News Wrap


India’s Prime Minister, Narendra Modi has based his dynamism on Hindu nationalism and promises to build on India’s rising economy. The economy appears shaky, as in the past 28 months, consumer confidence has plummeted, construction has slowed, the fixed investment rate has fallen, many factories have shut down, and unemployment has gone up, causing the overall economic growth rate to dip to 6.3%. Abruptly voiding most of the nation’s currency, and then less than a year later, imposing a sweeping new sales tax, have slowed India’s impressive growth. With the economic strategy losing sheen, Hindu nationalism is on the forefront. Economic grumbles and social tensions are growing. At 1.3 billion people, India is the world’s most Populous Democracy. The output from the textile industry in Modi’s state Gujarat, has been cut nearly by half, prompting layoffs and despair. It was once a huge employer. Textile production in Surat has dropped to 25 million metres per day, from 40 million metres two years ago. India’s economy expanded at more than 8% between 2005 and 2009, and more than 7% between 2010 and 2014. Other big economies turn on exports, such as China’s, Japan’s or Germany’s. But India is not nearly as industrialised. Modi’s ‘‘Make in India’’ is obstructed by India’s labour laws which are still too restrictive, imposing all kinds of red tape on factories of more than 100 workers. Few foreign investors are attracted.

Domestic rural demand substantially influences India‘s economy. Back-to-back droughts in 2014 and 2015 ruined millions of farmers, slowing down overall growth. Demonetisation hampered consumption, because many Indians did not have any spare cash in their pockets. Suddenly with the economy softening, all but the smallest businesses had to file online returns each year, paying taxes on everything from yarn to mixed nuts, often at confusing rates. The informal economy feeds the formal. The unemployment rate is 5%, the worst in five years, in 2015-16. Just a few hundred thousand jobs have been created each year under Modi in major industries such as textiles, transportation and information technology. This excludes the informal sector, where millions of Indians traditionally work. India has an educated work force; a young working class population, and a public that craves new technology, though this excluded the informal sector, where millions of Indians traditionally work. Facebook has 217 million monthly active users in India, second only to the United States.

Port of Duqm in Oman
Situated on the south-eastern seaboard of Oman, the Port of Duqm overlooks the Arabian Sea and the Indian Ocean. It is strategically located, in close proximity to the Chababar port in Iran. Duqm fits into India’s proactive maritime security with the Assumption Island being developed in Seychelles and Agalega in Mauritius. In September 2017, India deployed an attack submarine in Duqm Port, in the western Arabian Sea. A Shishumar-class submarine entered Duqm, alongwith naval ship INS Mumbai and two P-81 long-range maritime reconnaissance aircraft. With the aim of enhancing surveillance and co-operation, the naval units were on a month-long deployment. Oman signed a Memo of Understanding with the United Kingdom that allowed the Royal Navy to use the Port of Duqm. The agreement allows UK access to facilities at Duqm. The HMS Queen Elizabeth, the largest ship in the British Navy is allowed to dock at the port, along with other vessels. As part of India’s maritime strategy to counter Chinese influence and activities in the region, India has secured access to the key point, in Oman. During India’s Prime Minister Narendra Modi’s visit to Oman in the second week of February 2018, India and Oman signed an annexure to the existing MoU on military co-operation between the defence ministries, which would allow India access to the key port of Duqm. Operational visits by Indian Naval ships and aircraft, as well as Indian Air Force aircraft are faciliated. The Port of Duqm has a special economic zone, where about $1.8 billion investments are being made by some Indian companies. India has invited Oman to participate in building strategic oil reserves in India. Oman, on its own initiative has created strategic oil reserves in Ras Markaz, near Duqm.

Middle East Nuclear power
Saudi Arabia has a nuclear plan of 16 reactors at a cost of upto $80 billion, with its own enrichment. Among the five firms bidding for the Saudi project is Westinghouse, an American company that filed for bankruptcy in 2017. It would not be able to join the project without a ‘‘123 agreement’’. Such deals, named after a clause in US export control laws, impose tough safeguards, in return for American Nuclear Technology. America seeks influence over the Saudi programme. Rosatom, Russia’s state-owned nuclear power company, is pursuing a frenetic sort of nuclear diplomacy in the Middle East. In December 2017, it signed a $21.3 billion contract to build Egypt’s first power reactor. Jordon signed a $10 billion deal with the Russians in 2015.

465,000 barrels of oil per day, is burnt by the Saudis for electricity. The last reactors in Saudi Arabia will not go online until the 2030s. They will generate less than one-sixth of the 120 gigawatts, needed during periods of peak demand. The kingdom generates almost nil gas and nil solar energy. The government is building a solar panel factory near Riyadh, the capital. ACWA Power, a Saudi firm is building a 300-megawatt solar farm in the northern district. The nuclear deal Iran signed with world powers in 2015, allows Iran to enrich uranium and to process the stuff only to a level far below what is required for a bomb. About 220 km in the desert from Abu Dhabi, the capital of United Arab Emirates, a South Korean firm has built the Arab world’s first operational nuclear-reactor. The project started ten years ago in Washington, where the Emirates negotiated a ‘‘123 agreement’’. The UAE signed the agreement in 2009, and also pledged not to enrich uranium or reprocess spent fuel into plutonium. Both can be used to make nuclear weapons.

Vol. 50, No.43, Apr 29 - May 05, 2018