DAILY NEWS ANALYSIS 23 MAY
EDITORIALS
Notes on a digital currency plan, made in China
Context:
- China has launched the initiation of China’s central bank digital currency (CBDC).
- It has been Named Digital Currency Electronic Payment (DCEP).
- It is available via a mobile wallet app and pegged at 1:1 with fiat currency.
- It is designed to replace M0 (comprising currency issued by the PBoC less the amount held by banking institutions).
- Recently, China has initiated the pilot programme in Beijing.
Chinese Program:
- The Chinese Cabinet approved the PBoC’s own digital currency development programme, conducted jointly with qualified commercial banks and institutions by the end of 2017.
- The move to introduce the CBDC in China is a logical outcome of the efforts to curb and tackle its runaway crypto market practices.
Challenges:
- Monetary authorities everywhere have been sceptical of crypto currencies. As crypto currencies pose challenge to monopoly of central banks in issuing fiat currencies.
- There have been challenges of cyber security.
- Rise of surveillance state.
- Violation of citizen’s privacy and anonymity.
- If face-recognition technology enables states to spy on the physical movement of citizens, will CBDCs be used to spy on every movement of their money?
Success:
- Chinese investors have been supportive of the crypto currencies.
- China has emerged as the capital of the crypto ecosystem, accounting for nearly 90% of trading volumes and hosting two-thirds of bitcoin mining operations.
- Paper money comes with high handling charges and eats up 1% to 2% of GDP.
- By acting as a powerful antidote for tax evasion, money laundering and terror financing, CBDCs can materially boost tax revenues while also improving financial compliance and national security.
- As a tool of financial inclusion, particularly in emergencies, direct benefit transfers can be instantly delivered by state authorities deep into rural areas, directly into the mobile wallets of citizens who need them.
- CBDCs can provide central banks an uncluttered view and powerful insights into purchasing patterns at the citizen scale.
- In the long run, it is believed that CBDCs will make cross-border payments fast and frictionless.
Geopolitical:
- On the world economic stage, it may want DCEP to challenge the hegemony of the U.S. dollar as the default global reserve currency.
- In its war with American BigTech, it may want to showcase DCEP as its weapon of choice to counter FB or Facebook’s Libra.
- DCEP can be used to clip the wings of AliPay and WeChatPay, gigantic fintech duopolies that control 90% of the China’s domestic digital payments.
Conclusion:
From gold to silver to paper to digital, the march of currencies goes on. China has rolled the dice on central bank digital currencies, challenging other nations to follow.
Cold neighbourhood
Context:
- Bittering of relationship between India and Nepal over the Kalapani territorial issue.
- Nepal took aggressive posture over the inauguration of a motorable road to the Lipulekh pass, near the disputed Kalapani area.
Indian Arguments:
- For India, the Lipulekh pass has always been part of the road to Tibet, and was mentioned as one of the border passes for trade in a 1954 agreement with China, which was also reaffirmed in another trade agreement in 2015.
- Since 1981, when China re-opened the Kailash-Mansarovar pilgrimage route for Indians, they have also used the pass to walk into Tibet.
- The Survey of India maps since the 1870s showed the area of Lipu Lekh down to Kalapani as part of British India.
- The road built now follows the same alignment, and would essentially cut down their travel time by three days each way.
- Indian Army Chief has contended that Nepal raised the dispute at the “behest of an external force”, namely China.
Nepal’s Actions:
- It is threatening to send more forces to the India-Nepal border.
- The Nepali cabinet’s has adopted a new political map that claims not only Lipulekh but also other areas that are in Indian territory that have been claimed by Nepal.
- Nepal said that Indian virus looks more lethal than the one from China.
Challenges:
- Threatens the special relationship of India and Nepal, which has nurtured open borders, and the free movement of people.
- Foreign Secretaries, appointed by both countries in 2014 to discuss the matter, have failed to find an acceptable date for a meeting since then.
- India must concede it has dragged its feet on the issue. When matter was boiling in Kathmandu, the MEA’s response was that it would convene the meeting after the pandemic had been dealt with.
- Nepal had raised it earlier also. Its offer to send a political envoy to New Delhi was rebuffed.
- Military comment over hand of China in the issue made it appear as if Nepal has no mind of its own, provoked more anti-India nationalism in that country,
- Indian relationship with Nepal is of Beti-Roti, it should not delay the dealing with matter.
India-Nepal Boundary Disputes:
- Before the 1816 Treaty of Sugauli, the Nepalese kingdom stretched from the Sutlej river in the west to the Teesta river in the East.
- Nepal lost the Anglo-Nepalese War and the resulting Treaty limited Nepal to its present territories.
Treaty of Sagauli and resultant boundary:
- Nepal ceded the whole of the lowlands between the Rivers Kali and Rapti to East India company.
- It renounced all claim to or connection with the countries lying to the west of the River Kali and engages never to have any concern with those countries or the inhabitants.
Current dispute:
- Nepalese contest that the tributary that joins the Mahakali river at Kalapani is not the Kali river.
- Nepal now contends that the Kali river lies further west to the Lipu Lekh pass.
India-Nepal Boundary Dispute Management:
- The Nepal-India Technical Level Joint Boundary Working Group was set up in 1981 to resolve boundary issues, to demarcate the international border, and to manage boundary pillars.
- By 2007, the group completed the preparation of 182 strip maps, signed by the surveyors of the two sides, covering almost 98% of the boundary, all except the two disputed areas of Kalapani and Susta.
- It also ascertained the position of 8,533 boundary pillars.
Further way:
- There should be approval of the strip maps by the respective governments (that of the Nepalese Government is still awaited).
- There should be the resolution of the differences of opinion over Kalapani and Susta.
- There should be speeding up the erection of damaged or missing border pillars.
- India and Nepal have an established mechanism to deal with all boundary matters.
- India is committed to resolving outstanding boundary issues through diplomatic dialogue, in the spirit of India’s close and friendly bilateral relations with Nepal.
Conclusion:
It is only when Delhi stops looking at Nepal purely through a security prism, and at bilateral relations only as transactional and part of a zero sum game with China, can Delhi turn around the potential of this multifaceted relationship to the advantage of both nations.
Reference: https://www.thehindu.com/todays-paper/tp-opinion/cold-neighbourhood/article31655187.ece
INTERNATIONAL
China seeks India’s support for its new draconian law to crack down on Hong Kong protesters
Chinese steps:
- Sent demarches to India and several other countries explaining the reason for the new draft legislation.
- Argued that upholding national security” in Hong Kong Special Administrative Region (HKSAR) is “purely China’s internal affair and no foreign country may interfere in this matter".
- There is a clear loophole in Hong Kong’s legal system and an absence of a mechanism of enforcement.
- The turbulence over the amendment bill in Hong Kong last June has greatly undermined the SAR’s rule of law and stability and battered its economy and people’s livelihoods.
- Hong Kong has become a “notable source of risk” to China’s national security.
- The legislation for upholding national security in the Hong Kong SAR is purely China’s internal affair. No foreign country may interfere in this matter.
HongKong status:
- Hong Kong is a Special Administrative Region (SAR) of China.
- It has observed a “one country, two systems” policy since Britain returned sovereignty to China on July 1, 1997.
- The system has allowed it certain freedoms the rest of China does not have.
POLITY
India reaches out to Pakistan to fight locusts
Context:
- India has reached out to Pakistan to counter a locust invasion, which threatens to destroy crops and undermine food security in south and southwest Asia.
Indian Proposals:
- India had proposed a trilateral response in partnership with Pakistan and Iran to combat the desert locust wave sweeping across the Afro-Asian region.
- India has suggested to Pakistan that both countries coordinate locust control operations along the border.
- India is also offering to energise another mechanism marshalled by the Locust Warning Organisation, to coordinate a robust joint response by New Delhi, Islamabad and Tehran.
- Iran has welcomed India’s offer of pesticide to control desert locusts in its arid South Khorasan province, and Sistan-Balochistan province that borders Pakistan.
About Locust Swarm:
- A typical locust swarm, which can vary from less than one square kilometre to several hundred square kilometres, can devastate farmlands.
- A one square kilometre swarm, containing about 40 million locusts, can in a day eat as much food as 35,000 people.
Airlines make Aarogya Setu mandatory
Context:
- All airlines have made the government’s contact tracing app Aarogya Setu a mandatory pre-requisite for booking a flight.
Government guidelines:
- Either have Aarogya Setu app or fill a self –declaration form
- Passengers with red status in Aarogya setu app will not be allowed to travel.
- Airlines should devise a system that web-check-in or tele check-in is possible only when the passenger certifies the status of their health through the Aarogya Setu App or a self-declaration form.
Airline:
- Airlines have stated that passengers will have to download the Aarogya Setu app to be able to fly and the passengers will be required to fill an online health declaration before being issued the online boarding pass.
Reference: https://www.thehindu.com/news/national/airlines-make-aarogya-setu-mandatory/article31652631.ece
80% success chance for Oxford vaccine trials, says Serum Institute chief
About Serum Institute vaccine development Program:
- It is working on several candidates, including potentially mass-producing the AstraZeneca/Oxford University one, as well as developing its own.
- The institute, the world’s largest manufacturer of vaccines by volume.
- A potential vaccine is the experimental vaccine developed by a team at the University of Oxford and now licensed to drug maker AstraZeneca, with whom Serum is in talks to mass-produce the vaccine, which is now in the clinical trial stage.
- This vaccine was initially known as ChAdOx1 and now as AZD1222.
- The ongoing trials had an 80% chance of success, given that the vaccine is based on a tried-and-tested platform.
Prelims Bits
Khudol
- Khudol is a crowd-funded initiative of an Imphal-based NGO.
- The initiative entails ensuring food supplies and health services for the LGBTQI+ community, people living with HIV, daily-wage earners, children and adolescents.
- The United Nations Secretary-General’s Envoy on Youth has listed Manipur’s ‘khudol’ (gift) among the top 10 global initiatives for an inclusive fight against the COVID-19 pandemic.
PURE Study
- Consumption of whole fat dairy products actually offers some protection from metabolic syndrome (MetS), diabetes and hypertension across races.
- The Prospective Urban Rural Epidemiology (PURE) study is a large-scale epidemiological study that plans to recruit approximately 140,000 individuals residing in >600 communities in 17 low-, middle-, and high-income countries around the world.
- Examining the Impact of Societal Influences on Chronic Non-communicable Diseases in Low-, Middle-, and High-Income Countries.
Open Sky Treaty:
- It allows countries to monitor signatories’ arms development by conducting surveillance flights over each other’s territories.
- It was signed in 1992.
- The OST came into effect in 2002 under the George W. Bush administration and it allows its 34 signatories to conduct unarmed reconnaissance flights over the territory of treaty countries.
- The U.S. has used the treaty more intensively than Russia.
- Recently, US has threatened to pull out of it.
New Start Treaty:
- An agreement signed by the Obama administration with Russia that caps Russian and U.S. nuclear arsenal.
- It is due to expire in next February.
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