Events

The Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA) is organising a Talk by Mr Elbridge Colby, author of ‘The Strategy of Denial: American Defense in an Age of Great Power Competition’ (and former Deputy Assistant Secretary of Defense for Strategy and Force Development) on ‘The Strategy of Denial: An Assessment of US Defense Strategy for the Indo Pacific'.

The Talk, chaired by DG, MP-IDSA, Amb Sujan R. Chinoy, will be held today in the Room no. 005 at 1400 hrs.

Dr. Adil Rasheed, Research Fellow, Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), spoke on “US-Saudi Tensions: Possible Implications for the Petrodollar” at the Monday Morning Meeting held on 02 January 2023. The session was moderated by Dr. Muddassir Quamar, Associate Fellow, MP-IDSA. Ambassador Sujan R. Chinoy, Director General, MP-IDSA, and scholars of the Institute were in attendance.                                                             

Executive Summary

As the world experiences tumultuous geopolitical challenges on the Eurasian front, stagflation in the US, and continental energy crisis in Europe, the deteriorating Saudi Arabia-US ties can profoundly impact the global financial system. This has become an increasing possibility as the oil for security theme dictating the US-Saudi relationship has come under great strain due to the OPEC+ countries’ decision to reduce the oil output in the backdrop of the Ukrainian crisis. This has occurred despite several overtures on the western leaders’ part. It is all the while as the Saudi leadership has sought to diversify its security and economic partners, growing close to BRICS, Russia, and China, and further away from its traditional western allies. In light of these developments, India must act decisively to mould a new and more just international monetary system based on a basket of currencies and commodities. The Special Drawing Rights (SDR) is an interest-bearing international reserve asset created by the International Monetary Fund (IMF) in 1969as an alternative to US Dollar and China-backed Petroyuan.

Detailed Report

Dr. Quamar introduced the topic of the Monday Morning Meeting by highlighting the evolution of the US-Saudi relationship, premised on the theme of security for oil. As per this key feature, US Dollar would be the medium of oil trade, ensuring global American hegemony. However, it has recently faced several challenges ranging from ones that are personality-based to that including international turmoil in the oil market.

Following the brief introduction, the Dr. Quamar gave the floor to Dr. Rasheed.

Initially, the speaker briefly delved into the recent debates about how the international order is in flux and asserted how there is great uncertainty about whether the year 2022 has ushered in the post-pandemic world. Political experts have debated the possibility of a worldwide transition into a post-liberal, if not a post-American global order. The Ukrainian crisis and the negative impact on international trade due to protectionist policies and economic sanctions are considered by observers to have played a critical role in ushering in this new system. Finally, Russia and China’s concerted efforts to draw the Kingdom of Saudi Arabia (KSA) away from the western fold and de-dollarise the international economy can potentially transform the global financial order. 

Subsequently, he shifted the focus to the widening rifts in the US-KSA oil for security ties and the latter’s willingness to enhance cooperation with Russia and China instead. Amid such developments, western leaders ranging from former British Prime Minister Boris Johnson, American President Joe Biden, French President Emmanuel Macron, and German Chancellor Olaf Scholz have visited oil-rich Arab countries, including the Saudi Kingdom, to ensure they remain in the western fold and do not gravitate towards the Russia-China nexus. The primary motive behind their visits was to convince the oil-producing states to help in mitigating the European energy crisis and stagflation in the US.

However, despite several of these overtures, KSA has refused to pay heed. Instead of cooperating with the western world by increasing oil production, it, along with 22 other Organization of the Petroleum Exporting Countries (OPEC)+ member states, reduced oil production by 2 million barrels per day. The White House and the American allies perceived this decision as supportive of Russian actions in Ukraine, despite the OPEC+ countries’ claims of being guided solely by their economic forecasts.

There has been a visible Saudi tilt towards Russia with doubling oil imports to meet its domestic needs and a US$500 million investment in Russia’s three primary energy companies. While these decisions aided the sanctions-hit Russian economy, they also created an uproar in the US Senate’s Foreign Relations Committee. Threats to withdraw 3,000 troops stationed in the Persian Gulf and halt arms sales to Saudi Arabia were a part of the broader American counter-response.

Over the past two years, despite President Biden’s harsh rhetoric during his campaign, the White House has demonstrated a profound willingness to maintain KSA as a critical regional partner, by granting Crown Prince Muhammad bin Salman (MBS) immunity from lawsuits related to Jamal Khashoggi’s murder and preventing NOPEC and Yemen War Powers Bill from becoming laws, among others. Nevertheless, the Crown Prince has been dismissive of these initiatives.

Moreover, MBS hosted Chinese President Xi Jinping in December 2022, where the two leaders signed a Comprehensive Strategic Partnership Agreement and agreed to enhance oil trade. In addition, President Xi discussed with other Arab heads of the state the potential of trading oil and gas, if only partly, in Renminbi. Notably, Petroyuan was launched on the Shanghai International Exchange in 2018.

Overall, there are several reasons for this increasing discord between Saudi Arabia and US. Some of them include ideological differences, i.e., the clash between a pre-modern Wahhabi and a secular republic state, dredging up human rights-related issues with the Gulf States and Israel or courting of Iran by Democratic Presidents, and the gradual American pivot to Indo-Pacific from West Asia.

Here it is vital to understand the potential consequences of US-Saudi friction on the global financial system. Since the 1974 agreement between the Saudi Kingdom and US and the subsequent 1975 agreement between OPEC countries and the US about only conducting oil trade in US Dollars, the US has been able to exercise its economic hegemony or ‘exorbitant privilege.’ This was supposed to be a temporary measure to salvage the floundering American economy. However, this ‘privilege’ expanded to the trade of gold, agricultural products, and copper, among other goods. Today, every country participating in the oil trade must keep US Dollars as reserves to purchase oil. Consequently, global trade will be impacted gravely should the petrodollar system unravel. Before this, the dollar's value was linked to gold until it suffered a blow due to countries such as France picking up its reserve of gold from America.

Interestingly, KSA’s primary oil purchasers, i.e., India and China, are part of the BRICS, an organisation the kingdom has expressed interest in joining as a member. Within this context, it is crucial to look back on the Russian Foreign Ministry’s 2022 proposal to establish a BRICS reserve currency backed by commodities such as gold. The Saudi Kingdom’s bid to become a BRICS member, mainly due to its petroleum reserves, might bolster this idea. This possible reserve currency is being seen (at least by Russia) as an alternative to the US greenback and the IMF’s Special Drawing Rights currency.

Therefore, it is necessary to explore how these developments might impact the Indian economy. Over the years, the US Dollar has proven unreliable, and its costly exchange rate against other currencies results in other countries incurring high costs. These monetary fluctuations subject the Indian Rupee to volatility, and as recently indicated by our Finance Minister, it is not the Rupee that is falling. However, the dollar is rising because of the Federal Reserve’s policies and not the strengthening of the US economy. Nevertheless, India cannot back the China-backed Petroyuan because it would entail transitioning from one currency’s exorbitant privilege to that of another. Thus, India needs to take the lead in building an international consensus towards developing a safer and just monetary order for the future. 

Q/A Session

Dr. Quamar expressed his gratitude to the speaker for his detailed presentation and invited questions from the attendees.

The Q/A session broadly revolved around themes such as the debate about the world transitioning into a post-pandemic world, the feasibility about establishing the BRICS currency reserve, the long-existing partnership between KSA and China, the Saudi Kingdom’s role as a partner in the American regional counter-terrorism efforts and pivot to the Indo-Pacific. Furthermore, debates about the nature of liberalism, Russian and Chinese efforts to de-dollarise the global economy and the viability of the bilateral ties between Saudi Arabia and the US and Iran as a counterweight to Russian and Chinese influence were some of the other issues discussed. The speaker gave insightful responses to comments and questions from the participants. 

This report was prepared by Ms. Saman Ayesha Kidwai, Research Analyst, Counter-Terrorism Centre, MP-IDSA.

Dr. Smruti S. Pattanaik, Research Fellow, Manohar Parrikar IDSA, spoke on the topic "Emerging Opposition Politics in Bangladesh: Would It Be a Challenge to Sheikh Hasina?” at the Monday Morning Meeting held on 09 January 2023. The session was moderated by Dr. Ashok K. Behuria, Senior Fellow, Manohar Parrikar IDSA. Maj.Gen. (Dr.) Bipin Bakshi (Retd.), the Deputy Director General, MP-IDSA, and MP-IDSA scholars enriched the discussion.

Executive Summary

A massive protest was organized by the leading opposition party Bangladesh Nationalist Party (BNP) against the government on 10 December 2022 in Dhaka. A large number of protesters gathered at Dhaka’s Golapbagh. These protests organised by the opposition BNP are massive enough to demonstrate that re-election of Sheikh Hasina’s Government in the January 2024 election would not be easy. There are many factors which play a defining role in the next election.

Detailed Report

The Monday Morning Meeting commenced with Dr. Ashok K. Behuria, Senior Fellow, South Asia Center, MP-IDSA discussing the details of the nationwide massive protest organised by the BNP against the government on 10 December 2022 in Dhaka. According to Dr. Behuria, the massive numbers of protesters are enough to upset the government. He mentioned that the Sheikh Hasina government is in its third term.

Dr. Pattanaik initiated the discussion with a description of the opposition political parties in Bangladesh. Where some of the parties, especially the left groups are an integral part of civil society movements, some of the parties are part of the two broad alliances led by the incumbent Awami League (AL) and the Bangladesh Nationalist Party (BNP). For example, BNP was associated with a 20-party coalition. It is now reduced to a 12-party coalition. Similarly, the AL has a 14-party coalition. Apart from these two major political parties, other parties, except for Jatiyo Party and Jamaat-e-Islami Bangladesh, do not have significant electoral presence in the country.

BNP and Its Alliance

BNP was a part of a 20-party alliance in the last election held in December 2018. The BNP-led alliance participated in the 2018 national election under the banner of the Jatiya Oikya Front, which also included former Foreign Minister, Dr. Kamal Hossain's Gono Forum. During 2018, the BNP-led coalition managed to get only 7 seats in total and 293 seats were won by the AL in an election that is perceived as controversial and the government is accused of ballot stuffing and this election is referred by some as ‘midnight’ election. In electoral politics, the AL is confident that it can win the next election even though the opposition rallies made Sheikh Hasina address a rally in Chittagong in an effort of ‘show of strength’.

Ms. Pattanaik talked about the dissolution of the coalition of Jamaat-e-Islami and BNP. Jamaat Ameer argued that for the last five years, there has been no joint program with the BNP and the alliance has lost its political relevance in this context. Back in 2018 prior to the election in Bangladesh, there was a big question about whether the Jamaat will be part of the BNP or not because some important leaders inside the BNP spoke against the BNP’s alliance with Jamaat. However, electoral considerations made them to stick together and Jamaat which was deregistered as a political party fought the election on BNP’s symbol. It is a well-known fact that the Jamaat has a 12 percent vote bank in Bangladesh and they managed to get 18 seats in 1991 and in 1996 they received 8.6% of votes and won only 3 seats. The JI rose in politics only after it entered an electoral alliance with the BNP prior to 2001 elections. After leaving the BNP led opposition coalition, Jamaat has applied for registration as the Bangladesh Development Party.

Religious Political Groups in Bangladesh

There are two major religious groups in Bangladesh, one is Jamaat- e- Islami which has recently applied for registration as the Bangladesh Development Party and another one is Hefazat e Islam which defines itself as a political group. Jamaat is ideologically a very strong party with a dedicated cadre. The party members are associated with financial institutions, banks, have their chain of hospitals, educational institutions etc. which employ well-qualified cadres. Its stint in power between the period 2001 to 2006 benefitted the party and it expanded its network. On the other hand, Hefazat-e- Islam mostly controls Qaumi madrassas and madrassa students are its captive supporters. Many leaders belonging to this group are also hold positions in other smaller religious political parties. In the last election, one more religious political party that stood third in terms of support base is Islami Shasontantra Andolan.

Civil Society in Bangladesh

Civil society in Bangladesh is also divided along ideological lines. Supporters are divided along party lines and participate in the party programmes even though they are not members of political parties. Civil society in Bangladesh is very vibrant and has played a significant role in preserving the plural character of the state, culture, language, minority rights, issues of livelihood, gender etc. There are civil society groups that work to preserve Islamic values in society and see to it that no laws violate the tenets of Sharia. Bangladesh civil society is very much opposed to military/authoritarian regimes and support democracy. People across the civil society want to change but they are equally apprehensive about the character of the next regime.

Stakeholders in Favour of the Status Quo

Since the last 15 years, various stakeholders have aligned themselves with the Sheikh Hasina regime and have benefitted from it. Both the government and its stakeholders depend on each other for their sustainability. The long rule of AL has also resulted in massive politicisation of bureaucracy as well as state institutions. Such politicisation is not new in Bangladesh’s political history. Profiteering from the regime has become a hallmark whether it pertains to arrest or selection of candidates for local body and national elections. The character of the Bangladesh Parliament been changed over a period of time. More than 60 percent of current members of Parliament in Bangladesh are businessmen.

Issues that Will Determine the Ballot in Bangladesh

On the government side, it is said that economic development and stability in Bangladesh are the key achievements of the government which will be determining factors for the upcoming elections. In 2021, Bangladesh saw 7.2 percent economic growth and in 2022 it was 6.2 percent. This is despite the pandemic which affected Bangladesh’s readymade garment exports as well as remittances. In the past decade, Bangladesh has witnessed infrastructure development, and achieved energy sufficiency, till the Russia-Ukraine war hit the global energy market. The government has taken a decision to address the shortage of foreign currency by curbing imports of non-essential goods and has also taxed industries which are using imported gas.

There are three important factors. First, to hold a multiparty election. BNP may not participate in such an election but there will be other political parties who will participate in the election conducted by the Election Commission of Bangladesh. Second, managing the perception of the west regarding credibility of the election is another important factor. Apart from these, managing the domestic stakeholders would also be significant. In this context, neutrality of the armed forces would be important. India would watch this election as domestic permutation and combination takes place with re-alignment of political forces, prior to the election.

The Deputy Director General, Maj. Gen. (Dr.) Bipin Bakshi said that India is an important factor for Bangladesh but Bangladesh is also a defining factor for security of northeast.

There were questions regarding what would be main electoral issues and whether issues raised by political parties are any different than those raised in past election.

Ms. Pattanaik gave insightful responses to comments and questions from the participants.

The report was prepared by Mr. Shubham Thorat, Intern, South Asia Centre, MP-IDSA.

Ms. Mayuri Banerjee, Research Analyst, Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), spoke on "China’s Zero-COVID Policy: Reactions at Home and Abroad” at the Monday Morning Meeting held on 26 December 2022. The session was moderated by Dr. Titli Basu, Associate Fellow. Ambassador Sujan R. Chinoy, Director General, MP-IDSA, and scholars of the Institute were in attendance.

Executive Summary

The rising COVID cases in China have set off alarm bells all around the world. China’s National Health Commission has ceased releasing information on the daily COVID cases. The present surge in cases comes at a time when the nation is doing away with its Zero COVID policy and gradually opening up its economy and society.

A look at China’s approach to the pandemic highlights its emphasis on stamping out the virus. China's Zero COVID policy is essentially an elimination strategy that aims to keep infection numbers as low as possible at all costs. Despite mounting criticism of policy excesses, China's Communist Party (CCP) reaffirmed its commitment to the Zero COVID policy.

Since its inception three years ago, the policy has achieved very little in comparison to the cost it has inflicted on the Chinese economy and society. The population that once supported the policy is now increasingly opposed to it. It remains to be seen how China will deal with the ramifications of the Zero COVID policy.

Detailed Report

Dr. Basu commenced the Monday Morning Meeting by highlighting the explosion in COVID cases in China. She emphasised that China’s rapid surge in COVID cases has impacted the world’s health security and geo-economics. Furthermore, the surge in cases comes at a time when Beijing is parting ways with its Zero-COVID policy.

Like other nations, India is also reflecting on this growing concern. Dr. Basu stated that India would be concentrating on using a test-track-treat strategy in the future.

Ms. Banerjee was given the floor by the moderator after the brief introduction.

The speaker stated that the Zero-COVID policy has been a topic of considerable debate from the time it was instituted, in 2020. She began by exploring the timeline of the COVID-19 situation and highlighted the long gap between reporting of the first cluster of cases in early December 2019 and government response. According to Ms. Banerjee, administrative laxity allowed 5 million individuals to leave Wuhan and facilitated the rapid spread of the virus to other regions of China as well as to neighbouring countries.

The speaker pointed out that China came under heavy criticism for its slow response. It was as late as 23 January 2020 that Beijing initiated strong measures to stop the virus's spread. Ms. Banerjee stated that, in December 2020, China began its vaccination program. Here, she noted that, while China put much emphasis on stamping out the virus, it did not enforce vaccination as mandatory. In 2021, China continued to report major outbreaks.

Further, the speaker discussed China’s Zero COVID policy. She observed that the policy became a cornerstone of China's response to COVID 19.  It came to signify zero tolerance against COVID 19 infection and aimed to achieve zero community-level transmission. Ms. Banerjee then cited a joint report by the World Health Organisation and China that provided a theoretical framework for the Zero-COVID strategy.

Ms. Banerjee observed that the Zero-COVID policy was essentially an elimination strategy aimed at keeping infection numbers as low as possible. However, reports and instances emerged indicating government policy excesses, intrusive control measures, mismanagement, and lack of flexibility. The severe lockdowns also posed enormous difficulties for Chinese citizens.

In order to double down on the Zero-COVID approach, Provinces were divided into grids with grid controllers mandated to enforce the protocol measures dictated by local authorities. She mentioned that the government launched an app to monitor people's movements to determine whether they posed risk of contagion, causing massive bewilderment and confusion.

Further, the speaker highlighted the number of lockdowns imposed in China as compared to other countries. In this regard, she noted that in contrast to other countries, China consistently increased the number of lockdowns over the years.

Ms. Banerjee stated that when the Omicron Variant was discovered in November 2021, China fine-tuned its COVID policy to 'Dynamic Zero-COVID policy'. She claimed that the modification was based on the realisation that given the new variant's high transmissibility, zero domestic outbreaks were not possible. According to the speaker, in contrast to the previous policy, a greater emphasis was placed on prevention and containment. However, the difference on the ground was negligible.

Ms. Banerjee also discussed why the implementation of the COVID policy became so unresponsive to people's needs. First, there was a fear of punishment among government officials, and second, there was competition among local officials and Provinces in the hope of political advancement.

As the presentation drew to a close, she discussed the cost of Zero-COVID policy for both China and the international community and moved on to highlight the reasons for continuation of the policy. Ms. Banerjee stated that the policy had a significant human cost, with an increase in cases of depression and mental health issues. The Zero-COVID policy also resulted in widespread disruption of supply chains on a global scale.  

The speaker cited several reasons why the strict Zero-COVID policy was maintained despite significant losses: to demonstrate the superiority of the Chinese political system over liberal democracies, to preserve the Government’s and Xi Jinping's image, particularly ahead of the 20th Party Congress, and low efficacy of home-grown vaccines; and low vaccination rate among the elderly, etc.

During the initial outbreak, the Zero-COVID policy was widely supported by the domestic population. The phrase "not being a burden to the government" became prominent. However, people's attitudes shifted over the course of two years. There was increasing concern that the Zero-COVID policy could be self-defeating. Global reaction exhibited a similar trend. Foreign investors were growing concerned about the policy's impact on trade. Despite all this, in the 20th Party Congress, Xi reaffirmed China’s commitment to the Zero-COVID policy. The government did not roll-back most of the COVID restrictions until December 7, 2022.

Ms. Banerjee concluded her presentation by stating that the three years of Zero-COVID policy achieved very little as compared to the cost it extracted from the Chinese economy and society. It remains to be seen how China will manage to mitigate the implications left behind by the Zero-COVID policy.

Following the presentation, the Dr. Basu invited the Director General, Ambassador Chinoy to offer his comments.

Amb. Chinoy observed  that, at this point, China's COVID policies appear to be jeopardising the world much more due to their unpredictability and the lack of transparency in decision-making. The Zero-COVID policy appears to be an extremely short-sighted, myopic decision. He emphasised that this is heavily influenced by the existing political system in China, where the CCP’s sole objective is to retain power.

He shared that the Chinese always carry out their actions as mass movements and it  is these mass movements that have altered the course of Chinese history. The element of control is indispensable to these mass movements. A pandemic, however, is not something the CCP can control. As a result, China has shifted to the dynamic Zero-COVID policy, demonstrating some flexibility in their approach to COVID-19.

Ms. Banerjee concurred with Amb. Chinoy’s comments and stated that the chaotic situation demonstrates that no exit strategy was planned by the CCP regarding its Zero-COVID policy.

Key Takeaways from the Q&A Session

Following Ambassador Chinoy's remarks, MP-IDSA scholars were invited to join the discussion.

In response to a question about the rising number of cases in China and the possibility of a change in Chinese policy regarding the rejection of Western vaccines, Ms. Banerjee stated that the CCP has been steadfast in its opposition to Western vaccines. A question was raised about the disconnect between central and local government responses to the COVID19 pandemic. Ms. Banerjee stated that the Zero-COVID policy was primarily issued by the central government as a broad policy guideline, leaving its implementation to the various local governments.

Ms. Banerjee responded to a question about the reasons for the shift to the dynamic Zero-COVID policy by stating two possible reasons: growing frustration among Chinese citizens and higher transmissibility of the Omicron variant. In response to a question about the efficacy of Chinese vaccines and the implications for countries that have imported them, Ms. Banerjee stated that the efficacy of the vaccines must be considered in the context of herd immunity and vaccination of the elderly population.

Report prepared by Ms. Esha Banerji, Intern, East Asia Centre.