1.Countering a political act that has a legal garb

With sedition cases rising, often solely based on word usage, people need to have a political and legal defence

Aisha Sultana, a film-maker from Lakshadweep, was recently booked for the alleged offences of sedition and statements prejudicial to national integrity. A crime was registered based on a complaint by a leader of the Bharatiya Janata Party (BJP). Ms. Sultana then moved the Kerala High Court for pre-arrest bail. The court allowed interim bail to her on June 17. Ms. Sultana thus got temporary relief from incarceration. The court will pass its final orders in the application shortly.

Ms. Sultana’s case is only one among the numerous sedition cases recently registered in the country. In Lakshadweep, people have had sedition slapped against them for putting up placards or posters against the Prime Minister. Ms. Sultana’s case also reveals the regime’s political strategy to threaten dissidents.

Background and implications

Ms. Sultana is alleged to have used the word ‘bioweapon’ in a television discussion about the recent developments in Lakshadweep and its draft reforms. She said it while deliberating over the Lakshadweep Administrator’s actions and omissions that allegedly contributed to the spread of the COVID-19 pandemic on the island, which was free from the virus in 2020. Ms. Sultana indicated in her petition before the court and to the media that she is apologetic about the word used. In an interview she said that her “bioweapon remark” was a “mistake” and that she was “entrapped”.

Hindutva forces have relied heavily on this subsequent posture which she publicly made, to strengthen their stand. They tried to create a false sense of moral victory and legitimacy to back their position, which they thoroughly lack.

Ms. Sultana is not a political activist. And it is probable that she may not be very articulate or even be able to present strong arguments on the affairs of the nation. It seemed like she was partly accusing herself or acknowledging the ‘mistake’ in some way. This self-accusation was, however, unwarranted. When the purpose of the sedition law is to curtail opposing ideas, her rescission had the effect of legitimising the state’s wrongful action.

Lessons from history

Ms. Sultana’s case is a case study for those who are concerned about the country’s liberal values. The offence of sedition under Section 124A of the Indian Penal Code (IPC) was inserted in the Code in 1870. In the great trial of 1922, Mahatma Gandhi, charged with sedition, described the provision as “perhaps the prince among the political sections of the IPC designed to suppress the liberty of the citizen.” Gandhiji, who himself was a lawyer, made two points in his statement given on March 18, 1922. One, he admitted the charge of preaching disaffection towards the then existing regime. Two, he justified his act and said that it was his duty to do so as it is “a sin to have affection for the system (under the British Raj)”. He explained that “Affection cannot be manufactured or regulated by law. If one has no affection for a person or system, one should be free to give the fullest expression to his disaffection so long as he does not contemplate, promote, or incite to violence.”

This statement is not only political but also legal. Curiously, this assertion that Gandhiji made in the court was indirectly laid down as the law by the Constitution Bench of the Supreme Court of India in Kedar Nath Singh (1962) which said that incitement to violence is the gist of the offence of sedition. This proposition was followed by the top court consistently, till Vinod Dua (2021), where the Court said that a journalist cannot be booked for sedition for expressing dissent.

The law was clear even when Gandhiji was convicted and sentenced. Evidently, the charge and the conviction were political, not legal. Even today, the very registration of crimes against political opponents under the draconian laws is essentially a political act, though it takes a legal form. According to the report by the National Crime Records Bureau (NCRB), between 2016 and 2019 there was a 160% increase in the registration of sedition cases whereas the conviction rate during this period fell from 33.3% to 3.3%. Thus, the process itself becomes the punishment.

Therefore, one needs to build up a political defence as well as legal defence against such charges. Litigation is not merely a means for the redress of grievance. When the charges are under ‘political sections’, as Gandhiji eloquently described, they need to be countered by a political praxis as well. Only such a course would expose the egregious motive of the state in accusing its citizens of the offence of sedition without any legal or factual foundation whatsoever. Only such a resistance would be able to re-educate our judicial institutions constitutionally and historically, and to ensure dialogic democracy.

Unfortunately, Ms. Sultana’s subsequent expression of regret does not pass this political test. She could have asserted that the word she used was correct and proper. It was possible for her to justify it as an imagery capable of exposing the regime’s unprincipled approach in Lakshadweep.

It needs to be told that the British Raj used the draconian provision only when they alleged that a speech or a writing resulted in violence,or there was at least a remote connection between the overt act and social disturbance. Bal Gangadhar Tilak was tried in 1897 on an accusation that the articles in Kesari, a Marathi paper owned by him, incited violence that led to the killing of two British officers. Tilak was convicted and sentenced to undergo rigorous imprisonment for 18 months. In 1908, he was again tried and later sentenced for writing “seditious” articles and by connecting them with certain instances of ‘social disorder’. Post-Independence, in Kedar Nath Singh, the accusation among others, was that Kedar Nath, a Forward Communist Party leader, had asserted his belief in a revolution “in the flames of which the capitalists, zamindars, and the Congress leaders of India….will be reduced to ashes….” The Court said that “comments, however strongly worded, expressing disapprobation of actions of the Government, without exciting those feelings which generate the inclination to cause public disorder by acts of violence, would not be penal”. In Balwant Singh (1995), slogans for an independent Sikh nation were found to be not seditious for want of the ingredient of incitement to violence. None of these prominent cases relied on the mere use of words to make out the offence.

A new judicial activism

But after 2014, cases of sedition are frequently and intentionally registered solely based on words spoken, written, or tweeted. This can have a chilling effect on people’s movements. The clear political object behind the invocation of the law is to create an atmosphere of fear. This, in a way, is the price which the country had to pay for the retention of the law of sedition, among other draconian laws. Therefore, the Supreme Court of India and the High Courts should take suo motu cognisance of the incidents where the state ostensibly uses draconian laws to suppress criticism and protest. This is difficult, but not impossible. Such suo motu proceedings would reflect the kind of judicial activism that our time demands. The organised Bar, especially at the State level, must perform its libertarian role by constantly demanding for a judiciary that values freedom and acts for it.

What is the issue?

• The Section 124A (Sedition) of the Indian Penal Code (IPC) is being used more often recently.
• So, it is important to have a look at what courts and the Maharashtra government have said about the Section 124A IPC.

What is the Section 124A?

• Section 124A IPC states that whoever brings or attempts to bring hatred or contempt, or excites or attempts to excite disaffection towards, the Government established by law in India shall be punished.
• The punishment may involve imprisonment of 3 years to life term, to which a fine may be added; or, with fine.

What is its validity?

• Section 124A has been challenged in various courts in specific cases.
• The validity of the provision itself was upheld by a Constitution Bench of the Supreme Court (SC) in 1962, in Kedarnath Singh vs State of Bihar.
• That judgment went into the issue of whether the law on sedition is consistent with the fundamental right under Article 19 (1) (a).
• [Article 19(1)(a) guarantees freedom of speech and expression].
• The SC laid down that every citizen has a right to say or write about the government by way of criticism or comment.
• It also added that this comment shouldn’t incite people to violence against the government established by law or with the intention of creating public disorder.
• The SC ruled that casual raising of slogans, once or twice by two individuals alone cannot be said to be aimed at exciting or attempt to excite hatred or disaffection by the government.

What is the Maharashtra circular?

• In a 2015 circular, the Maharashtra government laid down the preconditions to its police personnel before invoking sedition.
• The circular came during the hearing of a public interest litigation (PIL) in the Bombay High Court, after a cartoonist was booked for sedition.
• The sedition charge was subsequently dropped by the police; a PIL was filed in 2015 on the alleged arbitrary application of the charge.

What the High Court (HC) said?

• In 2015, the HC referred to the Kedarnath judgment and said there was a need to lay down parameters for the invocation of Section 124A.
• Otherwise a situation would result in which an unrestricted recourse to Section 124A resulting in a serious encroachment of guarantee of personal liberty conferred upon every citizen of a free society.
• However, the court said it did not feel the need to dwell on the subject further.
• It said so due to the fact that the then state government had proposed that it would issue guidelines in the form of a circular to all its police personnel for the invocation of Section 124A.

What are the state guidelines?

• The circular was issued, and its guidelines included preconditions to be kept in mind while invocation of 124A.
• The preconditions were that the words, signs or representations must,
  1. Bring the government into hatred or contempt or
  2. Cause or attempt to cause disaffection, enmity or disloyalty to the government.
• Along with these, it must also inciting violence or tend to create public disorder or a reasonable apprehension of public disorder.
• The comments expressing criticism of the government with a view to change the government by lawful means without any of the above are not seditious under Section 124A.
• To ensure that the section is used arbitrarily, the circular directed that a legal opinion from the district law officer should be taken by the public prosecutor addressing fulfilment of these conditions.

 2.Policy creep

Overregulation risks retarding growth and job creation in the e-commerce sector

Barely 11 months after the Government notified the Consumer Protection (E-Commerce) Rules, 2020, the Department of Consumer Affairs has mooted a set of sweeping amendments, ostensibly “to protect the interests of consumers… and encourage free and fair competition in the market”. Among them is a norm stipulating the appointment of a chief compliance officer, a nodal contact person for 24×7 coordination with law enforcement agencies, and another requiring e-commerce entities offering imported goods or services to ‘incorporate a filter mechanism to identify goods based on country of origin and suggest alternatives to ensure a fair opportunity to domestic goods’. A third mandates a fall-back liability on online marketplaces in the event of non-delivery of goods or services to the consumer. Registration has also been made mandatory for all e-commerce players; specific ‘flash sales’, including ‘back-to-back’ ones, are set to be banned; and all entities must provide information within 72 hours on any request made by an authorised government agency probing any breach of law including cybersecurity issues. While on the face of it none of these new rules appears exceptionable, especially when e-commerce tops the National Consumer Helpline’s complaints chart, there is still a distinctly discernible pattern to the changes. Following on the heels of the recent IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, the draft e-commerce amendments show the Government’s increasing keenness to exercise greater oversight over all online platforms.

The Centre also appears to be signalling its intent to dig in its heels in an intensifying stand-off with Walmart’s unit Flipkart, and Amazon, which are both now in court battling an attempt by the Competition Commission of India to reopen a probe into their business practices. The two large e-commerce players have had to contend with accusations that their pricing practices are skewed to favour select sellers on their platforms and that their discounting policies have hurt offline retailers. The fact that the latest changes expressly seek to ensure that none of an e-commerce entity’s ‘related parties and associated enterprises is enlisted as a seller for sale to consumers directly’ could also impact several platforms that retail products supplied by vendors with arm’s length ties. The enforcement of many of these norms is bound to spur protracted legal fights. Asserting that the amendments were not aimed at conventional flash sales, the Government said it was only targeting certain entities engaged in limiting consumer choice by indulging in ‘back-to-back’ sales wherein a seller does not have the capability to meet an order. In trying to address shortcomings in its rules from last year, the Government appears to be harking back to an era of tight controls. Overregulation with scope for interpretative ambiguity risks retarding growth and job creation in the hitherto expanding e-commerce sector.

Introduction

• Electronic commerce or e-commerce is a business model that lets firms and individuals buy and sell things over the Internet.
• Propelled by rising smartphone penetration, the launch of 4G networks and increasing consumer wealth, the Indian e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion in 2017.
• India’s e-commerce revenue is expected to jump from US$ 39 billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of 51%, the highest in the world.
• The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second-largest e-commerce market in the world by 2034.

Advantages of e-Commerce

• The process of e-commerce enables sellers to come closer to customers that lead to increased productivity and perfect competition. The customer can also choose between different sellers and buy the most relevant products as per requirements, preferences, and budget. Moreover, customers now have access to virtual stores 24/7.
• e-Commerce also leads to significant transaction cost reduction for consumers.
• e-commerce has emerged as one of the fast-growing trade channels available for the cross-border trade of goods and services.
• It provides a wider reach and reception across the global market, with minimum investments. It enables sellers to sell to a global audience and also customers to make a global choice. Geographical boundaries and challenges are eradicated/drastically reduced.
• Through direct interaction with final customers, this e-commerce process cuts the product distribution chain to a significant extent. A direct and transparent channel between the producer or service provider and the final customer is made. This way products and services that are created to cater to the individual preferences of the target audience.
• Customers can easily locate products since e-commerce can be one store set up for all the customers’ business needs
• Ease of doing business: It makes starting, managing business easy and simple.
• The growth in the e-commerce sector can boost employment, increase revenues from export, increase tax collection by ex-chequers, and provide better products and services to customers in the long-term.
  • The e-commerce industry has been directly impacting the micro, small & medium enterprises (MSME) in India by providing means of financing, technology and training and has a favourable cascading effect on other industries as well.

Disadvantages of e-Commerce

• There is lesser accountability on part of e-commerce companies and the product quality may or may not meet the expectations of the customers.
• It depends strongly on network connectivity and information technology. Mechanical failures can cause unpredictable effects on total processes.
• Definite legislations both domestically and internationally to regulate e-commerce transactions are still to be framed leading to lack of regulation of the sector.
• At times, there is a loss of privacy, culture or economic identity of the customer.
• There is a chance of fraudulent financial transactions and loss of sensitive financial information.
• The Internet is borderless with minimum regulation, and therefore protecting intellectual property rights (IPR) on the Internet is a growing concern. There are currently several significant IPR issues including misuse of trademark rights.

Government Initiatives Regarding e-Commerce in India

• In February 2019, a draft National e-Commerce policy has been prepared and placed in the public domain, which addresses six broad issues of the e-commerce ecosystem viz. e-commerce marketplaces; regulatory issues; infrastructure development; data; stimulating domestic digital economy and export promotion through e-commerce.
• The Department of Commerce initiated an exercise and established a Think Tank on ‘Framework for National Policy on e-Commerce’ and a Task Force under it to deliberate on the challenges confronting India in the arena of the digital economy and electronic commerce (e-commerce).
• The Reserve Bank of India (RBI) has decided to allow “interoperability” among Prepaid Payment Instruments (PPIs) such as digital wallets, prepaid cash coupons and prepaid telephone top-up cards. RBI has also instructed banks and companies to make all know-your-customer (KYC)-compliant prepaid payment instruments (PPIs), like mobile wallets, interoperable amongst themselves via Unified Payments Interface (UPI).
• FDI guidelines for e-commerce by DIPP: In order to increase the participation of foreign players in the e-commerce field, the Government has increased the limit of foreign direct investment (FDI) in the e-commerce marketplace model for up to 100% (in B2B models).
• Government e-Marketplace (GeM) signed a Memorandum of Understanding (MoU) with Union Bank of India to facilitate a cashless, paperless and transparent payment system for an array of services in October 2019.
• The heavy investment of Government of India in rolling out the fibre network for 5G will help boost e-commerce in India
• In the Union Budget of 2018-19, the government has allocated Rs 8,000 crore (US$ 1.24 billion) to BharatNet Project, to provide broadband services to 150,000-gram panchayats.

Way Ahead

• e-Commerce has become an important part of many multilateral negotiations such as Regional Comprehensive Economic Partnership (RCEP), WTO, BRICS etc.
• e-Commerce still faces various issues like international trade, domestic trade, competition policy, consumer protection, information technology etc. As a growing sector with huge interest from both domestic and international players, it becomes pertinent to regulate it keeping in mind the interest of both entrepreneurs and consumers. A conducive environment and a level playing field should be encouraged.
• Policymakers should also be mindful of shaping a vibrant domestic industry. A comprehensive policy is of utmost importance to reflect India’s position in both domestic and international or multilateral forums.

3.The politics of an aerial snare

The investigation into the forced landing of a Ryanair aircraft in Belarus could be long-drawn-out

On May 23, a Ryanair flight was forced to make an emergency landing in Minsk by a MiG-29 fighter jet of Belarus. The dissident Belarussian journalist, Roman Protasevich, who was travelling in the commercial, civilian aircraft, was subsequently arrested. The whole operation, it is alleged, was carried out on the orders of President Alexander Lukashenko, who has ruled Belarus for 27 years.

Global reaction

The incident received considerable global attention. The European Union (EU) and the U.S. denounced it and called for a thorough investigation by the International Civil Aviation Organization (ICAO). EU-based carriers have since heeded the call to avoid overflight of Belarus. Belarusian flights have been barred from overflying EU airspace or landing at its airports. Air France, British Airways, Lufthansa, KLM and a host of other airlines have implemented their own suspensions.

At a special meeting convened on May 27, the ICAO Council expressed strong concern at the incident and launched a fact-finding investigation. Official requests for information were sent out to the countries involved in the event. Belarus and Poland have provided some preliminary details. Information is awaited from Greece, Ireland, Lithuania and Switzerland. An interim report is expected to be presented to the ICAO Council by the end of its current session, on or near June 23. The report is expected to be considered only at the next session, which begins on September 13.

European Commission President Ursula von der Leyen called the incident an “attack on democracy”, an “attack on freedom of expression”, and an “attack on European sovereignty”. The U.S., EU, and the U.K. have slapped further sanctions on Belarus. How justified was Belarus in taking such a decision? The answer lies at the junction of Belarus’s domestic laws as a sovereign country and international laws governing the action that states can legitimately take to deal with threats to security, real or perceived.

Not the first of its kind

The flight that the 26-year-old fugitive blogger boarded was operated by the Irish low-cost airline, Ryanair. It was on its way from Greece to Lithuania. While traversing the airspace of Belarus, an ostensible ‘bomb scare’ forced the aircraft to make an emergency landing in Minsk for standard checks. It turned out to be a false alarm. Mr. Protasevich, whose presence on board is suspected to be the real reason behind the action, was taken into custody soon after.

According to media reports, Mr. Protasevich, who had fled Belarus for Poland in 2019, had been in Greece to attend an economic conference with other Belarusian dissidents. There, the blogger also covered the visit of exiled Belarus Opposition leader Sviatlana Tsikhanouskaya.

If convicted, he could face a long prison term or worse. After all, Belarus is the only country in Europe that hands down the death penalty.

Mr. Protasevich’s case is not the first of its kind. Abdolmalek Rigi, head of the Jundullah militant group, accused by Iran for fomenting attacks in the province of Sistan-Baluchistan, was similarly arrested in February 2010. According to Iranian media reports, Rigi’s plane was forced to land in Bandar Abbas by Iranian aircraft while on a flight from Dubai to Bishkek in Kyrgyzstan. Rigi was subsequently tried and executed. Itek Air, a small Bishkek-based airline, folded up in 2010 for unrelated reasons. There is no direct parallel between Mr. Protasevich and Rigi except that both men were wanted by the governments of their respective countries and their custody was secured through very unconventional means.

Pressure to divert passenger aircraft from preordained flight paths could be on grounds of a security threat or for political reasons. In 2013, during the manhunt by the U.S. for National Security Agency whistle-blower Edward Snowden, Bolivian President Evo Morales’s plane was forced to land in Austria after several European countries refused the aircraft permission to enter their airspace, allegedly due to pressure from the U.S. According to reports, there was suspicion that Mr. Snowden might have boarded the President’s plane in Moscow. As it turned out, Mr. Snowden, who later obtained asylum and stayed on in Moscow, was not in the aircraft. Following the incident, seven Latin American countries voiced their concerns to the then UN Secretary-General, Ban Ki-Moon, who asserted that “a Head of State and his or her aircraft enjoy immunity and inviolability”.

An issue with many dimensions

The issue of the use of military aircraft to neutralise potential threats posed by civilian aircraft acquired a different kind of urgency in the aftermath of terrorist attacks in the U.S. on September 11, 2001. Generally speaking, international law grants sovereignty to nations over their airspace as it does in territorial waters. The Convention on International Civil Aviation, better known as the Chicago Convention of 1944, to which Belarus is a signatory state, prohibits any unlawful intervention against a civilian aircraft. At the same time, it has various provisions under Article 9 which permit a sovereign state the right to impose restrictions, including enforced landings at a designated airport in its territory, in “exceptional circumstances or during a period of emergency, or in the interest of public safety”. Once a flight has landed, Article 16 provides the host country the right to board/search the aircraft. This is probably the clause that provided cover for the local authorities to board Mr. Morales’s aircraft in Austria in 2013. But the Chicago Convention applies only to civilian aircraft of the contracting parties. In this case, the national carrier, Belavia Belarusian Airlines, is not involved though it is part of the targeted sanctions by the EU.

International law might also have to be examined in light of the International Air Services Transit Agreement (IASTA), also concluded in Chicago in 1944. According to this agreement, contracting states grant to one another the freedom of air transit in respect of scheduled international air services, that is, the privilege to fly across territories without landing. Belarus is not a signatory of IASTA. For that matter, neither is Russia, which is the main supporter of Mr. Lukashenko.

Given the multiple interpretations possible under the Chicago Convention and related agreements, the investigation could be a long-drawn-out affair. The International Court of Justice does consider ICAO-related cases, but it cannot enforce its decisions. The United Nations Security Council is a divided house and, in any case, does not consider unlisted agenda unless the case constitutes a major threat to international peace and security. This is not a matter that easily lends itself to technical consideration, given that it goes beyond the issue of a forced landing of a civilian airliner to encompass broader geopolitical issues. A meaningful outcome from the ICAO investigation may therefore prove evasive.

European Union

The European Union is a group of 28 countries that operate as a cohesive economic and political block.

19 of these countries use EURO as their official currency. 9 EU members (Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, Sweden, and the United Kingdom) do not use the euro.

The EU grew out of a desire to form a single European political entity to end centuries of warfare among European countries that culminated with World War II and decimated much of the continent.

The EU has developed an internal single market through a standardised system of laws that apply in all member states in matters, where members have agreed to act as one.

Goals

• Promote peace, values and the well-being of all citizens of EU.
• Offer freedom, security and justice without internal borders
• Sustainable development based on balanced economic growth and price stability, a highly competitive market economy with full employment and social progress, and environmental protection
• Combat social exclusion and discrimination
• Promote scientific and technological progress
• Enhance economic, social and territorial cohesion and solidarity among EU countries
• Respect its rich cultural and linguistic diversity
• Establish an economic and monetary union whose currency is euro.

History

• After World War II, European integration was seen as a cure to the excessive nationalism which had devastated the continent.
• In 1946 at the University of Zurich, Switzerland, Winston Churchill went further and advocated the emergence of a United States of Europe.
• In 1952, European Coal and Steel Community (ECSC) was founded under Treaty of Paris (1951) by 6 countries called Six (Belgium, France, Germany, Italy, Luxembourg and the Netherlands) to renounce part of their sovereignty by placing their coal and steel production in a common market, under it.
  • European Court of Justice (called “Court of Justice of the European Communities” until 2009) was also established in 1952 under Paris Treaty.
• European Atomic Energy Community (EAEC or Euratom) is an international organisation established by the Euratom Treaty (1957) with the original purpose of creating a specialist market for nuclear power in Europe, by developing nuclear energy and distributing it to its member states while selling the surplus to non-member states.
  • It has same members as the European Union and is governed by the European Commission (EC) and Council, operating under the jurisdiction of the European Court of Justice.
• European Economic Community (EEC) was created by the Treaty of Rome (1957). The Community’s initial aim was to bring about economic integration, including a common market and customs union, among its founding members (Six).
  • It ceased to exist by Lisbon Treaty-2007 and its activities were incorporated in EU.
• Merger Treaty (1965, Brussels) in which an agreement was reached to merge the three communities (ECSC, EAEC, and EEC) under a single set of institutions, creating the European Communities (ECs).
  • The Commission and Council of the EEC were to take over the responsibilities of its counterparts (ECSC, EAEC) in other organisations.
• The ECs initially expanded in 1973 when Denmark, Ireland, the United Kingdom became members. Greece joined in 1981, Portugal and Spain following in 1986.
• Schengen Agreement (1985) paved the way for the creation of open borders without passport controls between most member states. It was effective in 1995.
• Single European Act (1986): enacted by the European Community that committed its member countries to a timetable for their economic merger and the establishment of a single European currency and common foreign and domestic policies.
• The Maastricht Treaty-1992 (also called the Treaty on European Union) was signed on 7 February 1992 by the members of the European Community in Maastricht, Netherlands to further European integration. It received a great push with the end of the Cold War.
  • European Communities (ECSC, EAEC, and EEC) incorporated as European Union.
  • European citizenship was created, allowing citizens to reside in and move freely between Member States.
  • A common foreign and security policy was established.
  • Closer cooperation between police and the judiciary in criminal matters was agreed.
  • It paved the way for the creation of a single European currency – the euro. It was the culmination of several decades of debate on increasing economic cooperation in Europe.
  • It established the European Central Bank (ECB).
  • It enabled people to run for local office and for European Parliament elections in the EU country they lived in.
• A monetary union was established in 1999 and came into full force in 2002 and is composed of 19 EU member states which use the euro currency. These are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, and Spain.
• In 2002, Treaty of Paris (1951) expired & ECSC ceased to exist and its activities fully absorbed by the European Community (EEC).
• The Treaty of Lisbon 2007:
  • European Community (now composed only of EEC, EAEC, as ECSC already ceased in 2002) was ceased and its activities incorporated in EU.
  • EAEC is only remaining community organization legally distinct from the European Union (EU), but has the same membership, and is governed by many of the EU’s institutions.
• Euro Crisis: The EU and the European Central Bank (ECB) have struggled with high sovereign debt and collapsing growth in Portugal, Ireland, Greece and Spain since the global financial market collapse of 2008. Greece and Ireland received financial bailouts from the community in 2009, which were accompanied by fiscal austerity. Portugal followed in 2011, along with a second Greek bailout.
  • Multiple rounds of interest rate cuts and economic stimulus failed to resolve the problem.
  • Northern countries such as Germany, the United Kingdom and the Netherlands increasingly resent the financial drain from the south.
• In 2012, the EU received the Nobel Peace Prize for having “contributed to the advancement of peace and reconciliation, democracy, and human rights in Europe.
• Brexit: In 2016, a referendum (called Brexit) was held by U.K. government, and the nation voted to leave the EU. Now the process is under UK Parliament for formal withdrawal from EU.

Governance

• European Council:
  • It is a collective body that defines the European Union’s overall political direction and priorities.
  • It comprises of the heads of state or government of the EU member states, along with the President of the European Council and the President of the European Commission.
  • The High Representative of the Union for Foreign Affairs and Security Policy also takes part in its meetings.
  • Established as an informal summit in 1975, the European Council was formalised as an institution in 2009 upon the entry into force of the Treaty of Lisbon.
  • The decisions of its summits are adopted by consensus.
• European Parliament: It is the only parliamentary institution of the European Union (EU) that is directly elected by EU citizens aged 18 years or older. Together with the Council of the European Union (also known as the ‘Council’), it exercises the legislative function of the EU.
  • European Parliament does not possess as much legislative power as its member countries’ parliaments do.
• Council of the European Union: It is part of the essentially bicameral EU legislature (the other legislative body being the European Parliament) and represents the executive governments (Minister) of the EU’s member states.
  • In the Council, government ministers from each EU country meet to discuss, amend and adopt laws, and coordinate policies. The ministers have the authority to commit their governments to the actions agreed on in the meetings.
• European Commission (EC): It is an executive body of the European Union, responsible for proposing legislation, implementing decisions, upholding the EU treaties and managing the day-to-day business of the EU.
  • The Commission operates as a cabinet government, with 28 members of the Commission. There is one member per member state. These members are proposed by member countries and European Parliament gives final approval on them.
  • One of the 28 members is the Commission President proposed by the European Council and elected by the European Parliament.
  • The Commission is divided into departments known as Directorates-General (DGs) that can be likened to departments or ministries is headed by a director-general who is responsible to a commissioner.
  • High Representative (HR) of the Union for Foreign Affairs and Security Policy is appointed by the European Council by voting and The President of the EC must be in agreement with the decision. HR is charged with shaping and carrying out the EU’s foreign, security and defence policies.
• European Court of Auditors (ECA): It investigates the proper management of finances within both the EU entities and EU funding provided to its member states.
  • It can refer unresolved issues to the European Court of Justice to arbitrate on any alleged irregularities.
  • ECA members are appointed by the Council, after consulting the Parliament, for renewable 6-year terms.
• The Court of Justice of the European Union (CJEU): It interprets EU law to make sure it is applied in the same way in all EU countries, and settles legal disputes between national governments and EU institutions.
  • It can also be approached by individuals, companies or organisations to take action against an EU institution, if they feel their rights are infringed under EU system.
  • Each judge and advocate general is appointed jointly by national governments (member country).
  • It is located in Luxembourg.
• The European Central Bank (ECB): It is the central bank for the euro and administers monetary policy within the Euro zone, which comprises 19 member states of the  European Union.
  • Governing Council – It is the main decision-making body of ECB. It consists of the Executive Board plus the governors of the national central banks from euro zone countries.
  • Executive Board – It handles the day-to-day running of the ECB. It consists of the ECB President and Vice-President and 4 other members appointed by national governments of euro zone countries.
  • Sets the interest rates at which it lends to commercial banks in the euro zone, thus controlling money supply and inflation.
  • Authorises production of euro banknotes by euro zone countries.
  • Ensures the safety and soundness of the European banking system.
  • It is located in Frankfurt (Germany).
• The European system of financial supervision (ESFS): It was introduced in 2010. It consists of:
  • the European Systemic Risk Board (ESRB)
  • 3 European supervisory authorities (ESAs):
    • the European Banking Authority (EBA)
    • the European Securities and Markets Authority (ESMA)
    • the European Insurance and Occupational Pensions Authority (EIOPA)

Functions

• EU’s law and regulation is meant to create a cohesive economic entity of its countries, so that goods can flow freely across the borders of its member nations, without tariffs, with the ease of one currency, and the creation of one enlarged labour pool, which creates a more efficient distribution and use of labour.
• There is a pooling of financial resources, so that member nations can be “bailed out” or lent money for investment.
• Union’s expectations in areas such as human rights and the environment have political implications for member countries. Union can exact a heavy political cost such as severe cutbacks and an austerity budget on its members as a condition of giving aid.
• This is a great experiment, really, in cooperation amongst nations, who wish to be economically unified, ceding as little political and national power as possible.
• Trade
  
  
  • Free trade among its members was one of the EU’s founding principles. This is possible thanks to the single market. Beyond its borders, the EU is also committed to liberalising world trade.
  • The European Union is the largest trade block in the world. It is the world’s biggest exporter of manufactured goods and services, and the biggest import market for over 100 countries.
• Humanitarian aid
  • The EU is committed to helping victims of man-made and natural disasters worldwide and supports over 120 million people each year.
  • EU and its constituent countries is the world’s leading donor of humanitarian aid.
• Diplomacy and security
  • The EU plays an important role in diplomacy and works to foster stability, security and prosperity, democracy, fundamental freedoms and the rule of law at international level.

Challenges & Reforms

• It is no longer self-evident that all old member states will stay in the Union. The Treaty of Lisbon gave the members the right to leave the EU. The financial crisis has hit Greece so hard that many people have predicted for a long time that the country will exit from the Union.
• Layoffs, redundancies and migration of jobs to countries where labour is cheap affect the daily lives of European citizens. The EU is expected to find solutions to economic problems and employment.
• There is also demand for standard labour agreements on terms of employment and working conditions that would apply across Europe and even worldwide. As a member of the World Trade Organisation, the European Union is in a position to influence developments worldwide.
• EU is a global leader in the development of Key Enabling Technologies (KETs). However, EU’s record in translating this knowledge advantage into marketable products and services doesn’t match this. KETs-related manufacturing is decreasing in the EU and patents are increasingly being exploited outside the EU.
• Europe is experiencing a renaissance of national sovereignty supported by a nationalistic turn of public opinion and represented by parties on both ends of the political spectrum. Popular disaffection toward EU membership is fuelled by the contemporaneous occurrence of two shocks, the economic and the migration crises.
• USA, by withdrawing from the Paris climate change deal, by pulling out of the Joint Comprehensive Plan of Action (JCPOA) on Iran’s nuclear programme, and by attacking the integrity of the international trading system through the unilateral imposition of tariffs, has called into question Europeans’ formerly unshakeable faith in diplomacy as a way to resolve disagreements and to protect Europe.
• European leaders now fear that the transatlantic security guarantee will centre not on alliances and common interests but purchases of American technology and materiel.
• Like the United States, the EU has been forced to reconsider its relationship with a more assertive Russia with implications for European security and stability. The EU has sought to support Ukraine’s political transition, condemned Russia’s annexation of Crimea in March 2014, and strongly urged Russia to stop backing separatist forces in eastern Ukraine.
  • Democratic regression in Ukraine combined with a hardening attitude in Moscow imposes constraints on the Ukrainian government’s freedom of maneuver in pursuing its European Union membership.
• Brexit: EU has imposed too many rules on business and charged billions of pounds a year in membership fees for little in return.
  • The EU added eight eastern European countries in 2004, triggering a wave of immigration that strained public services. In England and Wales, the share of foreign-born residents had swelled to 13.4 percent of the population by 2011, roughly double the level in 1991.
  • Brexit supporters wanted Britain to take back full control of its borders and reduce the number of people coming here to live and/or work.
  • They argued that the EU is morphing into a super-state that increasingly impinges on national sovereignty. Britain has global clout without the bloc, they said, and can negotiate better trade treaties on its own.
  • Withdrawal from the EU is governed by Article 50 of the Treaty on European Union.
  • A deal between UK & EU that gives it control over immigration and also preferential access to the EU’s tariff-free single market of 500 million people (UK), the economic backbone of the world’s largest trading bloc is rejected by Germany & other EU leaders.

EU & India

• The EU works closely with India to promote peace, create jobs, boost economic growth and enhance sustainable development across the country.
• As India graduated from low to medium income country (OECD 2014), the EU-India cooperation also evolved from a traditional financial assistance type towards a partnership with a focus on common priorities.
• At the 2017 EU-India Summit, leaders reiterated their intention to strengthen cooperation on the implementation of the 2030 Agenda for Sustainable Development and agreed to explore the continuation of the EU-India Development Dialogue.
• The EU is India’s largest trading partner, accounting for €85 billion (95 billion USD) worth of trade in goods in 2017 or 13.1% of total India trade, ahead of China (11.4%) and the USA (9.5%).
• The EU’s share in foreign investment inflows to India has more than doubled from 8% to 18% in the last decade, making the EU the first foreign investor in India.
• EU foreign direct investment stocks in India amounted to €73 billion in 2016, which is significant but way below EU foreign investment stocks in China (€178 billion).
• INDIA-EU Bilateral Trade and Investment Agreement (BTIA): It is a Free Trade Agreement between India and EU, which was initiated in 2007. Even after a decade of negotiations, India and EU have failed to resolve certain issues which have led to a deadlock.
  • “Data Secure” status not granted by EU affecting prospects of India’s IT-enabled exports.
  • Presence of non-tariff barriers on Indian agricultural products in the form of sanitary and phyto-sanitary(SPS) measures which are too stringent and enable the EU to bar many Indian agricultural products from entering its markets.
  • EU wants India to liberalise accountancy and legal services. India denies on the ground of already shortage of jobs.
  • EU demands tax reduction on wines and spirits but in India these are regarded as ‘sin goods’ and the states which derive huge revenue from liquor sales would be reluctant to cut taxes.
  • Reduction of taxes on automobiles not acceptable to India as its own automobile industry would not be able to match the competition from EU automobiles.
  • India has rejected an informal attempt by the European Union (EU) to work towards a global investment agreement at the World Trade Organisation (WTO)-level that would incorporate a contentious Investor-State Dispute Settlement (ISDS) mechanism which will allow corporations to take sovereign governments to international arbitration. The ISDS mechanism permits companies to drag governments to international arbitration without exhausting the local remedies and claim huge amounts as compensation citing losses they suffered due to reasons, including policy changes.
  • The non-tariff barriers in pharmaceuticals that EU has imposed include requirement of WTO—Good Manufacturing Practice certification, import bans, antidumping measures and pre-shipment inspection among others.
  • India has cancelled most individual bilateral investment agreements with EU member states on grounds that they were outdated. By doing this India is putting pressure on EU to sign BTIA on favouring terms.

4.Why is China targeting cryptocurrencies?

Beijing seeks to strengthen its monetary hold and project its new official digital currency

The price of the world’s most prominent cryptocurrency Bitcoin has more than halved in the last two months after hitting a peak in mid-April. The second-most valuable cryptocurrency, Ether, has seen a similar fall from its peak last month. China’s crackdown against cryptocurrencies, which are those that aren’t sanctioned by a centralised authority and are secured by cryptography, is said to have a lot to do with the crashing of the value of cryptocurrencies.

What has China done?

In recent weeks, China has reportedly cracked down on crypto mining operations. The country has over the years accounted for a large percentage of the total crypto mining activity that takes place. In purpose, Bitcoin miners play a similar role to gold miners — they bring new Bitcoins into circulation. They get these as a reward for validating transactions, which require the successful computation of a mathematical puzzle. And these computations have become ever-increasingly complex, and therefore energy-intensive in recent years. Huge mining operations are now inevitable if one is to mine Bitcoins.

Access to cheap electricity has made mining lucrative in China. According to the Cambridge Bitcoin Electricity Consumption Index, China accounted for nearly two-thirds of the total computational power last year. Xinjiang and Sichuan provinces accounted for nearly half of this. Now, provincial governments one by one have acted against these mining operations. The latest to do so is Sichuan, which was a hydroelectric-based crypto mining hub.

But that’s not all.

A few days back, the People’s Bank of China directed banks and payment firms to pull the plug on cryptocurrency trading.

Actually, there is little change in the policy as far as China is concerned. It first imposed restrictions on cryptocurrencies way back in 2013. It then barred financial institutions from handling Bitcoin. Four years later, it barred what are called initial coin offerings, under which firms raise money by selling their own new cryptocurrencies. This is largely an unregulated market.

What China wants?

An inter-ministerial committee report in India two years ago noted that in 2017, the government of China also banned trading between RMB (China’s currency renminbi) and cryptocurrencies. It said, “Before the ban, RMB made up 90% of Bitcoin trades worldwide. In under a year, the trades between RMB and Bitcoin had fallen to under 1% of the world total.” The report also noted that China had decided to prohibit mining within its jurisdiction. While the miners had stopped their activities for some time, the steep increase in the price of Bitcoin had brought many back into action.

The fact that cryptocurrencies bypass official institutions has been a reason for unease in many governments. Not just that. The anonymity that it offers aids in the flourishing of dark trades online. While many countries have opted to regulate the world of cryptocurrencies, China has taken the strictest of measures over the years. According to observers, the latest set of measures are to strengthen its monetary hold and also project its new official digital currency. An AFP report said, “China launched tests for a digital yuan in March. Its aim is to allow Beijing to conduct transactions in its own currency around the world, reducing dependency on the dollar which remains dominant internationally.”

Offshore platforms

This time, its focus is on what has been a loophole all along — of offshore platforms enabling those in China to trade in cryptocurrencies. A Reuters report said the People’s Bank of China asked banks and payment firms to “identify those involved in cryptocurrency transactions and promptly cut their payment channels.” It said, “China Construction Bank, Industrial and Commercial Bank of China (ICBC) , Agricultural Bank of China (AgBank) and Postal Savings Bank of China attended the meeting, along with Alipay, the ubiquitous payment platform owned by fintech giant Ant Group.”

Cryptocurrencies

• Rise of Cryptocurrencies: The pioneer cryptocurrency, Bitcoin, was traded at just $0.0008 in 2010 and commanded a market price of about $65,000 in April 2021.
  • Many newer coins have also been introduced since Bitcoin’s launch and their cumulative market value touched $2.5 trillion by May 2021.

• Significance of Cryptocurrencies:
  • Corruption Check: As blocks run on a peer-to-peer network, it helps keep corruption in check by tracking the flow of funds and transactions.
  • Time Effective: Cryptocurrencies can help save money and substantial time for the remitter and the receiver, as it is conducted entirely on the Internet, runs on a mechanism that involves very less transaction fees and is almost instantaneous.
  • Cost Effective: Intermediaries such as banks, credit card and payment gateways draw almost 3% from the total global economic output of over $100 trillion, as fees for their services.
    • Integrating blockchain into these sectors could result in hundreds of billions of dollars in savings.
• Cryptocurrencies in India: In 2018, The RBI issued a circular preventing all banks from dealing in cryptocurrencies. This circular was declared unconstitutional by the Supreme Court in May 2020.
  • Recently, the government has announced to introduce a bill; Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, to create a sovereign digital currency and simultaneously ban all private cryptocurrencies.
  • In India, the funds that have gone into the Indian blockchain start-ups account for less than 0.2% of the amount raised by the sector globally.
    • The current approach towards cryptocurrencies makes it near-impossible for blockchain entrepreneurs and investors to acquire much economic benefit.

Issues Associated with Banning Decentralised Cryptocurrencies

• Blanket Ban: The intended ban is the essence of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. It seeks to prohibit all private cryptocurrencies in India.
  • However, categorising the cryptocurrencies as public (government-backed) or private (owned by an individual) is inaccurate as the cryptocurrencies are decentralised but not private.
  • Decentralised cryptocurrencies such as bitcoin aren’t or rather, can’t be controlled by any entity, private or public.
• Brain-Drain: Ban of cryptocurrencies is most likely to result in an exodus of both talent and business from India, similar to what happened after the RBI’s 2018 ban.
  • Back then, blockchain experts moved to countries where crypto was regulated, such as Switzerland, Singapore, Estonia and the US.
  • With a blanket ban, blockchain innovation, which has uses in governance, data economy and energy, will come to a halt in India.
• Deprivation of Transformative Technology: A ban will deprive India, its entrepreneurs and citizens of a transformative technology that is being rapidly adopted across the world, including by some of the largest enterprises such as Tesla and MasterCard.
• An Unproductive Effort: Banning as opposed to regulating will only create a parallel economy, encouraging illegitimate use, defeating the very purpose of the ban.
  • A ban is infeasible as any person can purchase cryptocurrency over the internet.
• Contradictory Policies: Banning cryptocurrency is inconsistent with the Draft National Strategy on Blockchain, 2021 of the Ministry of Electronics and IT (MeitY), which hailed blockchain technology as transparent, secure and efficient technology that puts a layer of trust over the internet.