World
China will not stop quest for maritime hegemony
The ruling by the Permanent Court of Arbitration (PCA) in The Hague on the South China Sea dispute in favour of the Philippines may have come as a setback for China but it will not stop Beijing from continuing with its quest for maritime hegemony in the region.
 
"The reaction of China on the court's ruling was on expected lines," Prashant Kumar Singh, Associate Fellow in the East Asia Centre of the Institute for Defence Studies and Analyses (IDSA), told IANS.
 
"In the immediate term, it might adopt aggressive posturing and show a defiant face to other claimants to the dispute and also to the US which is a security provider for many of the claimants, including the Philippines," he said.
 
But in the medium term, he said, how things would play out would depend a lot on domestic, international and regional responses to the situation.
 
An international arbitration tribunal in the PCA ruled on July 12 that China violated the Philippines' rights in the South China Sea, one of the busiest commercial shipping routes in the world.
 
The court accused China of interfering with the Philippines' fishing and petroleum exploration, building artificial islands in the waters and failing to prevent Chinese fishermen from fishing in the zone.
 
The tribunal held that fishermen from the Philippines had traditional fishing rights in Scarborough Shoal in the South China Sea and that China had interfered with these rights by restricting their access.
 
The court held that Chinese law enforcement vessels unlawfully created a serious risk of collision when they physically obstructed Philippine vessels in the region. 
 
China is locked in disputes over the Spratly and Paracel groups of islands in the South China Sea with other countries of the region.
 
While the other claimants over the Spratly islands are Brunei, Malaysia, the Philippines, Taiwan and Vietnam, the Paracel islands are also claimed by Vietnam and Taiwan.
 
The most heavily contested are the Spratlys, a group of 14 islands, islets and cays and more than 100 reefs that are strategically located.
 
Abhijit Singh, head of the Marine Security Initiative at the Observer Research Foundation, pointed out that the tribunal has ruled that areas where China claimed for setting up exclusive economic zones (EEZs) could not be called islands as these were rocks and could not sustain life.
 
"China has made territorial and historical claims," Abhijit Singh said. "But the most important claim is that of sovereignty."
 
He said that China already has a territorial dispute with Japan over the Senkaku islands in the East China Sea west of Okinawa.
 
"China regularly keeps sending naval ships in the vicinity of the Senkaku islands," Abhijit Singh said.
 
China is also jittery about what former President Hu Jintao described as the "Malacca Dilemma".
 
The Malacca Strait is a narrow stretch of water between Malaysia and the Indonesian island of Sumatra and serves as a crucial link to the South China Sea. 
 
The Chinese are worried that the strait, which is effectively under the US control, can be choked any time if trouble arises, cutting down energy supplies from the Middle East and Africa.
 
"To overcome this, they are taking steps like building the Gwadar port in Pakistan," Prashant Singh said, adding that China was building ports at Hambantota in Sri Lanka and Djibouti as well.
 
That China was seeking to increase its dominance in the Indian Ocean region became evident when the Maldives parliament passed a land lease act in undue haste last year.
 
"It was perceived to be a move to clear legal hurdles for release of land to China," Prashant Singh said.
 
In fact, the process of shifting China's military strategy from land to the seas and oceans has been underway for some years.
 
But, the big official endorsement came in the form of the 2015 military strategy paper, according to Prashant Singh.
 
"The purpose is to protect China's sea lanes and energy supplies from the Middle East, Latin America and other parts of the world," he said.
 
The second goal, he said, was to protect China's overseas interests like in Africa.
 
"They cannot protect their overseas interests without having a robust naval strength and presence."
 
According to foreign policy expert Dhrubajyoti Bhattacharjee, China is trying to further its maritime ambitions under the guise of exploring for rare earth minerals, gold and natural gas through its deep sea submersibles Dayang 1, Jialong, Qianlong and Hailong.
 
"But the fact of the matter is China only has passive technology for deep sea mining (meaning it has the equipment but it has only been tested overground and not the under the sea)," Bhattacharjee said.
 
While China virtually holds the monopoly in exports of rare earth minerals, it has reported finds of gold deposits off the east China coast and in southwest Indian Ocean, the exploration contract for which it has got from the International Seabed Authority.
 
"Only India and South Korea have the active technology for deep sea mining," Bhattacharjee said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  

 

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Rupee devaluation no key to increasing exports: Rajan
Reserve Bank of India Governor Raghuram Rajan believes the current value of the rupee is 'pretty reasonable' and devaluation may not be the key to increasing exports.
 
Any devaluation of the rupee will have inflationary impact offsetting any benefits the economy may get from devaluation, Rajan said here on Monday.
 
"My belief is that today's value of rupee is pretty reasonable. I don't think we should emphasise moving one way or the other as an answer to any problem," he said while answering questions at a national seminar on 'Equity, access and inclusion - transforming rural India through financial inclusion' at the National Institute of Rural Development (NIRD) here.
 
He was asked if he feels any need to devalue the rupee to increase exports from the country in view of current scenario of global slowdown.
 
"Devaluation has lot of side effects including the fact inflation will pick up in the county. You have to pay significantly more for your imports and significantly more for oil. It will have inflationary impacts which will offset any benefits you may get from devaluation," he said.
 
The RBI governor pointed out that Brazil failed to achieve tremendous expansion in exports despite significant devaluation of currency.
 
"Currency is a complicated animal. In the same way as a cheaper price for my exports may allow me to export more, it also means my imports are costly. Often exporters import a lot what they export. It is not obvious that just devaluing helps everybody," he said.
 
Rajan believes India has a long way to go and needs strong sustained growth for many years to catch up with China's GDP per capita.
 
He pointed out that China's GDP per capita today is about four times that of India's. At one point in 1960s, both were at the same level.
 
He said a few years of strong growth will not help because there will be very slow growth after that. "We need sustained growth which is why we need systems in place and we need macro stability in addition to growth," he said
 
He, however, was of the view that just GDP numbers are not enough to say that the country has developed. He said there were many other factors like the harm done to environment which was not measured by GDP.
 
"It would be good if we reach their level of GDP without the kind of environmental damage that has occurred in some parts of China and that is occurring in some parts of India. We have to have environmentally sustainable development path but we will also benefit from having equitable development path," he said while stressing the need for financial inclusion.
 
"Equity ensures that every citizen rise to his potential and benefits of growth are not captured by a few. We have to make sure that capacity to grow is there for everyone," he added.
 
On farmers' suicides, Rajan said it was a complex phenomenon and there was a need to work on all fronts. He called for understanding the complex phenomenon and emphasising the need to make access to credit easier.
 
He, however, said overlending was as much a problem as access to credit. 
 
"Part of answer is to expand productivity and ability to generate income. We also need to have some forgiveness in credit system and this has to be managed carefully. It has to be done in such a way that it does not shut out credit. In cases where level of debt is unmanageable, there should be some scope of relief," he said.
 
"We have to work on all fronts. It's not just an issue of debt but also issue of livelihood, it's not just an issue of economics but also of culture. It's a tragic phenomenon," Rajan added.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Ponzi schemes and the role of EOW of Mumbai Police
Only those who lost money to the Ponzi schemes of the 1990s would probably remember how they used to lure people into their trap. The entrapment continues even today and people lose tens of thousands of crore rupees to a variety of Ponzis that are proliferating even today. But I want to share a story that has a happy ending, thanks to the work of one upright police officer.
 
In the 1990s, many of us were lured by a phone call from an unknown person claiming we had won a lucky draw and were to receive a gift?  The modus operandi was simple. The caller would tell us, the target victims, that we would have to attend seminar on a particular date, time and place to claim the gift. On the day of the event, there would be another  call confirming attendance, and once we agreed to attend, we would be asked to come along with one’s spouse and not forget to bring a ‘cheque book’ along. 
 
Neatly dressed, we used to enter into a spacious hall to a warm welcome. A man would lead us to a table. Some so-called representative would attend to us with a glossy brochure about an investment scheme – there was also high tea on offer. The representative would describe the whole scheme, its benefits, a rosy future and attractive returns. The schemes were usually a plantation company offering unusual benefits, a holiday time-share scheme, goat farming or some such, which would apparently yield extraordinary returns because of a new technique of operation. The smooth talk of the presenter and the ambience of the hall worked like a charm and people invariably fell for into the trap and handed over a cheque to the person.
 
In 1999, two such companies, Adventure Plantation and Adventure Country Resort attracted people through such calls.  My maternal aunt invested in the first company and I invested in the second one.  Adventure Plantation, was supposed to use the funds collected for purchase of teak (saag) trees and promised extraordinary returns over 20 years. The terms for early withdrawal were very stringent and no return was offered until then, except a tour of the plantation every two years. Adventure Country Resort, issued bonds with an attractive return of 12% per annum payable on maturity, which was 10 years.  Another attractive feature was that the bondholder could enjoy a free stay at one of its hotels, once every two years accompanied with spouse and children below 12. There were also some coupons that could be encashed by selling them at a specific value to other members after a three-year lock-in. I fell for this, despite being a banker along with other professionals and wealthy people. 
 
After a few months, the scheme was exposed as a fraud and we were shocked. The Economic Offences Wing (EOW) of the Mumbai Police intervened, there were some arrests and the EOW asked victims to file written complaints. We also lodged a complaint, but without any real hope of getting back our money.
 
After a few years, we were surprised to receive a letter from the EOW asking us to attend the court and sign some papers. It is then that we met Assistant Commissioner of Police (ACP) Avadhoot Chavan for the first time.  We attended the court three or four times. Mr Chavan, who was invariably surrounded by eager investors used to explain every procedure to us and was also kind enough to share his mobile number. His patience, dedication and untiring effort in answering all our queries was noteworthy. 
 
Two years ago my maternal aunt got back the principle that she had invested in Adventure Plantation and last week I received my principle investment in Adventure Country Resort. I called up Mr Chavan to thank him for the ‘thankless job’ he had done for us.  He informed me that he has retired, but is still associated with this investigation as a special case. He felt satisfied to receive my call.  Being a good citizen of Mumbai, was it not my duty too to thank him and Mumbai Police? I have also written to the Commissioner of Police, Mumbai to share my thoughts.
 
Only those who have lost money in a Ponzi scheme would know how rare it is to recover funding from such companies and then distribute it to investors. Yes, it was only the principle and it took decades. It would be nice if the system worked better, but at least this is rare positive news for lakhs of hapless people who have been taken for a ride by such scamsters. 
 
I wish Avadhoot Chavan a happy and healthy retired life.
 
(Mr Abhay Datar is a retired banker who is now a well-known consumer activist. He volunteers his time every Thursday to guide members of Moneylife Foundation on consumer issues, banking and insurance matters). 
 

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COMMENTS

S Thambi Raj

4 months ago

Poor investers money should be returned to them with immediate effect and it is the prime duty of Lodha committee

Sharad Jain

5 months ago

Hats off to Abhay for finding time to help others! May his tribe grow.

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