Mains Current Affairs UPSC CSE -Sept Week 4
Are Saudi Arabia’s oil supplies vulnerable?
- Saudi Arabia is one of the largest producers of crude oil in the world. It produces a variety of grades of crude, including light grade crude which is in high demand in Asia.
- It produces nearly 10 million barrels of oil every day. In August, the kingdom exported, on an average, 7 million barrels a day. With its spare capacity — the ability to turn up supply to meet emergency demand situations — Saudi Arabia continues to play a critical role in global price stabilisation.
- In the past, it had pumped up supplies in the event of geopolitical shocks. At present, when the U.S. sanctions are cutting off Iranian oil supply to the global market, consumers are looking at Saudi Arabia and Iraq to make up the fall. Given the critical role it plays in supply, any major attack on the Saudi oil industry will rock the markets that happened recently.
The extent of damages
- Abqaiq is the world’s largest oil processing facility. Nearly two-thirds of the total Saudi supply is refined at Abqaiq. The attacks, reportedly carried out with drones and missiles, destroyed the spheroids at the facility that are used to process crude oil, and wrecked five of its 18 stabilisation towers.
- Satellite images showed that two towers at the Khurais oilfield, some 180 km south-west of Abqaiq that produces more than 1 million barrels of crude a day, were damaged.
- The attacks knocked out about 5 million barrels of oil output a day, nearly half of the kingdom’s daily production and over 5% of the global output.
- Following the attacks, crude prices spiked — the price of a barrel of Brent crude jumped 20% in the morning and closed at $69.02, 14.6% higher than the last close, the largest single day percentage gain in at least three decades.
Safety of the Saudi oil facilities
- Recent incidents in the Gulf suggest that neither oil facilities nor supply lines in the region are safe. Since May, oil tankers that pass through the Strait of Hormuz, a choke-point connecting the Gulf (also known as the Persian Gulf and the Arabian Gulf) with the Arabian Sea through the Gulf of Oman, came under multiple attacks.
- In June, Iran shot down an American drone alleging that it had violated Iranian air space, taking tensions between the two countries to the brink of a conflict. Iran has also seized a British-flagged vessel near the Strait of Hormuz after an Iranian ship was captured by British forces off Gibraltar (it was later released).
- The incidents near the Strait of Hormuz were a stark warning to global oil trade as a third of crude oil exports transported on tankers pass through the strait.
- Now, the attacks on Saudi Arabian oil installations expose the kingdom’s defence too. Unnamed Saudi officials told American media that their air defence had failed to detect and prevent the attacks as they came from the north.
- The Saudi and U.S. focus, they say, is on the kingdom’s southern border with Yemen from where the Houthis fire drones and short-range missiles. Whatever the reason, the attack showed that there are holes in Saudi Arabia’s defence system.
- The kingdom, which spends over $80 billion a year on its defence budget (Saudi Arabia was the third largest defence spender in 2018, after the U.S. and China) could not protect its most critical economic assets.
What is Iran’s strategy?
- Iran has denied any role in the attack on Saudi oil facilities. But whether Iran was directly involved in it or not, it cannot escape blame as it is backing the Houthis in Yemen’s civil war.
- The attacks also fit in with Iran’s strategy of disrupting the global energy markets using its military clout in the Gulf in retaliation for the U.S.’s sanctions.
- After the Trump administration withdrew from the Iran nuclear deal, Tehran waited for a year, urging other signatories including the European Union, Russia and China, to fix the agreement. It wanted to continue to enjoy the promised economic benefits.
- But those countries remained spectators as American sanctions cut off Iran’s oil industry, critical for the country’s economy, from the global market. Iran’s economy has been in a free fall since Mr. Trump reimposed sanctions.
- Most of the European companies that promised investments after the nuclear deal was reached have already pulled out of the country. Even countries such as India, one of the top buyers of Iranian crude, cut imports drastically after the U.S.’s sanctions.
- Iran started violating the nuclear deal step by step while launching attacks at the same time, either directly or through its proxies, on the energy supply lines or infrastructure in the Gulf. Iran has come up with “maximum resistance” to Mr. Trump’s “maximum pressure”.
- Ever since the Centre and the States passed the landmark legislation in 2016 adopting a single countrywide Goods and Services Tax (GST), the federal council that is tasked with overseeing all the regulatory aspects of the indirect tax has had its hands full.
- From recommending the rates that could apply to various products and services, to deciding on what could be tax exempted, the GST Council has had the onerous task of laying out the policy framework for administering the tax in a manner that benefits all stakeholders – the governments, the consumers and the suppliers along the value chain.
- Given the complexity of the legacy taxes that GST subsumed and replaced and the teething troubles of operating a new tax system, ensuring optimal outcomes has proved an abiding challenge.
- A significant concern relates to the loopholes that unscrupulous operators have sought to exploit, whereby revenue that ought to have accrued to the Centre and the States has leaked while allowing these elements to derive illicit profits.
- And the scale of some has been breathtaking. Earlier this month, the Directorate General of GST Intelligence and the Directorate General of Revenue Intelligence conducted a pan-India joint operation, which saw about 1,200 officers simultaneously conducting searches at 336 different locations.
- In the process they unearthed a network of exporters and their suppliers who had connived to claim fraudulent refunds of Integrated GST, with more than ₹470 crore of input tax credit availed being based on non-existent entities or suppliers with fictitious addresses. A further ₹450 crore of IGST refund is also under review.
- It is against the backdrop of such cases, and the fact that frauds totalling up to a staggering ₹45,682 crore have been detected since the roll-out of the tax in July 2017, that the GST Council has decided “in principle” to recommend linking Aadhaar with registration of taxpayers.
- In its 37th meeting in Goa recently, the council also agreed to appraise the possibility of making the biometrics-based unique identifier mandatory for claiming refunds.
- Already the GST Network — the information technology backbone on which the whole tax system runs — has made it mandatory for new dealers registering under the composition scheme for small businesses to either authenticate their Aadhaar or submit to physical verification of their business, starting January 2020.
- The council too needs to follow the network’s lead and move swiftly to recommend mandatory linking for refunds, especially since that has proved to be the main source of most frauds.
- In a becalmed economy, neither the Centre nor States can afford to forego even a rupee of revenue that is due to the public coffers.
UK apex court order – A lesson for India
- The United Kingdom Supreme Court, in a slender but significant judgment, decided that the prorogation of parliament by the Queen of England, acting on the advice of the Privy Council, was unlawful on the grounds of parliamentary sovereignty and democratic accountability.
- It historically held the action was so patently unlawful that “when the Royal Commissioners walked into the House of Lords it was as if they walked in with a blank sheet of paper”.
- This unanimous judgment of all 11 justices (the twelfth was not empanelled to avoid the casting vote of the chief justice for which apparently the Constitutional Reform Act 2005, makes no provision).
- The situation before the Court was pregnant with the politics of power but it, like the Indian counterpart, focussed merely on constitutionality of the prime minister’s action of prorogation of parliament in mid-session.
- This was truly a Kesavananda Bharati moment for the British court. But unlike the full Indian court, there was no riot of concurring and dissenting opinions.
- Written in elegant and firm language, and accessible to all, the judgment is very brief (71 paragraphs and 24 pages and heard only for three days).
- The judicial courage, craft, and contention have a common core in India and UK — judicial review has its basis primarily in safeguarding people’s basic rights but in the Indian context, the end is achieved by a prolixity of judicial opinions addressed to multiple constituencies and the high art of speaking to the future.
- May be, judicial verbosity emanates in India from the verbosity of the written Constitution itself? Or, each justice values the freedom to write, to concur as well dissent? Or still some are anxious to attain judicial immortality and be remembered by posterity with pride?
- Perhaps, the ancient Hindu law tradition of nibandkaras (essayists) reincarnates law-giving in the form of an erudite discourse. Different judicial styles reveal both the language of power and the power of language — a subject worthy of study by law and sociolinguistics.
- The UK Supreme Court has available to it two diametrically opposed readings. The first was the model of judicial self-restraint or accommodation with other institutions of co-governance; in effect, to treat the questions raised as the pursuit of politics by other means.
- The second was to check the political executive by insisting on the basic principles of the common law, which protect parliamentary sovereignty. It adopted the latter course saying that although the “United Kingdom does not have a single document entitled ‘The Constitution’, it nevertheless possesses a Constitution, established over the course of our history by common law, statutes, conventions and practice”.
- Though not codified, “it has developed pragmatically, and remains sufficiently flexible to be capable of further development” and it “includes numerous principles of law, which are enforceable by the courts in the same way as other legal principles”.
- The principle of judicial duty stands reiterated: “… the courts have the responsibility of upholding the values and principles of our constitution and making them effective: And it is their particular responsibility to determine the legal limits of the powers conferred on each branch of government, and to decide whether any exercise of power has transgressed those limits.”
- The courts “cannot shirk that responsibility merely on the ground that the question raised is political in tone or context”.
- The judicial duty then lies in the discovery of the first principles of constitutional law, which regulate the application of constitutional discipline over the uses of political power.
- However, the British Supreme Court does not confine the sway of such principles merely to the “protection of individual rights”, but includes “principles concerning the conduct of public bodies and the relationships between them”.
- These principles are “a concomitant of parliamentary sovereignty”. Accordingly, the “power to prorogue cannot be unlimited”. Indeed, no power is, at least in a constitutional democracy.
How, then, is the limit upon the power to prorogue to be defined, so as to make it compatible with the principle of parliamentary sovereignty?
- It dexterously links the doctrine of parliamentary sovereignty with democratic accountability to people at large: “Ministers are accountable to parliament through such mechanisms as their duty to answer parliamentary questions and to appear before parliamentary committees, and through parliamentary scrutiny of the delegated legislation which ministers make.
- By these means, the policies of the executive are subjected to consideration by the representatives of the electorate, the executive is required to report, explain and defend its actions, and citizens are protected from the arbitrary exercise of executive power”.
- And in the present case, judicial duty consists in applying some “legal limits” because a mere executive fiat proroguing parliament runs “the greater …risk that responsible government may be replaced by unaccountable government …the antithesis of the democratic model”.
- It was precisely this fear of limitless executive power that led the apex court in India to prescribe and develop the principle of the basic structure and essential features of the Constitution.
- Neither the monarch, nor the prime minister, may insulate themselves from parliamentary sovereignty and democratic accountability.
- Considerable judicial regard for “the responsibilities and experience of the prime minister” does not overcome the “court’s responsibility to determine whether the prime minister has remained within the legal limits of the power”.
- The Court will intervene if “the consequences are sufficiently serious”; far from being a mere judicial say-so, it has to rest on the discovery and affirmation of sound basic principles of constitutional good governance.
- Of course, no judicial decision is beyond socially responsible critique. But in asking parliament to finally decide the terms and conditions of Brexit, the British court has valuably upheld the principles of democratic accountability of a sovereign parliament.
Different peas in different pods
- India is among the first countries to set up a specialised agency for the development of research and human resources in the biotechnology sector. More than three decades later, it is imperative to ask: has the biotechnology sector lived up to its promise? Or was it all faux optimism? More importantly, is the sector poised to stand shoulder-to-shoulder with, if not beat, the IT sector in creating jobs for the future?
- One needs to go beyond the traditional indicators such as the numbers of institutions formed, students and scientists trained, and the number of patents filed to judge the sector’s performance, and its impact on the economy and society as a whole.
- Modern biotechnological research is expensive. It requires a highly trained and skilled workforce and access to expensive instruments. So far, most of the high-quality research output has come from a handful of institutions with better scientific infrastructure.
- The rest, which forms the bulk of the research publications, is of mediocre quality. This is primarily due to a “publish or perish” culture that incentivises numbers over quality. Over the years, the focus of research has slowly shifted from fundamental to applied research.
- Why has India not produced another Jagadish Chandra Bose or G.N. Ramachandran despite the biotechnology research budget growing several folds?
- The fruits of applied research will only come when we start investing in basic research without asking for quick returns. While continuing and increasing the share of funding in basic research, the government should encourage and incentivise the private sector to invest substantially in applied research.
- Compared to the developed economies (the United States), biotechnology research in India is mainly funded by the public exchequer. Unless the private sector starts supporting applied research and engages with academic institutions, the innovation in applied and translational biotechnology will be minimal.
- Let us look at the creation of human resources and jobs in the biotechnology sector. In India, unlike the IT sector, a large pool of the English-speaking workforce, low wages of scientists (compared to the developed economies) and a sizeable institutional research base have not helped create more jobs in biotechnology.
- There may be several possible reasons. Biotechnology research often requires access to laboratories with high-end scientific infrastructure, the supply of expensive chemicals and reagents with minimum shipping time between the supplier and the user, and a disciplined work culture and documentation practice due to regulatory and intellectual property filing requirement.
- Additionally, unlike the products and solutions from the IT industry, biotechnology products and solutions often require ethical and regulatory clearance, making the process long, expensive and cumbersome.
- As the nature of the work in the biotechnology sector is specialised, most jobs are filled with experienced and skilled scientists leaving the demand for young and inexperienced ones low.
- In a global marketplace, having a large number of young professionals hungry to work at meagre wage coupled with the need of large corporations in the West to get work done cheaper created some of the large IT companies in India.
China at Advantage
- However, for the biotechnology industry, the same honour went to China. Unlike India, China has many more labs with the best of scientific infrastructure; each with more number of skilled human resources trained in regimental work culture and trained to practise rigorous documentation.
- Chinese students and scientists outnumber Indians nearly 5:1 in most American universities in the life sciences/biology-related disciplines.
- A booming economy and a higher science budget coupled with a flexible hiring system have made Chinese universities and research labs attract many overseas Chinese scientists.
- Our government needs to make the process of hiring in our universities and national labs simpler and flexible, not necessarily provide more salary, to attract the bright overseas Indian scientists.
- Last, let us look at innovation, entrepreneurship, and technology creation. Unlike the IT sector, the biotechnology sector requires years of experience in the domain, access to labs with sophisticated instruments, sustained and long-term funding to innovate.
- The government has been supporting biotech entrepreneurs. Initiatives through the Biotechnology Industry Research Assistance Council (BIRAC) of the Department of Biotechnology to support the innovation ecosystems have resulted in an impressive outcome.
- For example, the funding has helped startup companies make nearly 50 biotechnology-related products that are in the market today. Moving beyond this, however, will require a different strategy and understanding of the mature biotech-led innovation and economy ecosystems. Two successful hotbeds for biotech innovation, Boston and Silicon Valley in the U.S., may provide us some clues.
- Along with the availability of funding, infrastructure and skilled workforce, the presence of top-notch research institutions and universities in the vicinity make these two places among the most attractive locations for biotech startup companies anywhere.
- Unlike the IT and e-commerce space, ideas for biotechnology companies are initiated in scientific research labs while their parent academic institutions work as feeders of intellectual property. Often technology is incubated, refined and tested for years in academic labs before it gets spun out.
- Therefore, and unlike the IT sector, a sustained innovation and product development model in the biotechnology field without enriching the academic institutions is not possible.
- The government is very encouraging and promoting entrepreneurship, but the culture of institutions and scientists to be entrepreneurial will take time.
- This will require a flexible policy in the institutes to allow scientists incubate startup companies in their labs while retaining their positions.
- Second, the government should let scientists from research institutions and universities take unpaid leave to join the industry for a fixed period.
- Similarly, the government should relax rules to appoint researchers from industry in faculty positions with the freedom to teach, participate, and take students. This academia-industry linkage will do the much-required communication and understanding of the problems at both ends.
- Without a sustained effort in encouraging and promoting science-driven innovation in our academic institutions, and a robust academia-industry collaboration, biotechnology-led innovation will not aid the nation’s economic growth.
- The future of biotechnology is bright in India. However, the sector is not going to displace the IT sector anytime soon in employment generation. Discoveries in biotechnology may help us solve some of the pressing societal issues of our time: cleaning our rivers, producing life-saving drugs, feeding our growing population with nutritious food and helping us clean the air we breathe.
- Therefore, it will be a mistake to look at the biotechnology sector through the lens of employment generation only.
- The need for the use of artificial intelligence-based tools and applications of big data in biology will leverage India’s strength in IT and move biotech innovations faster to the marketplace.
- Till then, India needs to do things patiently and work on the right side of the ethical and regulatory boundaries.
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