- Strengthening India’s energy security
Defence & Security Issues
- Myths about Israel’s security model
GS (M) Paper-3: “Infrastructure: Energy”
Strengthening India’s energy security
- The Essar Oil-Rosneft deal shows how lucrative the Indian energy market is. The sale of a 98% stake in Essar Oil to Rosneft has, unsurprisingly, drawn significant attention, Rs72,800 crore is not chump change.
- Given India’s bad loans problem and the fact that Essar’s debt has been among the highest, the deal could be—as Chanda Kochhar, MD of ICICI Bank, put it— “a significant step in the process of deleveraging the balance sheets of Indian corporates”.
India’s place in the global energy market:
- According to the IEA, India will cross Japan as the world’s third largest oil user this year, and expected to have the highest rate of growth of crude demand globally through 2040.
- ADB projections have India’s dependence on imports during the 2010-35 period growing from 76% to 92% for oil and 20% to 36% for gas.
- Unlike, China, whose energy binge a decade ago kicked off at a commodities peak, India is poised for take-off at a time of rock-bottom prices.
OPEC production-cut deal:
It faces two main obstacles:
- The quantum of the cut, less than one million barrels a day, is insufficient to deal with the existing supply overhang—a fact borne out by lukewarm market reaction to the news of the deal.
- The political and strategic difficulties of allocating the burden of the cut.
The US shale industry is another factor. Any price rise will increase the shale industry’s skin in the game, maintaining a balance beneficial to consumers.
All of which shows—to circle back to the Rosneft deal—why the Indian market, with its expected demand surge, is currently such a lucrative prospect for oil suppliers.
Going India’s Way:
- The leverage gives, India to position itself better in negotiations with traditional suppliers
- According to the Central Statistics Office’s Energy Statistics 2015 report, 59% of India’s crude imports were sourced from West Asia as of 2013-14.
- India is increasing its focus on African suppliers such as Nigeria, while South American supplies are also rising. And in June, Iraq replaced Saudi Arabia as the top supplier, which has resulted in better deals and more inbound investment in the energy sector.
- Gulf countries have stopped levying the “Asian Premium” (a higher rate for crude sold to Asian countries), Riyadh has been negotiating shipping crude to India in its own tankers, saving Indian companies shipping costs; Abu Dhabi has entered an energy partnership with India that includes upstream and downstream investments.
- India’s new Hydrocarbon Exploration Licensing Policy, putting a new market-friendly regime in place for oil and gas exploration back in March, has helped as well.
- This space that New Delhi now has to advance its energy security must be exploited fully. By some estimates, 60-70% of India’s own reserves remain unexplored.
- Given the interest in the Indian market, there is no need for the investment to rectify this to come from the government. Concurrently, this is also a good time for outbound investment flows.
- State firms like the Oil and Natural Gas Corp. Ltd are not bound to reduce capex unlike private oil companies.
- The fourth quarter of 2015, saw Indian companies sign on to $3 billion of foreign asset purchases, while another $5 billion could go towards Siberian oil and gas fields that would give Indian companies an equity share equivalent to a third of total domestic output.
Boost to India’s Domestic Policies:
- The commodities slump has already helped tame inflation in India.
- If India plays its cards right, it could lock in energy arrangements that would go a long way towards enabling the Narendra Modi government’s stress on boosting manufacturing.
Defence & Security Issues
GS (M) Paper-3: “Security challenges and their management in border areas; linkages of organized crime with terrorism”
Myths about Israel’s security model
- PM Narendra Modi’s veiled comparison of India’s strike against militants along LOC with Israel’s military operations, recently.
- His comments raise once again the question whether the Israeli security model is desirable for India.
Israel’s Feeble deterrence:
- An aggressive, militarist policy is not a successful model even for Israel.
- Looking at Israel’s military operations in 1982 against Palestine Liberation Organisation(PLO), which it calls as terrorist. The troops were sent to Lebanon to defeat the groups targeting from southern Lebanon.
- Begin then famously said Israel would win “forty years of peace” after the war. The PLO retreated from southern Lebanon, first to Tripoli and then to Tunis. But the Israeli intervention stirred up the Lebanese civil war, kicking off another protracted bloody phase of fighting between different sects. Instead of winning peace for 40 years, Israel continued the Lebanese occupation for 18 years.
- By that time, the PLO had moved to the West Bank, but Hezbollah, a Shia militia which was formed during the civil war, had established itself as a sizeable military force in southern Lebanon and as an influential socio-political movement among the country’s disadvantaged Shia community.
- In 2006, six years after it pulled troops out of Lebanon, Israel had to return to the neighbouring country to stop Hezbollah’s cross-border attacks. Israel conducted a major offensive & claims the operation a success as it destroyed much of Hezbollah’s military infrastructure. But in reality, the war left Hezbollah more powerful in Lebanon’s fractious politics, while it amassed weapons and rebuilt its military might over the next several years.
- So, the security threat Israel faces from southern Lebanon still very much remains.
- The story of Israel’s wars on Hamas is not substantially different. Hamas is a violent group that has targeted both the Israeli military and civilian centres. But Israel has been unable to claim a moral anti-terror position against Hamas because of the continuing occupation and, its policy of collectively punishing the Palestinian people.
- Israel withdrew forces and settlers unilaterally from Gaza in 2005, but it never stopped punishing the people of Gaza, and Hamas never stopped firing rockets into Israel. Ever since the withdrawal, Israel tried everything its mighty military could do to weaken the Hamas in Gaza.
- In 2007, it imposed a brutal land, air and sea blockade on Gaza, and between 2005 and 2014, it bombed Gaza thrice, which triggered widespread international criticisms and even allegations of war crimes.
- The UN Fact Finding Mission on the 2008-09 Gaza war, accused both Israel and Palestinian militants of war crimes and possible crimes against humanity.
- During the war, Israeli bombings killed 2,165 Palestinians, including 1,644 civilians, while militant attacks killed 66 Israeli soldiers and four civilians.
- But what has Israel achieved from this bloodshed? Hamas continues to rule Gaza and still possesses the capability to fire rockets into Israel.
Low risk potential:
- Another argument why the Israeli model is not desirable for other countries is that Israel’s cross-border attacks were against relatively weaker powers.
- Israel is the only nuclear armed state in West Asia. And doesn’t face an immediate escalation of a conventional war. Hezbollah and Hamas have the potential to file rockets into Israel, target its citizens and mount pressure on the country’s political leadership. But they are largely guerrilla forces who use asymmetric tactics rather than posing any existential threats.
- India, on the other side, has two nuclear armed powers in its neighbourhood.
- The source of overseas terrorist threat it faces is Pakistan, a nuclear power with considerable conventional military prowess.
- It can’t risk a nuclear war. Moreover, India is a country that cares about its international image and international laws.
- It can’t go about violating global norms and then hope to play a responsible role in international politics.