CUTS International Washington DC Center
Monthly Brief #52, July 2022
I2U2: Another Force for Good?
 
Is the newly instituted India-Israel-United Arab Emirates-United States of America grouping (“I2U2”) yet another effort to contain both China and Iran? Arguably, no. The glue that holds them together is not their coming together as a ‘West-Asian Quad’ or their respective strained ties with China and Iran, but other common interests and pursuits.
 
Like similar broad-based coalitions such as the Indo-Pacific Economic Framework, I2U2 is not about containment of external powers, but about expanding cooperation amongst its members. While India and the US have done well to invest diplomatic capital in this grouping, it is also interpreted as an outcome of the Abraham Accords between Israel and many Arab countries such as the UAE.
 
The I2U2 is expected to facilitate technology and innovation-based partnerships by complementing each other’s resources and advantages to enhance their capabilities in emerging and critical technologies. The accompanying flows of capital, knowledge, innovation, and technology would create opportunities for the private sector, research establishments, and start-ups.
 
The initiative also seeks to address the global food security crisis and challenge the monopoly of China in the renewable energy sector. Among other things, the UAE will invest in integrated food parks and climate-smart technologies in India, while the US and Israel will provide innovation and finance support. The US is already funding a hybrid renewable energy project in India, wherein private companies of the UAE and Israel are exploring opportunities to serve as knowledge and investment partners. Furthermore, Investment in battery storage facilities for renewable energy is critical for India to achieve its ambitions to be a regional clean energy hub.
 
All these initiatives will elevate India’s bilateral ties with Israel and UAE, and will also expand India’s inroads in the region. At the same time, it offers yet another platform for India-US collaboration. I2U2 also broadens prospects to leverage the benefits of recent normalisation arrangements in the region and prepare for the post-fossil fuel age period.
 
Most importantly, it underlines India's diplomatic success in the region, overcoming ideological preconceptions about the Israeli and the Arab world, resulting in a departure from the past to share platforms with both the Jewish democracy and the Arab monarchies. The formation of I2U2 is yet another testament to India’s strategic autonomy.
      
Pradeep S. Mehta
Editor

P.S. US-China tensions relating to Taiwan are escalating. Would this revise the approach of the Quad into a security alliance and enhance the militarisation of the Indo-Pacific?


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Indo-US Joint Defence Production: Trade to Partnership
The India-US defence relationship is driven by a mutual interest in commercial and geopolitical aspects based upon increasing trust between the two countries. It’s important to note that the 2+2 ministerial dialogue - US and Indian Foreign Ministers and Defence Ministers’ joint meetings - and the Defence Technology and Trade Initiative (DTTI) group meeting have acted as the cornerstones of this relationship. India exported defence items and technology worth a record US$ 1.63 billion in 2021-22, an impressive 54.1 percent raise over the previous year.

New Australian government supports trade pact with India
Commerce and Industry Minister Piyush Goyal said the new Australian government supports the trade pact signed with India, and they expected to soon approach their parliament for approval of the agreement. India-Australia Economic Cooperation and Trade Agreement (ECTA) signed in April, 2022 need ratification by Australian parliament before its implementation. The agreement, once implemented, will provide duty-free access to the Australian market for over 6,000 broad sectors of India, including textiles, leather, furniture, jewellery and machinery.

India adopts US' joint statement on cooperation of global supply chains
On behalf of partner economies including India, US State Department on July 20, 2022 released a joint statement of the 2022 Supply Chain Ministerial Forum, focussing on the global challenge which includes the COVID-19 pandemic, wars and conflicts and climate change. The shocks to global supply chains from pandemics, wars and conflicts, extreme climate impacts, and natural disasters have put in stark relief the urgent need to further strengthen supply chains, to work to reduce and end near-term disruptions, and to build long-term resilience.
 
India-EU Trade Talks: Need a full FTA, not ‘early harvest’
India and the European Union (EU) have once again embarked on an ambitious journey. Both understand the need for urgency in reaching their destination. But the path towards that end game remains a tumultuous one despite a new momentum in their bilateral engagement. This is a moment to seize and make the most of when it comes to India-EU trade ties and policymakers on both sides seem well aware of what’s at stake.

 

Speaker series aims to strengthen Indo-US green energy collaboration
As part of the continuing engagement and collaboration between India and the United States, the US Consulate General Hyderabad and the Confederation of Indian Industry (CII) Andhra Pradesh launched the first session of joint Renewable Energy Speaker Series in Vijayawada on July 20, 2022. The objective of the series is to advance collaboration between the US and India with a special focus on Andhra Pradesh, one of India’s leading States in India’s renewable energy revolution.

Transition from fossil fuels to renewable energy can pose fiscal challenges for India: study
The global transition away from fossil fuels to renewable energy sources could trigger financial challenges for India and major developing countries such as Russia, Brazil and China because of their high dependence on revenues from fossil fuel, according to a study by the International Institute of Sustainable Development (IISD). Though India is a net importer of petroleum products, it earns substantial revenues via cesses and taxes from the consumption of petrol, diesel and oil.
 
Australia plans to supply critical minerals to Indian electric vehicle makers, space and defence programmes
Canberra’s Minister for Resources and Minister for Northern Australia Madeleine King said Australia is all set to supply critical minerals required for India’s electric vehicles, solar power projects and other strategic areas. Australia will commit AUS$5.8 million to the three years India-Australia Critical Minerals Investment Partnership. Australia has the resources to help India fulfil its ambitions to lower emissions and meet growing demand for critical minerals to help India’s space and defence industries, and the manufacture of solar panels, batteries and electric vehicles.

SCO meet: Address global energy, food crises, says Jaishankar
External Affairs Minister S Jaishankar said the global energy and food crisis caused by disruptions due to the COVID-19 pandemic and the Russia-Ukraine conflict should be addressed through resilient and diversified supply chains and reformed multilateralism. Addressing a meeting of foreign ministers of the Shanghai Cooperation Organisation (SCO) in the Uzbekistan capital of Tashkent, he emphasised the need for a “zero tolerance” approach towards all forms of terrorism. Jaishankar also spoke of the potential of the India-developed Chabahar port for the bloc’s economic future.

 

ASEAN-India: Towards Comprehensive Strategic Partnership
India hosted a special India-ASEAN Foreign Ministers’ meeting in New Delhi in mid-June, 2022. This meet was seen as a step forward towards comprehensive strategic partnership between India and ASEAN. This year marks the 30th anniversary of dialogue relations between the two. Both sides reaffirmed that openness, inclusiveness, rules-based order, freedom of navigation and peaceful settlement of disputes should be at the very core of the Indo-Pacific. Therefore, in this edition of CUTS Occasional News Wrap (ONW) articles of significant importance about the meet are highlighted.

CAATSA waiver to India in US interest, need strong partnership
American Congressman Ro Khanna said the US seeks to enhance its defence partnership with India in the backdrop of China's assertiveness and New Delhi's reliance on Russian military exports for its national defence. Khanna said a waiver to India of Countering America's Adversaries through Sanctions Act (CAATSA), which penalises countries that engage in significant defence transactions with Russia, is in the best national interest of the US and the US-India defence partnership. It was the most significant vote to strengthen the US-India relationship since the civilian nuclear deal that was passed with overwhelmingly 300 bipartisan votes.

US Senate version of NDAA seeks to enhance defence partnership with India
A key committee of the US Senate has sought to bolster the defence partnership with India and take it to a new level through greater cooperation in intelligence collection, drones and fourth and fifth generation aircraft. The move by the powerful Senate Armed Services Committee comes a week after the House of Representatives passed a legislative amendment as part of the National Defence Authorisation Act (NDAA) that waived off punitive CAATSA sanctions for India. NDAA is the annual budget of the United States.

Institutions hold key to better ties
Australia-India ties are at a historic high. Currently, a trade mission led by Western Australia's Deputy Premier Roger Cook is in India to bolster bilateral ties. Earlier, Australia's Deputy Prime Minister and Defence Minister Richard Marles visited India on a four-day tour to boost defence and strategic cooperation with India and compare notes with friends. One such institution is the Australia India Business Council (AIBC) which has spearheaded bilateral business and trade initiatives since 1986 when it was founded by then Prime Ministers Bob Hawke and Rajiv Gandhi. AIBC has contributed to policy discussions and facilitated subsequent business and trade initiatives.

 

The key to US-India partnership: Defence and technology cooperation
India and the US are natural allies to confront the challenges posed by an expansionist and aggressive China in the Indo-Pacific and beyond. There are clear signals of unprecedented cooperation between the two countries in areas like national security, defence production and most prominently, new-age information technology and internet industries. For, the India-US strategic partnership to shift to the next orbit, closer cooperation in scientific research and critical emerging technologies (Paywall) is imperative, as the recently concluded India-US 2+2 Ministerial Dialogue recognised.

Artificial intelligence gets a real time local edge
When computing moved to the cloud, it brought a lot of advantages of managing data at scale. Computation of large sets of information sourced from several locations allowed experts to interpret data at scale with flexibility. Artificial intelligence (AI) played a critical role in helping understand patterns which could lead to business insights. In the new scenario, using AI in the cloud is not enough anymore. The rise of billions of connected devices means that data has to be processed locally.

India, UK NSAs discuss cooperation on cyber and regional security, violent extremism
National Security Adviser Ajit Doval on July 21, 2022 met his visiting counterpart from the United Kingdom, Sir Stephen Lovegrove. They discussed a wide range of subjects of bilateral and global significance. The key points discussed included cooperation in cyber security, maritime and Indo-Pacific, regional security, as well as dealing with violent extremism. Taking forward discussions between the two Prime Ministers, the NSAs deliberated on forward-looking cooperation in the technology and defence sectors with a focus on key objectives of the Atmanirbhar Bharat initiative.
 
A grand strategy for technology
A grand strategy for development that looks decades ahead, not just years, requires a rethink in many areas of development policy. One such area is technology development (Paywall). The research and development (R&D) model that we should look at is what made the US the leading force in technology development in the latter half of the 20th century, which saw path-breaking developments in information technology, communication, medicine, space exploration, energy, and a lot more.

 

Recover Together, Recover Stronger; G20’s Two Ministerial Meets in July
Under Indonesia’s presidency, the G20 Foreign Ministers’ meet took place on July 07 and 08, followed by Finance Ministers’ and Central bank Governors’ meeting on July 15 and 16. Both meetings were held in Bali. Emphasis was laid on the ‘Finance Track’, which mainly focuses on economic, financial, monetary, and tax issues to secure global financial stability. Plans to establish strong worldwide standards for crypto currencies also came up. Ministers also discussed how best to respond as a group to the global consequences of the ongoing war, specifically to the rise in energy prices and the aggravation of global food insecurity. India will assume the presidency of this crucial international grouping in 2023. This edition of CUTS Occasional News Wrap (ONW) collates articles marking the highlights of the two ministerial meets.

India-US defence relationship has evolved from mistrust to deep trust: Experts
“India-US defence relationship is a dynamic and evolving one from a place of mistrust to a place of deep trust,” noted experts during a Defence News Conclave Project, titled “India-US Collaborations in Defence Industry, Technology, Innovation and Trade”. Richard M. Rossow, Senior Adviser and Wadhwani Chair in US-India Policy Studies, Center for Strategic and International Studies, observed that India wants to move beyond a buyer-seller relationship in defence, and it wants access to the technologies underpinning defence sales.

Green finance could be bright and robust strand of growing India-US ties
Indian Ambassador Taranjit Singh Sandhu said green finance could become a bright and robust strand of the growing India-US economic relations in the next 25 years. The two countries have the intent and will to lead the global fight against climate change. The green economy is diverse globally, but concentrated in a few countries and is bound to find new and emerging markets like India.
 
Insular world chipping away at globalisation
In this period of hyper-globalisation since the late-1980s, economic downturns have invariably raised questions about the future of globalisation. The questions became more intense following the “Great Recession” of 2008, and the continued impact of this downturn well into the next decade came to be described, perhaps unsurprisingly, as "slowbalisation". This was so as the underpinnings of the process of globalisation, namely, trade integration, which, in turn, supported the supply chains in some of the more economically dynamic regions such as East Asia, were beginning to look unhinged.