Between Ego and Pragmatism

Nearly eight months have passed since a coordination committee was set up between the ruling coalition (the United Progressive Alliance – UPA) and its Left allies in India to negotiate the operationalisation of the Indo-US nuclear deal. Things seem to finally have come to a point where the substantial differences between them seem to be beyond bridging.

As such, this culmination was bound to happen, as the Left allies had never hinted about any movement away from their original position on the 123 agreement signed between India and the US. The Left parties had maintained consistently that the agreement’s text, the pretext for the deal and the subtext of strategic relations with the US was unacceptable to them. However, after prolonged negotiations, the UPA was able to wrest a concession from the Left parties to let the government negotiate with the International Atomic Energy Agency (IAEA) to prepare a safeguards agreement. This agreement was mandatory for the nuclear deal to go ahead, as it provided the Indian government approval from the IAEA to get fuel for the civilian nuclear reactors. The concession from the Left parties came along with the rider that the government was supposed to let text of the safeguards agreement to be presented to the coordination committee, which would then decide upon the next course of action, the decision to let the agreement to be taken to the IAEA board of governors for sealing.

After months of hard negotiations with the IAEA, the government was finally able to ‘freeze’ the safeguards agreement with the multilateral body. However, the subsequent step, i.e. discussion in the committee about the frozen text never materialised, as the Left parties complained that they were not shown the complete text, but only a summary of the agreement. At the same time, the Left parties maintained that it had agreed for the safeguards agreement to be finalised with the IAEA, because this was merely a technical step that enabled nuclear cooperation with various nuclear reactor and fuel suppliers in the world. The Left parties, however, maintained that they still had various problems with the strategic dimensions inherent in the nuclear deal as well as with other provisions of the 123 agreement.

The government has now reconciled to the fact that no matter how much it could try, it would not be able to persuade its Left allies to budge from their stated positions on various issues linked with the deal. The necessity, therefore, arose to ensure that all its partners in government (other political parties in alliance within government) were in line with the government’s decision to go ahead with the deal, Left support or not. This was not forthcoming to the ruling Congress party eight months ago, when the allies had argued that losing the Left parties’ support would have meant immediate elections and were not willing to risk the government in going ahead with the deal. But this time, the allies have hinted that they support the decision (if made) to go ahead with the nuclear deal, even if the Left parties do not come aboard. This change in stance has therefore meant that speculations have heightened about early elections, particularly in the winter (November/December).

Several problems still exist in a scenario where the Left parties withdraw support and the government tries to push through the deal by letting the safeguards agreement to be given to the IAEA board of governors. Firstly, if the Left parties withdraw support, the government is reduced to a numerical minority entailing a vote of confidence once the president gives a go ahead for such a vote. If the government goes ahead with the next step in the finalisation of the nuclear deal, it would mean that a minority government had taken this step, surely a dubious course of action. Already in numerous discussions in parliament on the issue of the nuclear deal, it has been clear that the majority of parliamentarians are against the present form of the nuclear deal, be it the major opposition party, the BJP or other parties outside the UPA and the Left, such as the Samajwadi Party (SP) and the Telugu Desam Party (regional outfits restricted to support in stats such as Uttar Pradesh and Andhra Pradesh).

The Congress-led government’s calculations would therefore mean that in order to escape from the fact of being a minority government, they would have to take support from the SP. Or it would believe that it would not mind facing an early election despite the troubled waters that the government has been wading through over quite some time now, with a raging inflation problem, continuing agrarian distress and no significant dent in poverty or livelihood as yet.

Considering that the Congress party has faced reverses in many a state election (the latest of which was in a southern state, Karnataka where the BJP came to power for the first time in its history), there is no guarantee that it could impress the voting populace with the slew of populist moves that it’s government has undertaken of late, particularly the farmers’ loan waiver scheme. The Congress believes that some of the welfare measures that the government had undertaken such as the extension of the Employment guarantee act (NREGA) to all districts in the country, other rural infrastructure projects such as the Bharat Nirman programme would keep it in good stead. Evidence, however, points out to the contrary. The opposition BJP has stolen a march in implementation of the NREGA and has handled regional contradictions better.

Keeping the above in mind, it seems that the new dogged approach of the government to go ahead with the nuclear deal even at the cost of losing power, would be quite quixotic. Supporters of such a move, particularly the mainstream media, have argued that domestic considerations should not curtail an important move such as the nuclear deal, which according to them, legitimises India’s nuclear energy programme without curtailing its strategic programme and recognises the country as a valid nuclear power. The costs of imported nuclear power, the problems of handling nuclear waste, the strategic implications of dovetailing into a cosy relationship with a unipolar hegemon and other such arguments have not cut much ice with the powerful supporters of the deal. The mainstream media for example has pretty much hidden the simple fact that the deal does not enjoy popular support in the parliament. Hence, we read editorial after editorial exhorting the government to commit suicide, but let the nuclear deal go through and care two hoots about the naysayers, including the Left. The ruling coalition therefore seems stuck in a cleft between honouring ego – after all, the government had considered the nuclear deal to be a grand achievement and a prestige issue – and remaining pragmatic. Eight months ago, it veered toward the latter, sensing that any rupture within the coalition would only benefit the BJP but today, driven by the exuberance of its prime minister, the coalition seems to be dithering toward the former. The fact that the US has done its all in setting a timetable for the deal to go through, made statements suggesting that it is willing to deal with a minority government and has used various kinds of soft power to harness support for the deal in the country, only increases the pressure on the government to push the deal through at the cost of popular legislative support.

This writer has pointed out that there are other means of harnessing energy to meet immediate needs. From the proposed gas pipeline from Iran to securing hydro power contracts with the newly formed secular democratic republic of Nepal, the opportunities for attaining sustainable energy are plenty. The nuclear deal does have its pros in terms of assuring uranium supply to fuel-starved Indian nuclear reactors but it also comes with a host of cons that militate against making the deal a sine qua non. It is hence advisable for the government to not convert the imperative of improving energy availability into a matter of prestige involving the operationalisation of the Indo-US nuclear deal at the cost of losing power itself. There is still time to evolve a way out for maximising options for energy without having to rely on the one-horse nuclear deal issue.

Fuel for Thought

Editorial written for Economic and Political Weekly

Biofuels have their advantages but as the world is learning to its cost that it comes with a burden of its own.

The ongoing energy consumption glut and the simultaneous pressure on depleting fossil fuels in the world have resulted in the coming to the fore of developing energy resources from new sources. Biofuels, the most well known example, are predominantly used as fuel for automotive transportation.



Following the example of Brazil, which has utilised extracted fuel (ethanol) from sugar cane grown in large-scale farms, many developed nations (and developing ones) arepromoting the growth of crops such as corn, sugar cane, beet, maize and jatropha (for biodiesel extraction) to manufacture biofuel. The reason for the new embrace of biofuels is, of course, the rising cost of crude oil and the need to promote energy independence. It is also being promoted on the somewhat dubious promise of reducing emission of greenhouse gases.

Within a couple of years of the global rush to promote biofuels new questions are being asked about the claimed benefits of these fuels and serious negative impacts are coming to light. One of the claimed advantages of biofuels over fossil fuels is that they do not contribute to global warming because of lower carbon emissions. However, considering that quite a large amount of new land needed to grow crops generating biofuels is being obtained by clearing forests, there is likely to be a net negative greenhouse impact in generating and using biofuels. The other major problem that is now becoming apparent in the large-scale production of biofuels is the fallout of the cultivation of crops for fuel rather than food. With the provision of substantial subsidies in the US for production of ethanol, large areas are now being used to grow corn for fuel rather than for food. This phenomenon of diversion of land to grow biofuel generating crops is one of the important reasons for the current surge in global food prices and shortages across the world.

The situation is so dire that the United Nations secretary general, Ban Ki Moon recently called for the review of biofuel use policy and urged caution in transfer of land to grow these crops. Researchers, however, argue that second generation biofuels, which extract energy from biomass such as biodegradable waste and are more “climate friendly”, mitigate the limitations of the first generation biofuels that are generated from crops. But research in manufacture of second generation biofuels is still going on and large-scale production has not yet come to fruition.

In India, there are strong economic disadvantages of an ethanol-based biofuel generation scheme. This is because of the fact that sugar cane (from which ethanol is extracted through fermentation) that is produced in the country is adequate, other than in the occasional year, only to meet domestic demand and growing more cane only means the diversion of more scarce water resources for use in cultivation of this water-intensive crop. Hence replication of the Brazilian model of biofuel generation in the country must be ruled out.

It is in this regard that the focus of the biofuel policy in India has been towards utilising an “oil bearing” plant, jatropha carcus, for oil extraction, processing and eventual blending with diesel. The advantage of this plant lies in the fact that it can be grown on cultivable wasteland and requires very little fertiliser and other inputs as normally required in agriculture. The use of jatropha as the primary plant for fuel generation thus obviates the need to transfer crop land for this use. Yet state regulation must ensure that crop switching from food crops to the “fuel crop” does not take place because of the commercial benefits of growing jatropha.

The focus on jatropha was fleshed out in a Planning Commission committee report in 2003 that laid emphasis on utilising large hectares of wasteland in the country to grow jatropha trees. The entire supply chain of jatropha production, oil extraction and transesterification (conversion to biodiesel for ultimate blending with standard diesel), is expected to be an employment generating exercise. Cooperative farming, decentralised extraction units and large-scale processing plants can be used for the creation of an employment-intensive jatropha to biodiesel supply chain.

Challenges still remain in deciding the price band of seeds that will provide a reasonable return to the farmer and yet ensure that the eventual price of the blended fuel product would be economical and comparable to existing diesel prices. Different states in India have already embarked upon drawing up a framework to develop the biodiesel industry. From contract farming to joint ventures, various ways of encouraging jatropha production and biodiesel use are being encouraged.

The biofuel experience thus far indicates that its use poses many challenges. The use of such fuel through reliance on second generation biofuels, and wasteland grown plants such as jatropha with regulation of land use and selection can certainly help reduce dependence on fossil fuels. Yet even such adjustments may not be able to serve a preponderant consumerist economy that increasingly depends on personal transport, which can only keep guzzling natural resources of all kinds.

Pipeline of Peace..

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What better way of commemorating Bhagat Singh’s birth centenary than to make further strides in peace and diplomacy among nations in South Asia? That is the question that strikes someone who is inspired by Bhagat Singh’s enduring legacy in the Subcontinent. Bhagat Singh was a revolutionary who envisaged a different world, and it is a different world indeed where conflict, violence and the ruling classes’ writ alone does not determine the contours of the toiling and common people’s economic choices.

For years, the South Asian region has gone through ferment, even as its inhabitants have yearned for better people-to-people contact, transcending of boundaries and for the ability to make their own choices over their destiny. But political differences have sustained and endured, creating complication after complication, making peace a cul de sac.

International relations theory, however, has an answer, groomed and tested in empiricism and history. The use of liberal institutionalism and the predominance of economics over politics has had sanguinary effects more often than less, and has brought order in times of pell-mell. Thus if one uses the value of economic relations, it makes it much easier to overcome political differences and the flickering light at the end of the tunnel seems much brighter.
It is in this regard that the proposed gas pipeline between Iran and India, transited through Pakistan, has a potential that transcends mere commercial value and emphasises a change in geo-strategic relations. Unsurprisingly, the force that resists this deal and its legitimising value for the nations involved is the US, which sees any leeway to and inter-state engagement with Iran, even for simple commercial value, as anathema to its grand plan for west Asia.

The gas pipeline from Iran to India was a proposal mooted by the Indian Oil Corporation (IOC) director, Dr R K Pachauri and former Iran deputy foreign minister Ali Shams Ardekani. The snowball of a proposal rolled on, took shape and soon the concept was welcomed by many for the benefits were huge. Iran was conscious that a new supply route from its gas fields could open up not only economic vistas, but also greater geostrategic potential. India and Pakistan, having high domestic demand for energy, have a relatively cheap and enduring source. The South Asian watchers are thrilled, because at last there is the strength of economic rationality weighing heavy over political units.

What is the Iran-Pakistan-India (IPI) gas pipeline all about? It is a 2,700 km long gas transport pipeline from the gas-surplus Iran fields, through Pakistan, and eventually to India through the western corridor. Natural gas is a cheap and a relatively clean source of energy as compared to other fossil fuel-based sources. Several project estimates and feasibility studies have pointed out that the project has tremendous commercial value, once implemented. These studies envisage that the costs of implementation are reasonable, and that the project itself is extremely viable.

As such, a few bottlenecks have cropped up vis-à-vis the project. Some have got to do with the feasibility levels, some to do with minor pricing irritants, but the major one has got to do with the geo-political nature of the deal. At the feasibility level, analysts are worried about disruption of the pipeline by extremist activity and the usage of the pipeline as a tool for making terrorist political statements. The financial worry of sabotage is alleviated by the fact that several modes of risk underwriting by international financial consortiums exist, any of which can provide money-back guarantees in case of sabotage. The political worry is addressed through a counterpoint: here is a chance to act on extremism more decisively, as rational choice determines that financial losses cannot be tolerated. Therefore, there is a strong financial incentive to act on extremism, even as the extremists themselves would realise that demand-fulfilling projects such as these cannot be a target for sabotage, as the stakeholders are common people.

The current phase of negotiations between Iran, India and Pakistan have been meandering into price irritants territory off and on. India and Pakistan are yet to resolve the transit fee issue, Iran is yet to accept the price review timeline that Pakistan and India favourably agree on and so on. Recently, India refused to take part in a tripartite meeting in Tehran, citing the non-resolution of the transit fee issue. However, these irritants are not deal-breakers and the advanced nature of financial economics can deal with these suitably. Important steps such as the determination of where would each country’s responsibility lie for the pipeline constructions, etc., have been made.

The overweening concern is geo-political. The US has stated its displeasure with the project and has advised India to prefer the Turkmenistan sourced pipeline. The US realises that the gas pipeline has a potential that could enhance the geo-strategic strength of Iran commensurately in the region. The Russian example of ‘gas diplomacy’ is there for all to see and the US realises as much as the others how gas supply can strengthen the influence and power of a country in the comity of nations. Russia’s influence in the European region has been greatly increased due to its gas supply and the dependence of downstream European countries on Russian gas.

The US insists on isolating Iran, as it brackets Iran into the “axis of evil” and it clearly does not want Iran to get out of the rut that it wants the country to be squeezed into. Simply put, the pipeline cuts into the hegemonic interests of the US in the region. Some would affirm that the Indo-US nuclear deal was a carrot dangled to India to drop the pipeline project, as the US re-enacts new scenarios in its great South-Central Asian game to retain hegemony. India’s relatively lukewarm reaction to the pipeline deal has instigated experts to argue that there is a heavy pressure from the US to scuttle the deal. In 2005, during a visit to the US, the Indian Prime Minister Manmohan Singh rather curiously attributed a problem with risk underwriting of the project to international bankers, even while the project was in its concept stage. There have been statements from the US Secretary of State, Condoleezza Rice, suggesting nuclear energy to be more viable as compared to natural gas sourcing. Long time politics-watchers of the Subcontinent have suggested that the US does not quite look at the deal positively, as it sees a reduced “offshore balancing” role for itself if the deal is consummated.

It is here that Bhagat Singh’s legacy needs to be readdressed. Seen in the people’s interests, the deal is a clincher, as it affirms a cheap source of fuel and has the potential to revitalise people-to-people contacts in the region by wrecking the boulders of political differences that stand between the nations, particularly India and Pakistan. Hegemonic interests of a distant imperia cannot and must not impose their will over such a project and these impositions must be resisted. India, Pakistan and Iran must continue to work hard to overcome the minor irritants that have popped up on the pricing issues. The people of the Subcontinent owe it to themselves to ensure that the pipeline project is through and is implemented. They owe it to Bhagat Singh on his birth centenary and to his personal sacrifice that he made as a statement against imperialism.

The writer, trained in engineering and in political science, works with the editorial team at Economic and Political Weekly, and is an avid follower of sports, political economy and the performing arts