Chapter 10. International Relations Notes for UPSC Mains

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Europe & European Union

INDIA & EU

  • Economic
    • Post Brexit importance
    • Trade at 100 billion $
      • EU is India’s largest trade partner
      • Largest export destination and source of FDI
      • Challenges in implementing FTA
        • Officially called BTIA
          • Broad based Trade and Investment agreement
          • Talks started in 2008 . Stalled since 2013
        • EU demand
          • Cut protection in the automobile sector

As high as 100%

    India’s stand- Cutting duties will mean dumping from the heavily subsidised agriculture in Europe

        • TRIPS +
        • Greater FDI in banking & insurance sector

    Done

        • Dispute resolution settlement wherein a private party ca drag the Indian state to an International Tribunal

    New BIT

    ISDSS

      • Indian Demand
        • Reduce unnecessary Sanitary and Phytosanitary SPS & Technical Barriers to Trade measures against Indian food exports
        • Remove India from “data insecure” list

    Would help India IT, BPO industry

        • More access to Indian labour
        • Greater access for generic drugs

    Recently, EU banned generic drugs from GVK

    • Political
      • India more inclined with the power blocs of Britain, France and Germany than the mainland
      • European Investment Bank (EIB) loan for Lucknow metro
    • Security
      • India, EUROPOL possible information exchange
      • Individual countries – France, Germany
      • Portugal – Abu Salem
    • Tech
      • ARIES
        • India, Belgium, Russia joint telescope
        • Asia’s largest telescope
        • In Nainital
      • Clean energy partnership
    • Space Diplomacy
    • Nuclear Diplomacy
    • Defence Deals
    • Social
      • Dutch – LOTUS – urban sewage

    The European Union

    History

    Current status

    Historical Pros of the European Union

    1. Stabilised the bitter rivalry between France & Germany, and saved the world from another world war
    2. After the end of the cold war, EU provided financial support to the erstwhile communist countries, also offered them membership
    3. Economic integration
      1. Formation of Euro
      2. Common market
      3. Gave a boost to the European Economy , and subsequently, an export driven world economy
    4. Thus, EU received the Nobel peace prize in 2012.
      1. in recognition of EU’s normative role and influence for spread of democratic values, rule of law, respect for human rights and rights of the minorities in its neighbourhood.
    5. Political status of EU
      1. Very complex
      2. Has jurisdiction over issues like Competition Policies
      3. Joint jurisdiction involving coordination with sovvereign states over issues like defence
      4. No jursdiction over others
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    General problems the EU is currently facing

    1. Economic
      1. Economy still down
      2. Deep Recession in the PIGS (Poland, Italy, Greece, Spain) countries
      3. All but Britain are facing negative or 0 growth
      4. With huge uncertainty over fate of Greece, and the chances of a default, investors worried and taking their money back to US
      5. Euro at a 12 year low
    2. Political
      1. Challenge in Greece
        1. The ruling party Syriza is adamant not to follow Europe imposed austerity
        2. Elaboration required
      2. Britain
        1. Referendum over being a memeber of EU or not in 2017
        2. Emergence of right wing parties like UKIP
      3. Ukraine
        1. Challenge from Russia
        2. Democracy down
        3. Elaboration required
    1. Social
      1. Immigration problem in the south
        1. Racial Divide
        2. Immigrants drowning
      2. Elaboration required
    2. Elaboration required

    GREECE Problem

    • Troika of IMF, ECB & EU extended a loan
      • Thrice
      • 2nd bailout of 240 billion Euro
    • Conditions-
      • Austerity – low public spending on social security, pension , govt jobs
    • However, austerity is only expanding the problem
      • According to Paul Krugman, the money is passing on from the traoika to the German banks via Greece
        • Out of the 240 billion euros, 220 was used to settle past debt
        • Hence, money actually injected into the economy to stimulate demand is absymally low given that austerity is reducing Public Consumption
      • Its GDP has declined by 25% in the last 5 years
    • Greece on brink of default
    • Could lead to a Grexit
      • Pros
        • Greece in Euro is unable to devalue the currency and stimulate exports
          • Greece out, can help do this
        • Greece out will also likely have gas deals with Russia
        • Europe too will not have to face the burden of bailing out and inducing risks
        • Elaboration Required
      • Cons
        • Will deeply hurt the tourism industry, the main sector, which benefits from European association
        • Portfolio and direct investments will fall deeply – Already happening
        • Free movement of labour stops, employment crisis
        • Europe
          • Taking money back to safer havens- US, UK
          • European banks tend to loose as the banks lending at risk
        • Elaboration required
    • Political
      • Right wing Syriza party elected to power, which promised on reductions in austerity
      • Looking for an option to tie up with Russia & act as a medium to export Russian oil & gas
    • India & Greece
      • Repurcussions due to a Grexit
        • In short term,
          • investors will panick & take back the hot money to US, UK,…
          • Indian ruppe will be hit, making imports expensive
          • Euro will be down, making exports to Europe expensive
          • Euro loans will become cheaper- yet such loans are only a small %
          • Greece -> depreciation -> Exports up, tourism industry will get a boost
        • Long term
          • As, the largest debt ridden country of the Eurozone leaves, EU will be in a better position
          • Problem – Could set a ripple effect
    • Elaboration Required
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    Netherlands

    • 2nd Largest horticulture exporting country
    • Has a seed valley just like the silicon valley
    • Teaming up with the Indian govt to start 10 centres of excellence in India wher information about seeds can be passed on to the farmers
    • Subsequently, the Dutch seed providers will benefit

    EUROPE Migrant Crisis

    • Worst since WW2
    • Mostly from Syria
    • Most affected border nations – Greece, Italy
    • Agreement
      • New relocation scheme
        • About 1, 60, 000 will be relocated to ease the pressure in Greece and Italy
      • Dublin agreement – Those nations in which the refugees first arrive will be responsible
        • Mainly 3 – Greece, Hungary and somewhat Italy
        • Greece- economically down
        • Hungary- has fenced its borders
          • In fact, is spending more on border fencing than relief and resettlement of asylum seekers
      • Schengen agreement – free visa less movement of normal people across the continent
      • Just for info – Maastricht agreement – made Euro into a monetary union
    • Need for other states to follow
      • Turkey, Lebanon- Refugees now making 25% of the population
        • Europe only has 0.1%
      • Each nation needs to have a quota system to accept people, so that no single country suffers
        • More importantly, this needs to be followed
      • Till now only Germany seems to have done its bit
        • 3 pillars
          • Weeded out economic immigrants out who are deported back
          • Germany’s immigration policy that focusses on Integration
          • Also municipal plan to disperse Immigrants instead of making Ghettos
        • May be one reason why No terror attack on German soil
      • Similarly, American quota of 10k is too little, too less
    • The magic of numbers
      • 3 lakh this year expected
      • Around 3k have died in the process
        • Similarlities to Rohingya crisis
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