to flee Indian markets. Industrial growth should be a priority; without having goods to sell, rupee swaps (say with Iran) will be difficult to institutionalise. A lower rupee is a recipe for a higher import burden, spiralling eventually into a currency crisis.
•The formalisation of the Indian economy, by deterring black money transactions in the rupee, is also much needed. Somehow, the rupee always ends up falling just prior to an election – looking at the data in 2013, Malini Bhupta and Vishal Chhabria found that rupee had depreciated just prior to the election date six times in the past seven elections. India’s black money strategy should consider four pillars — it should encourage tax rate rationalisation, reform vulnerable sectors, support a cashless economy and create effective and credible deterrence. Tax rate rationalisation, with lower tax rates as an end goal, would increase the tax base and increase compliance with tax returns. Administrative agreements with countries like the U.K. and Switzerland which can offer mutual tax sharing should be encouraged. It is important to create a remittance database detailing company transfers out and NGO transfers into India, all reporting to the Financial Intelligence Unit (FIU). The Direct Tax Administration’s Directorate of Criminal Investigation should be provided the right IT training, infrastructure and funding to become an effective deterrent, while the audit cycles for income tax, service tax and excise tax departments should be aligned, helping the Large Taxpayer Unit (LTU) become more effective, increasing the scope of simultaneous scrutiny and examination.
•Finally, looking ahead, the internationalisation of the rupee is a worthwhile goal to aim for. While the Chinese yuan is increasingly being positioned for an alternative reserve currency through a variety of multilateral trades, institutions (the Belt and Road Initiative, the Asian Infrastructure Investment Bank) and swaps, the Indian rupee remains woefully behind in internalisation. China campaigned hard for the inclusion of its currency in IMF’s benchmark currency basket in 2015, introducing a range of reforms to ensure that the yuan was considered as “freely usable”. The RBI, meanwhile, has adopted a gradualist approach – allowing companies to raise rupee debt offshore, enabling the creation of “masala bonds” and allowing foreigners to invest in rupee debt onshore; the rupee has transformed from a largely non-convertible pegged currency before 1991 to a managed float. The rupee is currently not even in the top 10 traded currencies.
•There is no magic wand to making the rupee appreciate. But institutional resistance against rupee convertibility should be overturned. To restore the rupee’s multilateral nature, we must unshackle its usage.
•Feroze Varun Gandhi is a Member of Parliament, representing the Sultanpur constituency for the BJP.
📰 Augmenting life
This year’s science Nobels compel us to relook at evolution, and also at gender parity
•The Nobel Prize for Chemistry this year is a tribute to the power of evolution. The laureates harnessed evolution and used it in the laboratory with amazing results. Frances H. Arnold, an American who was given one-half of the prize, used ‘directed evolution’ to synthesise variants of naturally occurring enzymes that could be used to manufacture biofuels and pharmaceuticals. The other half went to George P. Smith, also of the U.S., and Sir Gregory P. Winter, from the U.K., who evolved antibodies to combat autoimmune diseases and even metastatic cancer through a process called phage display. The prizes reaffirm the importance of the concept of evolution in our understanding of life as among the most profound of forces we are exposed to. The Physiology and Medicine prize has gone to the American James P. Allison and Tasuku Honjo, from Japan, for showing how different strategies can inhibit the metaphorical ‘brakes’ acting on the immune system and thereby unleash the system’s power on cancer cells to curb their proliferation. These immunologists have enhanced the power of the body’s immune system to go beyond its natural capacity.
•Arthur Ashkin, from the U.S., has been awarded one-half of the Physics prize, for enabling us to individually hold, study and manipulate tiny bacteria and viruses using ‘optical tweezers’. In many laboratories, optical tweezers are used to study and manipulate subcellular structures such as DNA and little molecular motors. Optical holography, wherein thousands of such optical tweezers can operate together on, say, blood, to separate damaged blood cells from healthy ones could be a treatment process for malaria. The parallel is clearly in how this work has, individually, enabled us to reach out beyond what is permitted by our sensory and physiological capabilities. Gérard Mourou, from France, and Donna Strickland, from Canada, who share the other half of the Physics prize, have been honoured for their methods to generate ultra-short pulses of laser light. The work, published in 1985, went into Ms. Strickland’s PhD thesis and soon revolutionised the field. Among its uses are in Lasik surgery in ophthalmology, and in making surgical stents. More recently, attosecond lasers have even made it possible to observe individual electrons. In sum, the prize-winners have drawn upon the fundamental forces in science and reached out beyond human physical limitations. However, the world of science can do with some introspection. For, two of the six laureates – Donna Strickland and Frances Arnold – are women. They are only the third and fifth women Nobel laureates in Physics and Chemistry, respectively, since the inception of the Nobel prizes. Along with the celebrations, this statistic gives reason for the community of scientists to introspect over what makes an enabling environment for women to practise science in.
📰 Focus on inflation — on RBI interest rate
The RBI chooses to stick to its core mandate, ignoring other pressures such as on the rupee
•The Reserve Bank of India pulled a surprise on the markets on Friday by keeping its benchmark interest rate unchanged at 6.5%. The decision to stand pat comes even as the central bank changed its policy stance from “neutral” to “calibrated tightening”, indicating that rates could either go up or stay steady in the coming months. The consensus on the street was that the RBI would raise rates by at least 25 basis points to support the rupee, with some even predicting a hike of 50 basis points. Not surprisingly, the rupee weakened past the 74-mark to the U.S. dollar for the first time ever after the news of the RBI holding rates steady hit the markets. Stocks, which have been on a downtrend since September, also took a hit on Friday while bond yields fell. What is obvious is that, through its surprise decision, the RBI has chosen to stick to its primary mandate of keeping domestic inflation just around 4%, notwithstanding other risks facing the economy. Notably, the Monetary Policy Committee’s decision to keep rates steady was strongly endorsed by its members, with just a lone member voting against the decision. And its dedication to strict inflation-targeting was further reiterated during the press conference after the review meeting where RBI officials termed inflation control as their legal mandate.
•With its strict focus on inflation, the challenge now will be whether the RBI can simultaneously manage the various other risks to financial stability. For now, the RBI seems to prefer piecemeal measures, such as easing foreign investment norms and mild intervention in the forex market, to address the financial risks posed by the weakening rupee. To be fair, the decision to keep rates unchanged, particularly after two consecutive increases since June, can be perceived as a strategy to keep the powder dry just in case external risks get out of hand. In this sense, the RBI’s decision could be termed prudent. The decision to keep rates steady might also work in favour of the government, which will prefer to borrow at cheaper rates in the run-up to the general elections next year. Bond yields have been on a steady rise since last year as investors have been spooked by fears over the fiscal deficit and the shift in global interest rates. The RBI’s decision to not raise rates may lift the sentiments of consumers and businesses at a time when the economy enters the busy season and festival demand kicks in. Going forward, the biggest challenge facing the RBI will be the prospect of further rate hikes by the U.S. Federal Reserve and central banks in other developed economies, which could force the central bank to look beyond its inflation mandate. The RBI will clearly have to juggle multiple challenges in the coming months.
📰 Nobel Peace Prize goes to Congolese Dr. Denis Mukwege, Yazidi rights activist Nadia Murad
They are awarded the Prize for their efforts to end the use of sexual violence as a weapon of war and armed conflict.
•The Nobel Peace Prize for 2018 has been awarded to Congolese gynaecologist Dr. Denis Mukwege and Yazidi human rights activist Nadia Murad for their efforts to end the use of sexual violence as a weapon of war and armed conflict.
•"Denis Mukwege is the helper who has devoted his life to defending victims of wartime sexual violence. Fellow laureate Nadia Murad is the witness who tells of the abuses perpetrated against herself and others," the official handle of Nobel Prize tweeted on Friday.
•Dr. Denis Mukwege has spent large parts of his adult life helping the victims of sexual violence in the Democratic Republic of Congo. Dr. Mukwege and his staff have treated thousands of patients who have fallen victim to such assaults.
•Ms Murad is one of an estimated 3,000 Yazidi girls and women who were victims of rape and other abuses by the Islamic State. "She has shown uncommon courage in recounting her own sufferings and speaking up on behalf of other victims," the Norwegian Nobel Committee said.
•The panel had received nominations for 216 individuals and 115 organisations. But only a few dozen of them are known, since the committee keeps the list of nominations secret for 50 years, although some candidates are revealed by their nominators.
•Among those put forward this year are Syrian civilian aid group White Helmets, Russia’s Novaya Gazeta newspaper, whistle-blower Edward Snowden and the U.N. High Commissioner for Refugees.
•The winner last year was the International Campaign to Abolish Nuclear Weapons.
•The 2018 prize is worth 9 million Swedish kronor ($1.01 million). Past winners who came under criticism include former U.S. President Barack Obama, who won in 2009 after less than a year in office, and Myanmar leader Aung San Suu Kyi.
