The new electricity guidelines are a first step towards creating a true regional market OM sn December 18, the Union eemingly anodyne memo inistry of Power issued a that set the rules for the flow of electricity across South Asian borders. Evaluated against the turbulent politics around the issue, the new guidelines are a startling departure from India’s previous stance. In an atmosphere of regional intrigue and mistrust, it is a rare and recent example of political pragmatism. It is important not only because it leads South Asian electricity trade in progressive directions but is also a concession to India’s neighbours in an area of political and economic importance. A course correction The revision is a response to two years of intense backroom pressure from neighbours, particularly Bhutan and Nepal, to drop trade barriers put up in 2016. The new guidelines meet most of their demands, that were timed to coincide with the recent visit of Bhutan’s new Prime Minister. India has thus signalled that it is serious about working with neighbours on the issues that should undergird 21st century South Asian regionalism, such as electricity trade. This course correction is a return to a trajectory of incremental, hardearned progress developedover the decades. Ideas of tying South Asian Association for Regional Cooperation (SAARC) countries together with crossborder energy flows — that punctuated the early 2000s — began to gain steam with substantial power trade agreements between India and Bhutan (2006) and Bangladesh (2010). These were driven by India’s need for affordable power to fuel quickened growth in a recently liberalised economy. The apotheosis came in 2014 with the signing of the SAARC Framework Agreement for Energy Cooperation and the IndiaNepal Power Trade Agreement in quick succession. The new government in New Delhi was keen on regional cooperation, and these agreements imposed few restrictions on trade. Instead, they laid the contours of an institutional structure that would allow private sector participation and facilitate market rationality in electricity commerce. At the Fifth SAARC Energy Ministers’ meeting that year, Power Minister Piyush Goyal said he dreamt of ‘a seamless SAARC power grid within the next few years’ and offshore wind projects ‘set up in Sri Lanka’s coastal borders to power Pakistan or Nepal’. Yet, two years later, the Union Ministry of Power released guidelines that imposed a slew of major restrictions on who could engage in crossborder electricity trade. There was a strong undercurrent of defensiveness in the guidelines of 2016. They seemed to be a reaction to perceptions of increased Chinese investment and influence in the energy sectors of South Asian neighbours. Some irritants The guidelines prevented anyone other than Indian generators in the neighbouring country, or generators owned by that country’s government, from selling power to India. Excluded were scores of privately held companies, particularly in Nepal, that had hoped to trade with India. In restricting access to the vast Indian market, the economic rationale for Nepali hydropower built for export was lost. Bhutan was worried about a clause that required the exporting generation companies to be majority owned by an Indian entity. This created friction in joint ventures between India and Bhutan. Bhutan also fretted about limited access to India’s main electricity spot markets, where it would have been well placed to profit from evening peaks in demand. Bangladesh had sensed an opportunity to partially address its power crisis with imports from Bhutan and Nepal routed through Indian territory but the guidelines complicated this by giving India disproportionate control over such trade. After two years of protests from neighbours, the new guidelines resolve all these issues and restore the governance of electricity trade to a less restrictive tone. Earlier concerns that India was enabling the incursion of foreign influence into neighbouring power sectors seem to have been replaced by an understanding that India’s buyer’s monopoly in the region actually give it ultimate leverage. More broadly, India seems to have acknowledged that the sinews of economic interdependency created by such arrangements have the political benefit of positioning India as a stable development partner rather than one inclined to defensive realpolitik. Tool for a greener grid A liberal trading regime is in India’s national interest. As India transitions to a power grid dominated by renewables, regional trade could prove useful in maintaining grid stability. Major commitments to renewables, which could amount to half of India’s installed power within a decade, have prompted justifiable concerns about stabilising the grid when the sun goes down or in seasons when renewables are less potent. Harnessing a wider pool of generation sources, particularly hydropower from the Himalayas that ramps up instantly as India turns on its lights and appliances after sunset, could be an important instrument in achieving a greener grid. Nepal and Bhutan have long recognised that their prosperity is tied to the sustainable use of vast hydropower reserves. The new guidelines are a tentative first step towards the creation of a true regional market in which generators across the subcontinent compete to deliver lowcost, green energy to consumers. Since this would soften the hard borders of South Asia, it is essentially a political vision. The new guidelines are a significant step in this direction because, for the first time, they allow tripartite trading arrangements, where power generated in a country is routed over the territory of a neighbour to be consumed in a third. This is a crucial move towards the evolution of complex, multicountry market arrangements. Such markets require the construction of regional institutions that absorb the politics and manage the technicalities of electricity trade. At present, this function is managed by the Indian state because of its geographic centrality and the ready availability of institutions that manage its domestic power sector. As volumes increase and experience in regional trade grows, South Asian nations might feel the need to build joint, independent regional institutions that proffer clear and stable rules of the road. The political vision to create this — felt in the new guidelines — must be maintained
Deterrence or danger?
India does not gain anything by escalating the nuclear arms race in the region with INS Arihant The indigenous nuclear submarine, INS Arihant, is a great achievement for India. The Indian Navy, its engineers and scientists have done us immensely proud. But it might not be inappropriate to ask: Will Arihant make us more secure, and if so, in what way? It has been universally recognised that the sole justification for having nuclear weapons is their deterrence value. If ever a nuclear bomb has to be used, it has destroyed its raison d’être. The initiation of a nuclear attack would mean utter destruction, not just for the two parties involved but also for regions far beyond. The Americans got away with their bombing of Hiroshima and Nagasaki, however controversial it was, because they had a monopoly of nukes at the time. Today, the situation is vastly different and far more dangerous. If nuclear weapons fail to deter the outbreak of war involving use of such weapons, they have disastrously failed in their deterrence mission. A nuclear triad The major nuclear weapon powers, principally the U.S., have developed the myth of a nuclear triad, that consists of landbased, airbased and seabased nuclear delivery systems. The theory is that if country A initiates a nuclear attack on country B in a first strike, country B must be in a position, even after absorbing the nuclear strike, to retaliate with a massive nuclear attack on the enemy country. This is called second strike capability. In the event that country A manages to destroy the land and airbased nukes of country B, country B will still have its third leg in the shape of seabased nucleartipped missiles, called SLBMs or submarinelaunched ballistic missiles, for use against country A because the seabased missiles, launched from nuclearpowered submarines, would have remained undetected and hence safe from enemy attack. Thus, the rationale for the naval leg of the triad is its survivability. Essentially, the argument in favour of the naval leg is not that it makes the deterrent more credible, but that, as mentioned above, it will survive for retaliation. In the event that an enemy initiates a nuclear strike, it will never be able to destroy all the land and airbased nuclear weapons of the target country. Again, the enemy might attack population centres and not nuclear weapon sites; in that case, all the nukes of the target country would be available for retaliation. In
either case, the deterrence capability of the target country would remain intact. If the possession of the naval leg were to deter the enemy, ab initio, from initiating a nuclear launch, it would add to the deterrence value. Survivability by itself does not appear to make deterrence more credible. If the ostilities reach the threshold where a country may consider using nuclear weapons, it would be preceded by a period of conventional warfare. The enemy would also have to reach the conclusion that unless he uses his nuclear weapons, he would suffer a defeat that he simply cannot afford to let happen. A conventional conflict itself will not start before several days of negotiations, including possible mediation by external powers and the UN Security Council. Even a small incident involving India and Pakistan would immediately invite big powers to rush in and mediate pullback of forces, etc. Whether the external interventions succeed or not in preventing a major war, the target country would have ample time to disperse its land and airbased nuclear assets. The naval leg does not seem indispensable. The case of Pakistan Let us take Pakistan. One does not know if it has a nuclear doctrine, but even if it does not have one, that by itself does not make it an irresponsible nuclear power. Pakistan has rejected the nofirstuse policy and has in fact said that it would not rule out using nukes if it felt compelled to do so in a war. It claims to have socalled tactical nuclear weapons which can presumably be used in a battle field. Pakistan, in other words, keeps the option of using nuclear weapons first as a deterrent against a conventional attack by India. India’s stand is clear. Any use of nuclear weapon, tactical or otherwise, will invite massive retaliation by India which would have disastrous consequences for Pakistan. (Will India remain unaffected by radiation, etc? Can we guarantee that the winds will not blow in our direction? The radiation, debris, heat, blast, etc will be carried well beyond the belligerents’ borders.) So, even assuming that we will have the political and moral will to unleash the full force of our nukes, how does acquiring SSBNs or a nuclearpowered ballistic missile submarine make our deterrent more credible? Since Pakistan is still a long way away from having the naval leg of the triad, would not our land and airbased nukes be enough of a deterrent? Is it conceivable that after destroying each other’s land and airbased nuclear platforms, either country will have even the need to bring into play its naval leg? And, if and when Pakistan does acquire the third leg, which it is bound to sooner or later, even if it has to ‘eat grass’,
will it then make the nuclear equation more stable and make each country’s deterrent more credible? We may not admit it, but we are engaged in a nuclear, and conventional, arms race, exactly the same way the superpowers were during the Cold War era.China is far ahead of India in many respects. It has more warheads and more nuclearpowered submarines. Both India and China have repeatedly declared adherence to the nofirstuse doctrine. So where is the justification for acquiring the naval leg of the triad? We have a territorial dispute with China, but both countries have acquired enough experience to manage and contain the conflict. It is reasonably safe to say that there will not be an allout war involving the use of nuclear weapons between India and China. One of the arguments in the 1960s and 1970s in favour of atom bombs was that they would be cheaper in the long run. That has not happened. The acquisition of expensive conventional platforms as well as the ever expanding nuclear programme has destroyed that argument. India has been in the forefront in campaign for nuclear disarmament. Let us not at least escalate a nuclear arms race in our region