The big deal in Tokyo

After concluding the nuclear deal with Japan, the Modi government must review India’s atrocious nuclear liability regime.

It is a big deal. Owing to the controversy over the replacement of currency notes, though, it has almost slipped popular attention. India and Japan have concluded an agreement that allows Japanese vendors to compete in the India’s nuclear power market.

The deal holds potential for greater competition in the Indian market for nuclear reactors and technology. It also is a shot in the arm for Japan’s beleaguered nuclear power sector, and can help in attempts to rejuvenate the Japanese economy. That’s the economics of it.

Greater significance lies in what persuaded Japan to set aside its decades-old anti-nuclear, ‘anti-proliferation’ stance and conclude a deal with a non-signatory of the nuclear non-proliferation treaty (NPT). Shinzo Abe is finding greater political traction in making big changes to Japan’s traditional foreign policy in the light of an assertive China that is fast expanding its geopolitical footprint. Prime Minister Abe’s policies are by no means fully accepted in the Japanese polity, but he is likely to have his way. With Donald Trump having created unprecedented doubts as to the United States’ commitment to its treaty allies, realists in Tokyo are even more likely to desire closer relationships with potential non-treaty allies (better known as ‘strategic partners’). 

To help get the deal through the Japanese Diet, Prime Minister Abe needs to reassure sceptics that Tokyo retains its anti-nuclear weapons positions. Hence, a note to the effect that Japan reserves the right to give a year’s notice and suspend nuclear commerce with India in the event of New Delhi conducting another nuclear test, was signed and exchanged following the formal nuclear agreement. The concession makes it easier to conclude the deal.

It is not unusual for Indian critics to complain that New Delhi conceded too much, based on a legalistic parsing of an international agreement and its associated notes. Such criticism is overstated. An agreement between two sovereign states depends to a overwhelming extent on the will of the parties to comply. If Japan seeks to renege, it can do so, no matter what is written and signed on paper. So legalities matter only to an extent. No sleep needs to be lost over the matter.

What policymakers and analysts in India should worry about is whether the atrocious law on nuclear liability is consistent with India’s energy, environmental and safety needs. At the moment it seems to restrict competition by keeping vendors from rule-of-law conscious countries out of the Indian market. Not only is the Indian power sector deprived of the possibility of newer and safer technologies, New Delhi (and its strategic partners) are unable to fully harvest the geopolitical rewards of nuclear deals. It makes little sense to sign nuclear deals with dozens of countries only to find that the liability clause is a show stopper.

All parties, including the BJP were complicit in enacting an unworkable nuclear liability law during the UPA government’s term. Now, the Modi government must undo the damage, confront the anti-nuclear lobbies and put in place a sensible nuclear liability regime.

TAPI’s confused objectives, risky implications

India should not invest in making itself vulnerable to geopolitical blackmail

Kabir Taneja quotes me in an article in the Sunday Guardian on the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project. Here are my views in greater detail.

What is your general consensus on TAPI? Does it benefit India geo-politically?

It is unclear what India’s primary purpose is with respect to the TAPI and the IPI gas pipelines. If it is energy security, then clearly placing an important source of fuel in the hands of a hostile actor like the Pakistani military-jihadi complex defeats the purpose. If it is geopolitics, it raises the question if energy security is being sacrificed at the altar of wishful thinking about potential geopolitical gains.

India would do well to invest in LNG terminals and infrastructure, enabling it to purchase gas from anywhere in the world, including from Iran and Russia. Energy security lies in trying to make the international natural gas market as competitive as possible.

What are your main reservations on the project?

Any project that relies on Pakistan is fundamentally risky.

First, even before the resurgence of the Baloch insurgency, pipelines were routinely targeted in inter-tribal political violence. Now with a full-blown insurgency, the extent of which is unclear, but where Pakistani air power and armour is being employed, the political risk rules out any pipeline investment.

Second, the Pakistani military-jihadi complex has entirely different incentives compared to the the putative Pakistani state. It’s tendency to pursue actions that undermine Pakistan are well-known: it conducted nuclear tests in 1998 despite knowing that this will cripple the economy. More pertinently, it has blocked the transit routes for US & NATO forces since Dec 2011 even at the cost of more than $1.2 billion in coalition support fund payments that it is owed. The transit route business is highly profitable to the army and its business empire. A conservative estimate is that the Pakistani military establishment collected around $360 million in different forms of rent, over the last five years.

This puts paid to the assertion that the Pakistani army will permit transit if it benefits financially. Clearly, its behaviour shows that is not the case. The Pakistani army is likely to use the gas pipelines as leverage against India and Afghanistan, regardless of the economic consequences to itself.

Supporters of TAPI suggest that it will help tame the populations of troubled regions in Afghanistan and Pakistan by creating mass employment. Thoughts?

This is a dubious suggestion. In fact, it would be terrible to impose a “resource curse” on a population wracked by radicalism and violence. What the region needs is investment in human capital and political stability that allows normal economic activity to take off. Putting gas fields and pipelines in regions of turmoil will create political economies that might worsen the conflict by providing more funds to warlords. Unless the fundamental security problem is tackled, gas revenues, like drug revenues, flow into the war chests of militant groups.

The Asian Balance: US-Iran rapprochement

Can we help Washington and Tehran to get over it?

This is the unedited version of yesterday’s column in Business Standard.

As the war in Afghanistan enters what might be an endgame, it remains clear that there is broad convergence of geopolitical interests between two sets of players: Pakistan, Saudi Arabia and China on the one hand, and India, Iran and the United States on the other. If Pakistan achieves its ‘strategic depth’ in Afghanistan, it benefits Saudi Arabia to the extent that such an outcome unsettles Iran, Riyadh’s regional and sectarian-ideological rival. For China, this means the United States is kept away from its south-western land frontiers, that Beijing is saved the messy business of intervening in Afghanistan and that friendly regimes help it manage the restive Uyghurs in Xinjiang.

If Beijing has masterfully managed its relationship with its natural allies, Washington has allowed a dogmatic petulance over Iran take over strategic sense. Why else would it work to undermine co-operation among India, Iran and the United States to address the unprecedented threats to international security emanating from Pakistan’s military-jihadi complex?

Imagine how profoundly the geopolitics of Asia would change were Iran and the United States to co-operate, even if it is in the limited context of Afghanistan. Remember, the Iranians collaborated with their ‘Great Satan’ ten years ago, in the aftermath of 9/11, to get rid of the nearer shaitans to their east.

Since improved ties between Iran and the United States are in India’s interest, we should wonder why New Delhi doesn’t do anything to lubricate a rapprochement.

This brings us to two myths about our own relationship with Tehran. Myth No 1 is that without the Iran-Pakistan-India gas pipeline, we can neither buy gas from Iran nor really have a good bilateral relationship with it. Myth No 2 holds that the scope of India-Iran relations is limited by the tensions between Washington and Tehran. If it appears that these are ground realities, and not myths, it is because New Delhi chooses to make them so.

We don’t need a pipeline, over land or under sea, to get gas from Iran. We can purchase it as liquified natural gas (LNG) and ship it across to regasification terminals on India’s shores.

The fascination with pipelines is part economics, part statist mindset, and part due to a belief that a pipeline can bring peace between India and Pakistan.

Shipping LNG might be more expensive than the pipeline, but considering that the IPI pipeline  traverses the most dangerous territory in the world, the risk premium on the piped gas makes the project unviable without government subsidies. In other words, the taxpayer is being asked to make good what is fundamentally an unsound business case. Furthermore, even if pipelines can lock down gas supplies, Russia’s attempts to coerce Europe using its monopoly position at the head end of pipelines demonstrate that being at the receiving end can be uncomfortable.

Proponents of a ‘peace pipeline’ need to be asked whether India needs the pipeline for ‘peace’ or for energy security. Should India’s energy security be hostage to fantasies of those who want to put India’s jugular in the hands of the Pakistani military establishment? It is astounding that a project that deliberately creates a vulnerability that Pakistan can exploit at will is somehow considered part of energy security.

Forget the pipeline. We must make strategic investments in LNG, enabling us to purchase supplies from anywhere, including from Iran.

On to the second myth. With India in a position to be a geopolitical swing power, India’s ties with Iran need not be hostage to the tensions between Washington and Tehran.

Some might argue that this is already the case today, but the results on the ground have been unsatisfactory. Last year, Ayatollah Khamenei included Kashmir in the list of lands that needed to be “rescued from the demonic clutches of hegemonic powers.” US pressure caused India to disallow crude oil purchases from Iran under the Asian Clearing Union (ACU) mechanism, hurting Indian importers and refiners. We are getting assailed by both sides.

New Delhi should declare India’s interest in a rapprochement between the United States and Iran and work to bring them together, unofficially to start off with, and officially when it becomes possible. Indian diplomacy must be focused on persuading the two sides to undertake confidence-building measures. The goal should be to persuade the two sides to begin formal talks, under a ‘truce’ with Washington committing to non-aggression while Tehran halts its nuclear programme. Such a proposal will be rebuffed, but that need not deter us from taking our position.

Ayatollah Khamenei and President Mahmoud Ahmedinejad may not very receptive, but let’s remember ayatollahs and presidents can change, or change their minds. If a moderate Khatami could be replaced by a Ahmedinejad, the excesses of the latter could well cause a shift back to the centre. Similarly, if the United States is cozying up to Vietnam today, and even talking to the Taliban, Washington is not totally devoid of realism.

So things can change. Especially if New Delhi musters the imagination and resolve that distinguish statesmanship from mere diplomacy.

Fukushima – a preliminary assessment

…and implications for India

1. All six reactors at Fukushima Daiichi 1 nuclear power station automatically shut down after the earthquake in North-east Japan on March 11th, 2011. Automatic shutdown, an important safety feature to prevent catastrophic leakage of radiation, involves the complete insertion of control rods into the fuel core to stop the nuclear fission reactions. Had reactors not been designed with this crucial safety feature, the potential tragedy would have been immediate and far worse. Therefore, even in the worst case, the radiation damage will be much lower than if this were not the case. [See David Ropeik’s post at Scientific American blogs]

2. The problems at Fukushima Daiichi 1 power station involve the malfunction and failure of post-shutdown safety systems. Fuel cores generate heat for some time even after the reactor is shut down, and need to be cooled using a circulation of water. The diesel generator & batteries that pump the coolant water into the reactors malfunctioned, either due to internal faults or due to the damage caused by the earthquake, resulting in the failure of the normal cooling mechanisms. Two of the six reactors at Fukushima suffered this problem. The nuclear plant authorities, assisted by Japanese armed forces, are attempting to ensure that the fuel core is cooled by pumping water through other means or by flooding the reactor cores with sea water.

3. The reactor core is enclosed in a thick steel & reinforced concrete containment vessel. Even if, in the worst case, the attempts to cool the reactor cores fail, causing the fuel rods to melt, radiation leakage will be limited to the extent that the containment vessel remains intact. [See this post at Atomic Insights]

4. Despite the boiling water reactor technology used in Fukushima Daiichi 1 being 40 years old, it has performed reasonably well given the intensity of the earthquake and tsunami. The automatic shutdown worked. Even if the post-shutdown safety systems malfunctioned, they did so in a manner that gave engineers and policymakers crucial time to plan emergency manoeuvres, make important decisions and evacuate the public. Modern reactor designs take into a account the historical experience since 1970 (when Fukushima’s first reactor came online), including technologies to make the post-shutdown cooling less dependent on diesel/batter-powered pumping. The Westinghouse AP1000 reactor, for instance, places the cooling unit above the reactor core, so that it would flow down naturally.

5. Fukushima’s managers might have thought that they could implement the cooling without having to use the final option of injecting seawater and permanently putting the reactors out of commission. There are three possibilities why they waited almost a whole day before taking this option (for Reactor 1). First, they might have estimated the risk of radiation leakage to be low enough to warrant attempting other options. Second, commercial imperatives caused them to try and save the reactor, even at the risk of a threat to the public. Third, relevant engineers, officials and policymakers couldn’t make an immediate decision for some reason. With the available information, and given the Japanese context, it is likely that it was the first of the three possibilities—that the risks of radiation was estimated to be low.

6. Japanese authorities have been both calm and prudent in responding to the situation. They have provided timely information (given that the nuclear emergency is taking place within a larger natural disaster situation), ordered the population in a 10km (and subsequently 20km) radius to evacuate, made arrangement for the distribution of iodine pills and generally called for calm. Prime Minister Naoto Kan himself visited Fukushima the day after the quake.

6. Nuclear energy remains a relatively safe, clean and secure way of generating power. It remains to be seen how Japanese engineers & policymakers handle the technical and policy challenges (not least involving release of radioactive vapour into the atmosphere). It is possible that attempts to cool the reactor will not succeed. Even so, the technological vintage, the age of the reactors, the unprecedented nature of the disaster and the relative safety performance of the Fukushima reactors must be seen in perspective while assessing the impact of this incident on the future of civilian nuclear power.

7. India is well-placed to benefit from a global nuclear renaissance. The international nuclear power industry was in the doldrums for the last three decades after a nuclear emergency in Three Mile Island in the United States and the disaster at Chernobyl in the Soviet Union. However, projected shortage of fossil fuels and environmental concerns have triggered a renewed interest in nuclear power in recent years. Unlike 30 years ago, neither is the Indian civilian nuclear sector closed to foreign investment nor is the Indian scientific establishment locked in by international sanctions. This presents a strategic opportunity for India to not only expand the use of nuclear energy to strengthen its energy security, but also for Indian companies to become international players in this sector. As such it is in India’s interests to debunk irrational, unjustified and motivated campaigns to discredit nuclear power.

Relating the fiscal deficit to the price of oil

Every $10 increase in oil prices causes a fiscal deficit of between 0.6% to 1.3% of GDP

One of the issues discussed at last weekend’s Friends of Takshashila meeting in Singapore was the relationship between fiscal deficit and the oil price. Aditya Palwankar, who was there, has this to share:

“I had mentioned that every $10/bbl rise in oil prices would impact India’s fiscal deficit by 0.8% of GDP. In fact, as a recent report by Morgan Stanley suggests, it is even worse. It suggests 0.9% of GDP in FY2011 ($85/bbl) and 1.3% of GDP for FY2012 (assuming oil prices at $100/bbl) as the additional subsidy on account of oil price rise.”

Our Oil and Gas analyst Vinay Jaising estimates the under-recoveries at US$14.3bn (0.9% of GDP) for F2011 (12-months ending March 2011), assuming oil at US$85/bbl for F3Q11 and US$90/bbl for F4Q11. For F2012, assuming oil averages US$100/bbl, he estimates oil subsidy burden of US$24.7bn (1.3% of GDP). In fact, for every incremental US$1bbl change in the crude oil price, he estimates the subsidy burden to increase by ~US$612mn in F2011 and US$629mn for F2012. [Chetan Ahya/Morgan Stanley]

Mr Palwankar adds: “The relationship is deduced as follows: sum total of all subsidy on account of oil (LPG, Kerosene, HSD, Petrol and ATF) divided by the nominal GDP of the country. For FY2011 (Apr-Mar), Morgan Stanley expects total subsidy to be $14.3bn and India’s nominal GDP is expected to be $1,600bn. Hence dividing the two we get 0.9% of GDP.

Of course, the 0.8% to 1.3% range is assuming oil prices between $85-$100/bbl and real GDP growth of 8% and nominal GDP growth of 14-15%.

But these appear to be best case scenarios because if oil prices go up to say $120/bbl, there will be a triple whammy, namely a spike in current account deficit (funded through capital flows), increase in oil subsidy (funded through the fisc) and slowdown in economic growth (due to lack of capital). I am not counting the impact on inflation here, to sound not too negative. On the other hand if oil prices come down to $80-85/bbl, we will still be in the region of 0.6-0.7% of GDP in F2012 assuming a nominal GDP growth of 15% and no change in oil prices.

(Let us see) India’s oil subsidy in the context of what it costs to build efficient public transportation systems in urban India. Delhi Metro phases 1 & 2 costs were estimated at $3.3bn in 2004. Even if you were to adjust the cost for inflation (at 10%), it would not cross $6bn. Oil subsidy in each of the previous five years has been at least upwards of $5bn. Had we spent this subsidy in building long term efficient public transportation systems instead, we could have made some impact on the rising demand for oil as also reduce the severe congestion we find on Indian roads.”

Up Persian creek without a strategy

India must get its act together on Iran…quickly

The apparent lack of policy co-ordination within the Indian government over Iran is really worrying.

We are referring to the RBI’s decisions in recent days closing the Asian Clearing Union (ACU) mechanism to imports—beginning with oil and extending to other goods and services—from Iran. The move not only caught the industry by surprise. And it looks like it caught the relevant government ministries by surprise as well. Given that Iran is India’s second largest supplier of crude oil accounting for around 13 percent ($12 billion) of oil imports and the risk of a short-term supply shock sending oil prices higher, the lack of policy coordination amounts to dereliction of duty.

The lack of coordination reflects a deeper malaise—the UPA government’s inability to evolve a coherent policy on Iran, with the result that New Delhi is forever in reactive mode. [See: Will the Ayatollah step behind the line?] The overall failure of Prime Minister Manmohan Singh and his government to communicate with the public—witness how they botched up the India-US nuclear deal—means that no political leader explains why the government is doing whatever it is doing, and why difficult decisions have to be made. The latter would still be acceptable if the government executed in a competent fashion—like in the case of the nuclear deal—but intolerable where execution is poor.

In this case, there is no evidence that the relevant cabinet committees ever discussed the implications of RBI’s move and took the necessary measures to manage the fallout. The RBI’s independence doesn’t preclude coordination in matters like this. A competent government would have reassured the markets and the public that although RBI’s measures against imports from Iran would put 13% of India’s supply of crude at risk, it has alternative plans to protect the Indian economy. Instead we were left working out the implications of terse press releases issued by the central bank.

What might those alternative plans be? These could involve arrangements to import Iranian oil through other currencies (or the Indian rupee), assurances from other suppliers (read Saudi Arabia) that they will make up the shortfall or both. Given Saudi interests in keeping the lid on Iran’s nuclear programme, New Delhi could have extracted the latter as the price of tightening the financial screws on Iran. Indeed, not extracting such a price is a good opportunity squandered.

India must get its act together on Iran. First, it is in India’s interests to ensure that Iranian oil and gas continue to provide the economy with the supply diversity that an oil-importing country needs. If this objective is inconsistent with playing responsible global citizen then so be it.

Second, given that Iran shares an interest in preventing Afghanistan from falling under the sway of a Saudi-Pakistani-Taliban nexus, India needs to continue to engage Iran.

Third, while a nuclear-armed Iran may or may not be entirely in India’s interests, it is far better to manage the consequences thereof than to countenance the use of military force in a futile attempt to stop it.

Finally, while international sanctions are unlikely to prevent a determined Iran from developing a nuclear weapon, it is geopolitically costly to stay out of the Western consensus. Unless sanctions prohibit India from purchasing Iranian oil and gas, it is better for India to be part of the sanctions regime.

Reconciling these objectives is not easy, but not impossible either. The big prize in foreign policy, however, is for India to assiduously work to bridge the divide between the United States and Iran. This—more than securing a permanent seat at the UN Security Council—is a project that is worthy of a rising global power. This task of international statesmanship requires a real leadership at South Block and the PMO. Till that time we can have day-to-day issue management, not strategy.

The new year begins with a question mark on oil imports from Iran. The larger question mark though is whether the UPA government will now realise that it finds itself in a jam over Iran because it has no ideas of its own.

Pax Indica: Playing the energy game with China

Why India must promote democracy abroad & private enterprise at home

An interesting conversation with Rajeev Mantri & Yogesh Mokashi last week led to the writing of this piece: how might India compete against China in the global quest for energy (and other) resources:

Moreover, the “game” is not one-off. It is a continuous ongoing game that will be played for generations. Nor is it entirely “zero-sum”. It is possible to envision a world where both China and India have access to the energy resources they need. Such a world is possible even when, perhaps only when, the two countries are competing (in a free market) for those resources. Such a world, however, will cer-tainly not come into being merely by wishing for it. It has to evolve, under the tender loving care of nuclear weapons.

The Indian government is trying to improve its score. It has set overseas acquisition targets for state-owned corporations and permitted them to spend $1.1 billion ‘without government approval’. This might yet produce some results—especially if it is backed by political support. It is unlikely, though, that bidding wars with companies that have parents with the world’s deepest pockets are winnable. That’s not all. As India found out in Kazakhstan in August 2005, the kid whose dad drives a Merc can get the goalposts shifted after the game begins.

Clearly, India’s strategy must be different. It must be one that plays to India’s strong points. It must also be one that undermines China’s advantages. The greatest asymmetries that are in India’s favour are democracy and private enterprise.

Consider. It would be much harder for China to move goalposts by coddling the dictator if there were no dictator to coddle. It would be much easier for Indian companies to compete against Chinese ones if the former didn’t have the Government of India as the single largest shareholder. In other words, in the long term, it is in India’s interests for resource-rich countries to be democracies. It is also in India’s interests to facilitate its private sector to expand globally. [Yahoo! India]

Read the whole thing at Yahoo!

Realism in Riyadh

Getting Saudi Arabia to take responsibility for Pakistan’s actions is in India’s interests

At a recent conference in Abu Dhabi on emerging powers and the Middle East, one of the arguments I made was that a stable Afghanistan requires a balance of two distinct sets of powers—India-Iran-Russia on the one hand, and China-Pakistan-Saudi Arabia on the other. Even so, I suggested, Saudi Arabia (and the Gulf Arab states) would be better off not wholly aligning themselves to China, because they would be better off by balancing the two Asian powers than hitching themselves to any one of them.

The Saudi Arabian government has unparalleled clout in Pakistan—not only does it have influence over almost all of Pakistan’s power centres, it is also popular with the masses. Riyadh has managed Pakistan masterfully. While there is a Saudi-Pakistan nuclear nexus (and a Saudi-China ballistic missile nexus) it is focused on Riyadh’s perception of the strategic threat from Iran. And while the Saudi Arabian regime continues to promote its version of Islam across the world—including India—it also recognises that global jihadi terrorism undermines its own interests.

The Kingdom of Saudi Arabia, like any other state, is deeply interested in its own survival and security—just as it uses Islam to promote its interests, it has not shied away from putting down any threats to its own survival. It allowed French special forces to storm the Grand Mosque at Mecca in 1979, it allowed US forces to operate from its soil against Iraq and it has not allowed the Palestinian struggle to come in the way of a modus vivendi with Israel.

Given all this, it makes good sense for India to engage Saudi Arabia on managing the security threat emanating from Pakistan. Shashi Tharoor is right when he said “Saudi Arabia of course has a long and close relationship with Pakistan but that makes Saudi Arabia all the more valuable interlocutor for us” (via Smita Prakash/ANI). Introducing the special issue of Pragati in February 2009, we had argued that the dynamics of Pakistan’s relationship with United States, China and Saudi Arabia are changing and that “there is an opportunity for India to engage in bold, imaginative diplomacy to galvanise the international community to radically change Pakistan’s course.”

Recognising Saudi Arabia as an interlocutor on Pakistan brings Riyadh’s role above the table. India must compel the Kingdom to take responsibility for the actions of its wards in Islamabad and Rawalpindi. Even if religious solidarity, personal relationships and the nuclear nexus are factors that shape Saudi policy, Riyadh is unlikely to be insensitive to its overall geopolitical interests. In January 2006, The Acorn wrote that “Saudi Arabia is taking baby steps towards a different relationship with India. Though that may be too gradual for India’s liking, it is nevertheless a welcome development.” So too are the milestones scheduled to be highlighted during Prime Minister Manmohan Singh’s trip this week. [Related Links: Jyoti Malhotra in Business Standard, article & editorial in Arab News]

Just as the Saudis are better off hedging India and China, it is in India’s interests to balance the powers on either side of the Persian Gulf.

Tailpiece: Back at the conference, I challenged the conventional wisdom that it is India-Pakistan tensions (oversimplified to “Kashmir”) that stand in the way of Afghanistan’s stability. Rather, I argued, it is the US-Iran relationship that forces the United States to rely on a state that has opposing interests (Pakistan) and repulse a state that shares them (Iran). Lubricating a US-Iran rapprochement is in India’s interests.

Ruddying relations

A closer strategic India-Australia relationship—the “how”

The Lowy Institute has released an excellent policy brief, authored by Rory Medcalf, coinciding with Australian prime minister Kevin Rudd’s first visit to India. You should read it in full—but the cogent executive summary is worth reproducing on this blog.

What is the problem
Strategic ties between Australia and India keep falling short of expectations, despite strong growth in trade. Controversy over the welfare of Indian students has added to differences over uranium exports to cloud what should be promising links between two countries with many common concerns. The relationship will weather recent turbulence. But without major diplomatic initiatives soon, the prospects for a truly strategic partnership between these Indian Ocean democracies will be set back for years.

What should be done?
The relationship needs to be invigorated through a leaders’ commitment to a strategic partnership, informed by a fresh awareness of how each country can help the other increase its security. This needs to be more than rhetoric.

A bilateral security declaration would add Australia-India relations to a regional web of defence ties involving Japan and South Korea. India should reciprocate Australia’s overtures to engage as a priority maritime partner, including in exercises. The two armies should help each other too, for example in special forces training.

Australia and India should work to expand common ground on nuclear non- proliferation and disarmament, which might help open the way on uranium sales. Both governments need fully to grasp Australia’s vast potential in ensuring India’s energy security.

Regular strategic dialogue should focus on common interests, including relating to China, Pakistan, Afghanistan, terrorism and maritime security. Options should also be explored for new regional arrangements including a three-party forum with Indonesia. [Lowy]

Related Link: Mr Medcalf also has an op-ed in today’s Indian Express. In the February 2008 issue of Pragati he argued that closer India-Australia ties requires political will on both sides.

Pragati May 2009: Changing China

The controversy over a new book by Chinese intellectuals arguing for China to adopt a strong nationalist-realist posture in its foreign policy has gone largely unnoticed in India. Yet the issue is important: not merely for what the authors argue but also for the response the book has received from other thinkers and opinion makers in China. The cover story of the May 2009 issue of Pragati hopes to bring this debate to your attention. We also take a look at recent trends in party-army relations in China.

In our special issue on Pakistan (No 23 | February 2009) we had argued that only a MacArthur-like international intervention can stem the tide of Talibanisation in Pakistan. In this issue we present arguments by Pakistani analysts who argue how the necessary change might come from within Pakistan.

Also in this issue: discussions on black money; on human rights activists who discredit their cause; and on understanding why states fight over natural resources. And more…

Download (PDF) and visit the website.