1.The big deal behind the ruckus over AUKUS

China’s economic and military capacities as well as its belligerence have led to a shift in regional security paradigms

The announcement of the new Australia-U.K.-U.S. (AUKUS) trilateral security pact has naturally generated animated debate in strategic circles, coming as it does just days before the first in-person Quad Leaders Summit to be hosted by United States President Joe Biden on September 24 in Washington. Last week, HMS Queen Elizabeth, the flagship of the United Kingdom’s Carrier Strike Group, arrived in Japan after exercising with India, Malaysia and Singapore and traversing the disputed waters of the South China Sea. Exercise Malabar 2021, held in the Western Pacific from August 26-29, 2021, brought together, for the second year running, the U.S. Navy, Japanese Maritime Self-Defense Force (JMSDF), the Royal Australian Navy and the Indian Navy.

Indo-Pacific is the core issue

Earlier in April, France, which like the United Kingdom has historically been an Indo-Pacific power with territories and bases across the region, participated in a multi-nation naval exercise in the Bay of Bengal with the four Quad nations (the U.S., Japan, Australia and India). All this points to a vigorous strengthening of bilateral, trilateral and multi-lateral security dialogues and structures, seemingly different in scope and activity, but which converge on the core issue of maintaining peace and stability in the Indo-Pacific.

There is no gainsaying the fact that rapid accretion in China’s economic and military capacities, but more particularly its belligerence, has led to a tectonic shift in regional security paradigms.

The Quad is not a security arrangement though there is a widespread feeling that without stronger security underpinnings it would play a limited role in dealing with the real challenge of China’s militarisation. The Malabar exercise is not a naval alliance, even though the habit of cooperation is geared to facilitate communication and interoperability in times of need. Several countries have been obliged to review their defence preparedness in response to China’s rising military power and its adverse impact on regional stability.

In August, Japan’s Defence Ministry proposed a budget of U.S.$50 billion for the fiscal year 2022, which represents a 2.6% nominal increase in its annual defence spending. The traditional ceiling of limiting defence spending to under 1% of GDP is no longer sacrosanct. Its Defence White Paper, for the first time, highlighted the urgent need to take stock of developments around Taiwan, a clear acknowledgement that Japan’s own security is linked to stability in the Taiwan Strait where muscle-flexing by China is the new norm. It is not without reason that Australia’s defence budget has seen enhanced outlays for the ninth straight year. For the financial year 2020-2021, it touched AUD 44.61 billion (USD$34.84 billion) representing a 4.1% hike over the previous year.

The AUKUS pact will facilitate the transfer of nuclear submarine propulsion and manufacturing technologies to Australia, the first instance of a non-nuclear nation acquiring such capability. Even if the first of the eight nuclear-powered submarines may be available only around 2040, or perhaps a few years earlier, the very fact of Australia operating such advanced platforms adds a new dimension to the evolving maritime security architecture in the Indo-Pacific. It conclusively puts to rest a long-standing domestic debate on whether it was time for Australia to assess China through the strategic lens, overcoming the purely mercantile considerations that tended to dominate its China policy.

A chance for the U.K.

The AUKUS pact is also an emphatic assertion of the relevance of the U.S.-Australia Security Treaty (ANZUS). New Zealand, the outlier, walked away in 1984 from the treaty that ironically still bears its initials. Its “nuclear free” stance ran counter to the U.S. Navy’s non-disclosure policy in regard to nuclear weapons aboard visiting vessels. Close ties notwithstanding, Australia’s future fleet of nuclear submarines will not be permitted access to New Zealand’s ports or waters, as averred by Prime Minister Jacinda Ardern.

AUKUS provides a fresh opportunity to the United Kingdom to reinsert itself more directly into the Indo-Pacific. It is already a member of the Five Eyes (FVEY), an intelligence-sharing alliance built on Anglo-Saxon solidarity (Australia, Canada, New Zealand, the U.K., and the U.S.).

AUKUS is not a substitute for the Quad. At the same time, it does not erode the Quad’s significance as a platform for consultations and coordination on broader themes of maritime security, free and open trade, health care, critical technologies, supply chains and capacity-building. The AUKUS submarine deal, on the other hand, is an undiluted example of strategic defence collaboration, and a game-changer at that.

In 2016, Japan’s Mitsubishi-Kawasaki consortium that manufactures the Soryu-class diesel-electric submarine lost out to France’s Naval Group (formerly known as the DCNS) which bagged the contract to build 12 diesel-electric submarines in Australia to replace its six Collins-class vessels. The Shortfin Barracuda Block 1A submarine offered by France was a diesel-electric variant of its own Barracuda-class nuclear attack submarine. It is heightened threat perceptions that have now prompted Australia to switch from conventional to the far more potent nuclear attack submarines.

Beijing’s stance is odd

China, expectedly, has strongly criticised AUKUS and the submarine deal as promoting instability and stoking an arms race. This is sheer hypocrisy. China has the world’s fastest-growing fleet of sub-surface combatants, including the Type 093 Shang-class nuclear-powered attack submarine (SSN) and the Type 094 nuclear-powered Jin-class ballistic missile submarine (SSBN), not to speak of its burgeoning fleet of conventional diesel-electric submarines with AIP (air-independent propulsion) capability. Its nuclear submarines are on the prowl in the Indo-Pacific. Yet, China denies Australia and others the sovereign right to decide on their defence requirements!

As for India, it operates one indigenously-built SSBN (INS Arihant) after returning the SSN (INS Chakra) on lease from Russia. It operates a number of conventional submarines, though far fewer than what it truly needs, including the Scorpene-class diesel-electric attack submarine which is manufactured at Mazagon Dock Shipbuilders Ltd. (MDL) in collaboration with France’s Naval Group under Project 75.

Australia’s role gets a boost

Australia’s proposed nuclear submarines, whether the U.K.’s Astute-class attack submarine or the U.S.’s Virginia-class vessel, will potentially be fully equipped with advanced U.S. weapons such as the Mark-48 torpedoes, the Harpoon anti-ship missiles and the Tomahawk cruise missiles. These will give Australia quite a punch in terms of a stand-off capability. Situated as it is, far away from any other country, the diesel-electric attack submarines that it currently operates, or even those that it might have got from France, have limited capacity in terms of range and duration of mission as compared to nuclear-powered submarines. The growing focus on anti-submarine warfare across a more expansive region is clearly altering calculations.

Australia’s nuclear submarines would help create a new balance of power in the Indo-Pacific, especially in tandem with the U.S. and the U.K. Australia will now have a more meaningful naval deterrence of its own to protect its sovereign interests. Australia is set to play a more robust role in ensuring peace and stability in the Indo-Pacific.

France’s momentary pique at the cancellation of the contract by Australia should soon subside. As a major Indo-Pacific power, France is an important part of the regional security calculus. The setback ‘down under’ may spur France to focus afresh on partners such as India, which must strike a balance between continuing imports and implementing the all-important Atmanirbhar Bharat in defence manufacturing.

Rationale For Formation of AUKUS

• The UK, US and Australia have announced a historic security pact in the Asia-Pacific, in what’s seen as an effort to counter China.
  • It will let Australia build nuclear-powered submarines for the first time, using technology provided by the US.
• However, the three nations are already allied to each other, in more ways than one — the US and UK are NATO allies, and Australia, New Zealand and the US are linked by the ANZUS pact.
  • All three are also members of the “Five Eyes” intelligence alliance.
• This announcement places a question mark over the continuing relevance of this forum and its long-overdue actualisation as there is the Quadrilateral Security Dialogue (Quad) for the Indo-pacific realm.
• The inclusion of a much-diminished, post-Brexit UK in such a long-range alliance is bound to raise a few eyebrows.

Impact on Indo-Pacific Realm/QUAD

• There is concern that AUKUS could leave a deep scar on US-EU relations and the North Atlantic Treaty Organisation (NATO), and weaken the international coalition in the Indo-Pacific.
• France had cancelled a scheduled meeting of the foreign ministers of Australia, France, and India at the UN.
  • In the last couple of years, the trilateral has become an important element in the emerging Indo-Pacific architecture. But the cancellation of the meeting is a blow to the trilateral engagement.
• It is not clear whether the QUAD and AUKUS will reinforce each other or remain mutually exclusive.
  • There are some beliefs that the “Anglosphere nations” — which share common cultural and historical ties to the UK — inspire more confidence in each other.

Impact on India

• India Excluded: The creation of the AUKUS is an attempt to send a stronger message to China. However, China’s description of this alliance as an “exclusionary bloc,” should be food for thought for two members of the Quad/Malabar forums — India and Japan — who have been excluded from the new grouping.
• New USA Partner to Lead in Indo-Pacific:
  • Some major milestones in the Indo-US security relationship have been: Signing of the pathbreaking Indo-US Civil Nuclear Agreement, in 2008; launching of the Defence Technology and Trade Initiative in 2012; accord of the status of “Major Defence Partner” by the US Congress in 2016; grant of Tier 1 status to India, enabling export of high-technology items; and institution of “2+2 talks” in 2018. Signing of the fourth and last of the key “foundational agreements” in 2020, was supposed to have eliminated the final impediment to closer defence cooperation.
  • But AUKUS may be the beginning of a shift in the US policy which is about finding a new partner to lead in the Indo-Pacific region i.e. Australia.

Chinese Reaction

• China called on countries around the world to oppose “hegemony and division”.
  • China opposed acts that undermine the international order, create confrontation, and create division under the banner of so-called rules setting.
• China has proceeded to create artificial islands, and to convert them into fortified air bases.
  • Regular “freedom of navigation operations” by the US and allied navies have neither deterred, nor daunted China.
• Even more aggressive has been China’s conduct along the Sino-Indian border, where it has used massive military deployments to stake claims to large tracts of Indian territory, leading to a conflict in mid-June 2020.
  • India, having counter-mobilised, at considerable economic cost, has stood its ground. This dangerous confrontation is likely to continue.
• The Quad has neither created a charter nor invested itself with any substance, fearing that it would be dubbed an “Asian NATO.”
  • China, on its part, has dismissed the Quad as a “headline-grabbing idea which will dissipate like sea-foam”.

2.ADB cuts India’s 2021-22 growth forecast to 10%

Bank sees risks to outlook tilt to downside, hinging on pandemic; projects input costs to fan inflation to a faster 5.5% pace

The Asian Development Bank has cut its forecast for India’s GDP growth in 2021-22 to 10%, from 11% projected earlier, with downside risks dominating the economic outlook. The ADB also sees rising input costs fuelling inflation to a faster 5.5% pace, than the 5.2% previously estimated.

While the COVID-19 second wave had disrupted the recovery since the ADB’s April forecast for 11% growth, the Bank expects the economy to ‘rebound strongly in the remaining three quarters and grow by 10% in the full fiscal year before moderating to 7.5%’ in 2022-23.

Still, the risks to the outlook tilt to the downside and depend mainly on the evolution of the pandemic, the ADB’s director of macroeconomic research Abdul Abiad told The Hindu.

“The primary risks are centred around the pandemic,” said Dr. Abiad. “Until we get to the point that we have really widespread vaccination, countries still are at risk of renewed outbreaks as the Delta variant is much more infectious. So the main risk weighing on the outlook is if vaccination hasn’t progressed widely, the health system gets strained and the government needs to put restrictions on mobility again,” he explained.

‘Bit optimistic’

Conceding that the ADB’s outlook was a ‘bit optimistic’ compared to the Reserve Bank of India, which now expects 9.5% growth this year, Dr. Abiad said: “We didn’t change it much from our earlier forecast, because we have only had one quarter of the fiscal year yet and with the wide uncertainty, we wanted to stick to that and see how things evolve.”

That the second wave accelerated very rapidly but also declined very rapidly, allowing the economy to reopen was another key factor behind ADB’s assessment, and was backed by the Purchasing Managers’ Index (PMI) readings that had ‘switched to highly positive for India’, he pointed out.

“Because consumption will recover only gradually, government spending and exports will contribute more to this year’s growth than they did in the previous fiscal year,” the ADB said in an update to its Asian Development Outlook for 2021, emphasising that the healthy trend in export orders suggested that ‘strong external demand’ had helped cushion the impact of the second wave on the economy.

Blaming the uptick in India’s inflation on rising global oil prices and higher duties on gasoline and diesel fuel, along with double-digit consumer price inflation for pulses and vegetable oil, the ADB said a deficient monsoon could augur further inflationary pressure.

“Rising prices for oil and other commodities will further increase input and transportation costs for producers, which they will pass on to consumers. These push factors and the second-round effects of persistently high headline inflation from last year will keep core inflation elevated,” it warned.

About ADB:

• It is a regional development bank.
• established on 19 December 1966.
• headquartered — Manila, Philippines.
• official United Nations Observer.

Who can be its members?

The bank admits the members of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP, formerly the Economic Commission for Asia and the Far East or ECAFE) and non-regional developed countries.

• ADB now has 68 members, 49 from within Asia.

Voting rights:

• It is modeled closely on the World Bank, and has a similar weighted voting system where votes are distributed in proportion with members’ capital subscriptions.
• As of 31 December 2019, ADB’s five largest shareholders are Japan and the United States (each with 15.6% of total shares), the People’s Republic of China (6.4%), India (6.3%), and Australia (5.8%).

Roles and functions:

• Dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.
• This is carried out through investments – in the form of loans, grants and information sharing – in infrastructure, health care services, financial and public administration systems, helping nations prepare for the impact of climate change or better manage their natural resources, as well as other areas.

3.U.S. not seeking a new Cold War: Biden

As we close the period of relentless war, we’re opening a new era of relentless diplomacy, he says at UN

Delivering his first address at the UN General Assembly (UNGA), U.S. President Joe Biden said America was not seeking a “new Cold War” in a reference to the tensions between the U.S. and China. Mr. Biden said America was closing a chapter on “relentless war”, after its exit from Afghanistan and that it was opening a chapter on diplomacy, development and renewing democracy.

“We are not seeking a new Cold War, or a world divided into rigid blocs,” Mr. Biden said. “The United States is ready to work with any nation that steps up and pursues peaceful resolution to shared challenges, even if we have intense disagreement in other areas…” he said. The President did not name China.

He said America would compete vigorously and will stand up for its allies and oppose attempts by stronger countries to dominate weaker ones via changes to territory by force, economic coercion, technological exploitation or using information. Over the weekend, speaking to the Associated Press, UN Secretary General Antonio Guterres had asked the U.S. and China to mend their “completely dysfunctional” relationship.

“We need to avoid at all cost a Cold War that would be different from the past one, and probably more dangerous and more difficult to manage,” Mr. Guterres had said.

In his speech on Monday, Mr. Biden said the world stood at an inflection point and the future would depend on how it responded to a number of crises faced by humanity — COVID-19, climate change, the choice between “universal principles” and “the pursuit of naked political power”.

Democratic world

“The authoritarians of the world may seek to proclaim the end of the age of democracy, but they’re wrong,” Mr. Biden said. “The truth is, the democratic world is everywhere. It lives in the anti-corruption activist, the human rights defenders, the journalists, the peace protesters…”

Mr. Biden said the U.S., for its part, would, instead of fighting the wars of the past, focus on common challenges. He included trade, cyber issues, emerging technologies and the threat of terrorism on this list.

He said he was prioritising working with alliances and regional organisations, naming several, including NATO, the European Union, the Quad, the African Union and others as it focused on regions and issues of consequence. He cited the Indo-Pacific as an example of one of the most consequential regions in the world.

“We’ve ended 20 years of conflict in Afghanistan. And as we close this period of relentless war, we’re opening a new era of relentless diplomacy of using the power of our development aid to invest in new ways of lifting people up around the world; of renewing and defending democracy; of proving that no matter how challenging or how complex the problems you’re going to face, government by and for the people, is still the best way to deliver for all of our people,” Mr. Biden said. “U.S. military power must be our tool of last resort, not our first. It should not be used as an answer to every problem we see around the world,” he said. He dwelt on forms of U.S. engagement — such as vaccines, and funding to tackle the climate crisis.

Iran deal

The President said the U.S. was willing to return to full compliance with the Iran nuclear deal if Iran did the same. He also said he was seeking the “complete denuclearisation” of the Korean peninsula and that the U.S. believed in the two state solution, emphasising its support for Israel , which he characterised as “unequivocal”.

Mentioning the August terror attack at Kabul airport, Mr. Biden said the U.S. was adept at fighting terrorism without large-scale military deployments — such as by dismantling terror networks and financing.

Recently, 30^th anniversary of the fall of the Berlin Wall (which was brought down on 9/11/1989) was celebrated which had marked a pivotal event in the Cold War Era.

What is Cold War?

• The Cold War was a period (1945-1991) of geopolitical tension between the Soviet Union and its satellite states (the Eastern European countries), and the United States with its allies (the Western European countries) after World War II.
• Post World War II, the world got divided into two power blocs dominated by two superpowers viz. the Soviet Union and the US.
  • The two superpowers were primarily engaged in an ideological war between the capitalist USA and the communist Soviet Union.
• The term “Cold” is used because there was no large-scale fighting directly between the two sides.

Note:

• The Cold War was between Allied countries (UK, France etc. who were led by the US) and Soviet Union.
• Soviet Union
  • The Soviet Union, officially known as the Union of Soviet Socialist Republics (USSR).
  • It is the world’s first Communist state that was established in 1922.

Reasons of Cold War

Durning the World War Allied countries (US, UK and France) and Soviet Union fought together against the Axis powers (Nazi Germany, Japan, Austria). However, this wartime alliance could not workout after World War II, due to multiple factors.

Potsdam conference

• The Potsdam conference was held at Berlin in 1945 among US, UK and Soviet Union to discuss :
  • Immediate administration of defeated Germany.
  • Demarcation of boundary of Poland.
  • Occupation of Austria.
  • Role of the Soviet Union in Eastern Europe.
• Soviet Union wanted some portion of Poland (bordering Soviet Union) to be maintained as a buffer zone. However, the USA and UK didn’t agree to this demand.
• Also, the USA did not inform the Soviet Union about the exact nature of the atomic bomb, dropped on Japan. This created suspicion in Soviet Union about the intentions of western countries, embittering of the alliance.
• This created suspicion in the Soviet leadership.

Truman’s Doctrine

• Truman Doctrine was announced on March 12, 1947,by US President Harry S. Truman.
• The Truman Doctrine was a US policy to stop the Soviet Union’s communist and imperialist endeavors, through various ways like providing economic aid to other countries.
  • For example, US appropriated financial aid to support the economies and militaries of Greece and Turkey.
• Historians believe that the announcement of this doctrine marked the official declaration of the Cold War.

Iron Curtain

• Iron Curtain is the political, military, and ideological barrier erected by the Soviet Union after World War II to seal off itself and its dependent eastern and central European allies from open contact with the West and other noncommunist areas.
• On the east side of the Iron Curtain were the countries that were connected to or influenced by the Soviet Union, while on the west side were the countries that were allies of the US, UK or nominally neutral.

Important Events of the Cold War

Berlin Blockade 1948

• As the tension between Soviet Union and Allied countries grew, Soviet Union applied Berlin Blockade in 1948.
  • The Berlin Blockade was an attempt by the Soviet Union to limit the ability of Allied countries to travel to their sectors of Berlin.
• Further, on August 13, 1961, the Communist government of the German Democratic Republic began to build a barbed wire and concrete wall (Berlin Wall) between East and West Berlin.
  • It primarily served the objective of stemming mass emigration from East Berlin to West Berlin.
  • Except under special circumstances, travelers from East and West Berlin were rarely allowed across the border.
• This Berlin Wall served as a symbol of the Cold War (US and Soviet Union), until its fall in 1989.

History of the Berlin wall

• Allied countries (US, UK, France) and Soviet Union together defeated Nazi Germany in World War II in 1945, after which Yalta and Potsdam conferences (1945) were held between Soviet Union and Allied countries to decide the fate of Germany’s territories.
• At the conference, Germany was to be divided into zones under Russian, American, British and French influence.
• The eastern part of the country went to the Soviet Union, while the western part went to the United States, Great Britain and France.
  
  
  • Berlin, as the capital, was to be likewise split. However, Berlin happened to be in the middle of the Russian zone.
• The three Allied zones got merged and became the Federal Republic of Germany (FRG) or West Germany while the former Soviet occupation zone became the German Democratic Republic (GDR) or East Germany.
  • The division of Berlin was the main bone of contention between USSR and Allied countries, as West Berlin became an island within Communist East Germany.

• Berlin Wall fell on 9/11/1989, marking a symbolic end to the cold war.

The Marshall Plan vs The Cominform

• The Marshall Plan
  • In 1947, American Secretary of State George Marshall, unveiled European Recovery Programme (ERP), which offered economic and financial help wherever it was needed.
  • One of the aims of the ERP was to promote the economic recovery of Europe. However, this was an economic extension of the Truman Doctrine.
• The Cominform
  • The Soviet Union denounced the whole idea of Marshall Plan as ‘dollar imperialism.
  • Therefore, the Cominform (the Communist Information Bureau) – was launched in 1947, as the Soviet response to the Marshall Plan.
  • It was an organization to draw together mainly Eastern Europe countries.

NATO vs Warsaw Pact

• NATO (North Atlantic Treaty Organization)
  • The Berlin blockade showed the West’s military unreadiness and frightened them into making definite preparations.
  • Therefore, in 1948, mainly the countries of western Europe signed the Brussels Defence Treaty, promising military collaboration in case of war.
  • Later on Brussels Defence Treaty was joined by the USA, Canada, Portugal, Denmark, Iceland, Italy and Norway. This led to the formation of the North Atlantic Treaty Organization (NATO) in April 1949.
  • NATO countries agreed to regard an attack on any one of them as an attack on all of them, and placing their defence forces under a joint command.
• Warsaw Pact
  • The Warsaw Pact ( 1955) was signed between Russia and her satellite states shortly after West Germany was admitted to NATO.
  • The Pact was a mutual defense agreement, which the Western countries perceived as a reaction against West Germany’s membership of NATO.

Space Race

• Space exploration served as another dramatic arena for Cold War competition.
• In 1957, Soviet Union launched Sputnik I, the world’s first artificial satellite and the first man-made object to be placed into the Earth’s orbit.
• In 1958, the U.S. launched its own satellite called Explorer I.
• However, this space race was won by the US, when it successfully landed, the first man (Neil Armstrong) on the surface of the moon in 1969.

Arms Race

• The containment strategy of US provided the rationale for an unprecedented arms buildup in the United States, reciprocated by Soviet Union.
• Development of nuclear weapons took place on a massive scale and the world entered into the age of nuclear age.

The Cuban Missiles Crisis, 1962

• The Cuba got involved in the Cold War when US broke off its diplomatic relations with Cuba in 1961, and Soviet Union increased their economic aid to Cuba.
• In 1961, the USA planned Bay of Pigs invasion of Cuba, intending to overthrow the head of Cuban state (Fidel Castro), who was backed by the Soviet Union . However, the operation failed.
• Fidel Castro then appealed to the Soviet Union for military help, to which Soviet Union decided to set up a nuclear missile launchers in Cuba aimed at the USA.
• Cuban Missile Crisis, brought two superpowers on the brink of a nuclear war. However, the crisis was averted diplomatically.

End of the Cold War

In 1991, Soviet Union collapsed due to multiple factors which marked the end of the Cold War, as one of the superpowers was weakened.

Reasons of the collapse of the Soviet Union

• Military reasons
  • The space race and the arms race drained a considerable proportion of Soviet Union’s resources for military needs.
• Policies of Mikhail Gorbachev
  • In order to kick start moribund Soviet economy, Gorbachev instituted the policies of glasnost (“openness”) and perestroika (“restructuring”).
    • Glasnost was intended for liberalization of the political landscape.
    • Perestroika intended to introduce quasi free market policies in place of government-run industries.
      • It allowed more independent actions from various ministries and introduced many market-like reforms.
  • Rather than sparking a renaissance in Communist thought, these steps opened the floodgates to criticism of the entire Soviet apparatus.
    
    
    • The state lost control of both the media and the public sphere, and democratic reform movements gained steam throughout the Soviet Union.
    • Also, there was growing disenchantment in the public due to falling economy, poverty, unemployment, etc. This made the people of the Soviet Union attracted to western ideology and way of life.
• Afghanistan War
  • The Soviet-Afghan (1979–89) was another key factor in the breakup of the Soviet Union, as it drained the economic and military resources of Soviet Union.