INTERNATIONAL RELATIONS

Dr. KRISHNAVENI MUTHIAH

M.Com., M .Phi., PGDHRM., PGDIB., M.B.A., Ph.D.,

Head, Department of International Business,

Shri Nehru Maha Vidyalaya College,

(Affiliated to Bharathiar University),

Coimbatore - 641 021.

FIRST EDITION : 2001

Himalaya Publishing House

MUMBAI • DELHI • NAGPUR • BANGALORE • HYDERABAD

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© AUTHOR

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FIRST EDITION: 2001

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State Planning Commission

Government Of Tamilnadu,

"Ezhilagam"

Chepauk, Chennai -600 005.

Tel. No. : 8545460

Fax : 044 - 8545485

Dr. A. Venkataraman I.A.S. (Retd.)

Member - Agriculture&Irrigation

FOREWORD

Interaction of social concepts, economic perceptions, and political philosophies influenced by scientific technologies govern and guide the development of nations of the world. In this arena of human strife for betterment there is constant power struggle among nations for sitting in the driver's seat to secure maximum gains for their own people. A clearer understanding of the forces that influence international relations would be of value to everyone, more so now when social and economic concepts are undergoing rapid changes and national barriers are getting dismantled by technological innovations.

In the past fifty years the world power structure has transformed dramatically. At end of the second-world war, the USA emerged as the leader of the 'free world', and stood for human rights, free trade and democratic institutions. Northern Europe that enjoyed monopoly of world dominance till then for almost three hundred years by its colonial hold over other nations was pushed to the third place in power equation and virtually became a dependent on USA.

End of the colonial era led to birth of innumerable free nations, all with great aspirations for providing richer and better living conditions to their people with the assistance of the international community. The USSR, the leader of communist block emerged as a strong contender to USA led capitalism in international affairs. This new power struggle of two opposing economic concepts resulted in a prolonged cold war that ultimately led to the collapse of the challenger, the USSR and a setback to We concept of communism as an effective strategy for economic development. The world is at the threshold of a new economic order with capitalism as the major driving force.

Simultaneously the social fabric of the world has also undergone rapid changes. Demographic changes, urbanization, breakdown of traditional communities with dominance of nuclear families, overall improvements to health, nutrition and education standards, empowerment of women and their liberation, challenge to race and class supremacy, international concerns for human rights, environmental degradation, and poverty are the

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prime factors for setting the pace of social change. Proliferation of illegal arms trade, use of narcotics and spread of international terrorism threaten orderly growth of the society.

With increased interaction among nations social change, with its benefits and pitfalls, would assume new dimensions and cause chain reactions in economic thoughts and political philosophies. Advances in information technology, biotechnology particularly in medicine, and space research would accelerate these interactions and resultant changes. Directing change in desirable pathways would emerge as a major task of the future for the governments and other social institutions.

The USA with its strong commitment to capitalism, free trade and democratic institutions is in the driver's seat of world economy now. It acts as the peacekeeper and pacesetter for the world. Sound economy, unparalleled-armed might with nuclear capability, and strong influence over monetary and fiscal policies of other nations through international institutions are its strength. But other nations are responding to the changed conditions in varied ways: Northern Europe has formed an union with a common currency and unrestricted trade; East Asia has established a group for economic cooperation, China is transforming as a major economic power by shedding off communistic doctrines and oil producing countries have formed a cartel. The Pacific-rim countries are emerging, for the first time, as yet another economic power center. India is also refining its public policies and international relations to adjust to the changing world. What does the future hold for us? How should we structure international relations to secure better benefits to our people?

All individuals and institutions involved in the pursuit of understanding and planning for the development of the nation in this era of open global economy, need to have basic knowledge of the underlying events and factors which govern the external relations of the country. Towards gaining a comprehensive knowledge on this field of vital importance, the present book - 'International Relations', is a treasure. It provides a fundamental grasp of the subject. It offers a basic understanding to be gained, by anyone who would like to widen ones knowledge on relations between nations.

I deeply appreciate the efforts and skill of the author, Dr. Krishnaveni Muthiah, in setting out in understandable terms the whole gamut of factors involved in international relations. This book, I am sure, would help to kindle the interest of the reader towards the day-to-day happenings in the world arena, make him/her more conscious of our nation's status in the context of world nations, and would help to foster the much needed factor of 'public opinion' on building healthy international relations.

Dr. A . VenKataraman

Chennai

04.01.2001

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FOREWORD

In this era of Globalisation and Liberalisation greater scope has developed for professionalism in international business. Nations are taking great efforts to cope up with trade openness. Business houses have the necessity to develop competency to expand across the national borders and therefore have come to accept the need for professional managers in their effort of expanding their foreign trade. Sensing this need, universities have taken up the challenge of developing specialisation courses in international business.

Bharathiar University started its Master of International Business (M.I.B.) course in July 1995 and it has been the unique privilege of Shri Nehru Maha Vidyalaya to be the first institution to offer this course. Subsequently this PG specialisation course has been widely accepted by many self-financing colleges affiliated to this University. Moreover, various management institutes in the country have acknowledged studies on international business as a stream of specialisation.

In the field of international business, the subject of international relations among nations is of current day importance. To have greater awakening towards the day to day changes in the world affairs, it is important, that everyone has a basic understanding of the relations between nations. It is imperative

that any person persuing studies in the field of international business is tuned properly towards understanding, the underlying currents between nations, in their cross border dealings.

Towards this particular need, this present book authored by Dr Krishnaveni Muthiah H.O.D., of M.I.B. of our Institution, helps in gaining a clear, fundamental understanding of the state of international relations, among the nations of the world and in particular from India's viewpoint.

The effort, initiative and spirit of the author towards this academic contribution are deeply appreciated.

Shreegopal Maheswary

President

Coimbatore Welfare Association

Coimbatore

04.01.2001

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PREFACE

The world nations have fully understood the worth of peaceful coexistence after having felt the effect of two world wars. International relations in the present period has centered on the search for a new international system to replace the old order that was shattered in the two world wars. Factors influencing international relations and the stand of nations against one another is undergoing noteworthy changes due to the technological advancements, especially the nuclear and space age developments. The technological improvements have also increased the interdependence of nations.

The political, economic and social well being of mankind is affected to a greater or lesser degree by the happenings in the international arena. Hence it is imperative, for any individual to have a basic interest in the current happenings, a minimal knowledge of the past activities that form the basis for the present trends and in general have a conceptual understanding of the whole gamut of national reactions in the international arena. It is more so a necessity for any person whose career is directly affected by international affairs. Towards providing this, the present book offers a basic knowledge of past history in international relations, traces out the regional integration that has set in and the future threat of nuclear warfare.

International relations are not about past happenings alone, it is knowledge to be gathered every day based on the present day happenings. As it has been popularly claimed, the study of international relations is not a science with which we solve the problems of international life. It offers a basic understanding to the underlying factors and provides a systematic approach to those problems. Hence this book will be of value, to those who wish to persue a career in the field of international business, to personnel directly involved in the maintenance of cordial, diplomatic relations between nations, to policy makers and organisations involved in the upliftment of the nation in the international sphere. It will be of help to have a fundamental grasp of the subject, for the students of commerce, foreign trade, economics, business administration, political science, professionals in import export trade management and entrepreneurs venturing into overseas business.

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In this effort, I would like to express my gratitude to Dr. M. Manickam., Professor and Head, Dept. of Commerce, and Mr. B. Kalidoss, Deputy Registrars of Bharathiar University who have been instrumental in the development of my academic interest in the field of international business. This endeavour has been under the portals of Shri Nehru Maha Vidyalaya established by the Coimbatore Welfare Association(CWA) and I express my gratefulness to the CWA for the oppurtunity they provided me to expand my academic work experience in this field, their unstinting support and encouragement.

Special acknowledgement is made to reports of the World Bank, the published works of Rama Melkote, A Narasimha Rao, L.N. Srivastva, Norman D. Palmer and Howard C. Perkins, for the conceptual clarity gained from them. This book has been the result of extensive reference work, for both the past history and the happenings to date in the international affairs, undertaken on the Internet and in various libraries. To be specially mentioned among the libraries are the ones at Shri Nehru Maha Vidyalaya, SIMA Golden Jubilee Library and Indian Institute of Foreign Trade. A special thanks to the above individuals and institutions.

Teachers receive continuous inspiration from students and I herein appreciate the input of the students of international business, who have used this text in manuscript form and hence have instigated further search for knowledge in the various aspects covered in this book. I express my deep sense of gratitude to M/s Himalaya Publishing House, for having undertaken this publishing work and my special thanks to Mr. Niraj Pandey of Himalaya Publishing House.

Author

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CONTENTS

Page No.

1. INTERNATIONAL RELATIONS 1

Meaning and scope

World order of relations over the years

Study of international relations

Approaches to the study of international relations

Transitive nature of the study of international relations

War and peace

2. NATIONAL POWER 9

The state system

Inseparable features of state system National power- the concept

Forms of national power

Elements of national power

Consciousness of national power

3. DIPLOMACY AS AN INSTRUMENT OF NATIONAL POLICY 22

Nature of diplomacy

Diplomacy and foreign policy

Diplomatic factions

Diplomatic embryos and consular officers

Diplomacy in the twentieth century Diplomacy by conferences

4. ECONOMIC INSTRUMENTS OF NATIONAL POLICY 31

Tariffs policy

International cartels

Intergovernmental commodity agreements

Dumping and preemptive buying

Quotas and licenses

State trading and subsidies

Boycotts, Volorization, Embargoes, Black list

5. IDEOLOGIES AND PROMOTION OF NATIONAL INTEREST 42

Role of ideologies

Imperialism, colonialism, nationalism

Motives of imperialism

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6. BALANCE OF POWER 48

Characteristics

Devices .for maintaining the balance of power Bipolar or multipolar world

Today's world order: Multipolarity - vision and reality

7. COLLECTIVE SECURITY AND PEACEFUL SETTLEMENT 56

Nature of collective security

Methods of pacific settlement

The future trend

8. THE UNITED NATIONS 63

Organisational setup

Political and security issues

Social achievements Economic issues

Organisational issues

UN and India-Current affairs

UN-The Millennial Summit

UN-Sanctions

9. INTERNATIONAL LAW 98

Nature

Material sources of international law International disputes

Treaty relations

International law and business houses

10. REGIONAL INTEGRATION 115

EU

NAFTA

APEC

LAFTA

ASEAN

Arab league

G-8, G-15, G-77 SAARC

NATO

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11. WORLD TRADE ORGANISATION 180

Genesis of WTO Administrative setup

Key agreements

Impact and implications of the agreements on the Indian economy

Current status- Seattle Meet

Areas of concern for India

Future outlook for WTO

12. INDIA'S FOREIGN POLICY 199

Opposition to colonialism and imperialism

Opposition to racial discrimination

Promotion of international peace

Panchsheel

Non alignment

Relevance of NAM

NAM's Cartagena Conference April 2000

India's foreign policy-50 years of achievement

13. INDIA'S RELATIONS WITH HER NEIGHBOURS 212

Indo-Pakistan relations

Recent happenings

Sino-Indian relations

Sino-Indian relationship - towards togetherness

Indo-China economic ties-new dimensions

Perception about current threats from China

14. INDIA AND THE SUPER POWERS 231

Indo-American relations

American President's visit-March 2000

In the new millennium-bilateral cooperation

Future outlook

Indo-Russian relationship

Russian President's visit-Oct.2000

India and the major powers- Pointers for the future

15. INDIA'S STANCE ON NUCLEAR WEAPONS 252

Hiroshima and after

Nuclear disarmament treaties - History of disarmament

Current status of India on nuclear disarmament

Review meet 2000

Beyond nuclear obsession

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1. INTERNATIONAL RELATIONS

Meaning and scope

World order of relations over the years

Study of international relations

Approaches to the study of international relations

Transitive nature of the study of international relations

War and peace

International relations today have been characterised by a high degree of interaction and interdependence between the states. An insight and study into the nature of international relations is a basic need for safeguarding the nation's security, the peoples' welfare and survival. With the shrinking of the globe the actions of one state have a deep impact on the interest of others. In modern times no

state can afford to live in isolation. It has to cultivate relations with other states of the world out of sheer necessity. International relationship is as much a product of necessity as social existence itself.

"The study of international relations is not a science with which we solve the problems of international life. At its best it is an objective and systematic approach to those problems" - Palmer and Perkins.

The discipline of international relations is concerned with the factors and activities, which affect the external policies of the state. States should necessarily maintain a proper relationship between national interests and international responsibilities. For this states should ascertain their rights, obligations, interests and responsibilities in international context and make decisions so as to protect those rights, fulfill obligations, promote their interests and discharge those responsibilities. This in itself is the art of conducting foreign relations or international affairs.

International relations is the state of peaceful co-existence that prevails among the nations of the world, which is governed by various factors some of which are the power politics, economic interdependence among states and the social patterns that set in, due to various happenings in the course of the passing years.

Meaning and scope

International relations are those relations carried on or otherwise existing between different nations. But it is not confined exclusively to relations among nations alone since it also includes studies on political actions and interaction of non-nations, namely, international organisations like the ASEAN or the United Nations. It is now generally accepted that

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the term 'international' covers 'nations', 'states' and 'non-state' actors. The term relations includes, diplomatic relations, economic (trade and commerce), cultural and political relations. What constitutes politics is not easily identifiable since practically all interactions between nations impinge on the authority of the state. (International politics is more concerned about the factors and activities that affect the external policies, the power of the nations and polarisation of power between nations.)

Interaction among nations ranges from conflict to cooperation. In their choice of maintaining international relations, nations have a range of options. They can enter into alliances; use international

organisations and the like. The means by which states and non-state actors manage, or fail to manage their conflicts and the ways in which they cooperate or fail to cooperate is the subject matter of international relations.

In the management of their relations with each other, states have developed rules, institutions and procedures to deal with international conflict and cooperation. They range from balance of power, to alliances, to international organisations, from hegemony, colonialism, neocolonialism to international law.

When there exists agreement between nations over the regulation of conflict, co-operation becomes possible. In the absence of such an agreement, conflict might escalate to war. While nations are willing to go to war, they are also in the constant search for peace. More so is this search, in these days of nuclear warfare, which has the potential for great destruction. Peace in a narrow sense is a state of no-war, but the causes of such war continue to exist. Peace movements in the present century are concerned with not only promoting international organisations, but also with the underlying factors, the nature of conflict itself and the question .whether power is a primary motivation or merely means to an end.

Some of the fundamental questions of international relations revolve around (i) nation and world (ii) international inter-dependence (iii) war and peace (iv) national power (v) international politics and international society (vi) world population v/s food, resources and environment (vii) prosperity and poverty (viii) freedom and oppression

Thus international relations is concerned with both political and non-political issues, the influence of economic factors on state policies, international happenings, internal political processes that shape national policies, sociology of politics, geography as a determinant of national policies and science and technology as determinants of state power.

World order of relations over the years

With expanding industrial production and technological advancement, many of the developed nations, found that they had saturated their

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domestic market and hence had to find newer markets in other countries, also there was need to procure cheap raw materials outside their national boundaries. By the end of 19th century, competition and scramble for colonies between the European states, especially France, Britain, Germany and Belgium reached alarming proportions culminating in the famous Berlin conference of 1885 that partitioned Africa among these colonial powers. Imperialistic designs and militarism entangled European nations in the web of alliances and counter alliances leading ultimately to the outbreak of World War I in 1914. The Treaty of Versailles (1919) formally terminated World War I, redesigned Europe's political map on the principle of self-determination and created the first international organisation, namely, the League of Nations. Its basic function of umpiring international disputes raised hopes about a new world of peace and order. But it turned out that the League of Nations lacked the requisite competence and enforcing authority to punish an international delinquent and restore order. Power politics, imperialist designs and militarism underlined as the reality of international relations. Hence the League of Nations failed to stand up to its expectations.

The great economic depression had the world in an economic chaos and worsened the international situation further. The industrial decline, unemployment and poverty gave rise to the emergence of militant nationalist forces in Europe. Reactionary forces ensembling militant nationalism - Nazism, and Fascism - further fuelled by German ravanchism pushed the Eurocentric World once again to the brink of a World War. World War II ended, and a new international organisation, the United Nations Organisation (UNO) was created in place of the League of Nations. Colonies throughout the world clamored for independence and by mid sixties most colonies had gained independence or were on their way to independence. With the increase in the number of independent sovereign-nation-states, new economic problems and internal conflicts gave rise to new demands on the international system. The search for solutions to the international economic problems led to various dialogues and the establishment of regional economic organisations. With the failure of socialism, it was realised that neither capitalism nor socialism offered solutions to the problem of the world. We are now at this juncture where state of power relations among nations is far from satisfactory and the world society is in search of alternatives towards better international relations.

Study of international relations

International relations is a part of political science, it also heavily relies on history. Most of the studies on international relations have taken to, the studies of history as instances have occurred. History does in a sense become an integral part of this discipline called International

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Relations. History constitutes the raw material for the study of international relations. But international relations are not history itself. International relations does not concern itself only with political phenomena but percolates to other disciplines of social sciences like economics and sociology. International relations deal with aspects that are political, social and economical in an international context.

In the post World War II scenario, international relations was studied by conceptually dividing the world into different zones. The different conceptual zones of study were South Asia, South East Asia, Eastern Europe, Western Europe, Latin America, etc. This division, apart from being a tool for understanding the world, was also conceived to be of great use in foreign policy formulation, both in political and strategic terms. Yet few people have raised objection against this kind of conceptual division, on the ground that it assumes a non-existent homogeneity of an area. Prior to World War II, the growth of capitalism created larger territories, basically due to expanding markets. Capitalism led to colonialism. With the end of the war, decolonisation gained momentum and sovereign states emerged. The US and the USSR emerged as super powers creating a new global power structure. Hence, international relations in the post 1945 period are quite different from what existed earlier.

Some broad models have been developed in order to demonstrate as to what was the nature of the international system in the past, what it is now and what it is likely to be in the future.

Oligopolar Model This is also called as the classical balance of power model. This model existed from 1816 - 1914, wherein there was no arbiter for the resolution of international disputes. There were 5 major political powers in this period when there were no regional or universal international organisations. Alliances were specific and shifting of alliances took place on the basis of pragmatic interests and not ideological ones.

Bipolar Model This is also called as the cold war model. It was in existence in the period between 1947 and 1971. The bipolar model recognised the existence of two super powers and the formation of blocks. This model is also characterised by the existence of a third peripheral group, which comprises essentially of non-aligned nations. The non-aligned are in some sense or the other dependent on either of the two super powers in many matters that pertain to their survival.

The Nuclear Proliferation Model This model has no historical counterpart. It would come about when most nations possess nuclear capability that would be used to dissuade unfriendly relations. This model could lead to a world order that creates an unfriendly and mutually suspicious environment.

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Collective Security Model This is an idealistic model, which again has no historical counterpart. It can come about when the United Nations Organisation works as per the original intentions and countries voluntarily give up the search for power and reduce their military forces.

The multiblock model talks about the world being divided into large autonomous regions like North America, Western Europe, South Asia, etc. The multipolar world would come into existence if existing countries disintegrate into smaller countries.

Approaches to the study of international relations

Broadly speaking there are two approaches for the study of international relations-the classical approach and the scientific approach. The classical or traditional approach has been taken from other disciplines like history, philosophy, law, etc. It holds that substance is more important than method. The scientific or the modern approach on the other hand attaches more importance to the methods and techniques. The supporters of this approach try to build up a theory of international relations on the basis of logical, mathematical and empirical approaches.

Historical approach. This was the earliest approach adopted for the study of international relations.-Under it diplomacy and inter-state relations for a fixed period of time were studied. This approach worked well because at that time the international relations were in fact the relations of Europe. With the emergence of Asia and Africa the field of study has greatly widened and this approach has assumed doubtful value. But it cannot be denied that the historical approach had one advantage in as much as it tried to study the contemporary relations in the light of the recent past. This not only gave deeper understanding of the problem but also enabled the students to know the weakness of the previous statesmen.

International organisation approach. This approach gained importance after the establishment of the League of Nations. It seeks to understand inter-state relations by studying the behaviour of the states in the various international organisations. This method had one serious limitation. All the international activities of a state are not conducted through international organisation. However, it cannot be denied that this approach helps to understand how the various states are working within the international community by examining their alignment in various issues.

The above approaches of the study of international relations are variants of the traditional or classical approach.

Behavioural approach. The approach gained prominence after World War II and was promoted by the advances in the field of psychology. This approach tries to analyse international relations as strife between various 'national characters'. The supporters of this approach hold that every state

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exhibits a peculiar approach of its own towards various world problems. But the fault with this approach is that it attaches too much importance to national character, which is constantly changing.

Karl Deutsch, another behaviouralist developed the 'Quantitative Theory' and developed certain measurable factors as indices of community development. On the basis of this theory communications or flow of information was considered vital to healthy international relations.

Richard C.Synder developed the Decision-Making Approach in which emphasis was laid on the need of probing the minds of the decision-makers. However, the decision-makers were not to be taken into isolation. While probing their behaviour both internal and external settings were to be taken into account. The internal settings included domestic politics, public opinion, geographical location etc. The external settings included conditions and factors beyond the territorial boundaries of the state, the decision of other states and nature of their society. This approach held that the decisions are nothing but reactions to a given situation taking place in a certain setting. However this approach of Synder has been criticised on the ground that international relations are not always made of highly conscious moves and choices, which can be analyzed.

Prof. Kaplan and McClelland developed the 'System Theory', which holds that a theory of international politics normally cannot be expected to predict individual action because the inter-action problem is very complex.

Liska built equilibrium theory of international relations and institutions. According to him the states seek to secure the best attainable position of equilibrium and this is a desirable policy for safeguarding human values.

The major defect of the 'Systems' Approaches is that they try to reduce everything to 'quantitative variables', but it is not possible to quantity variables like ideology. The result of these approaches is, in the words of Hoffmann to "produce system rather than help achieve understanding of the social world".

Power approach or realist theory. Of all the traditional and modern approaches the power approach theory has held away for maximum period and over maximum number of people. The chief supporters of this theory have been Morgenthau and Spykman. This theory tries to understand international politics in terms of state interests. It holds that, interest guides the statesman more than any other factor, viz., motives and ideology. The statesman may talk in terms of philosophy and ideologies, but when it comes to actual action they act only in terms of national interests.

Inspite of its wide popularity and acceptability the realist theory has been criticised because it attaches too much importance to political power.

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Man is not merely a political animal interested in controlling the action of others. Other considerations like participation and community also determine his action. The realists consider the power as an end and fail to realise that it is only a means. It is also not correct to define national interests in terms of power.

Study of various approaches and theories of international relations shows that the study of "international relations has become increasingly interdisciplinary, behavioural, comparative and scientific. The obvious purpose has been to place the study within a broader and more meaningful theoretical framework and to give it more adequate methodological and conceptual tools". - Palmer and Perkins

Transitive nature of the study of international relations

In today's world changes are taking place in innumerable ways. Old powers are playing new and often-reduced roles and new powers of uncertain quality and prospects are appearing constantly. Alterations beyond recognition are taking place due to the technological changes and the upcoming nuclear and space age.

The study of international relations, like the world community itself, is in transition. Traditional- approaches of a historical, descriptive and analytical nature are being supplemented, by other approaches, which are designed to bridge the gap between theory and practice and which want to apply the findings and technique of behavioral sciences and other disciplines to international relations research.

The study of international relations is not itself a well-organised discipline with a coherent and integrated body of material. History and political science are the disciplines from which international relations study has emerged and the approaches natural to these two older disciplines are still common.

The study of international relations is still too subjective in character and content. In the early years, desire to prevent war was the initial course and direction of the study, but the failure of the League of Nations, made to think in a serious, critical and analytical manner about international problems.

According to Grayson Kirk, the study on international relations has as its ingredients (1) the nature and operation of the state system (2) factors which affect the power of a state (3) the international position and foreign policies of the great powers (4) the history of recent international relations and (5) the building of a more stable world order.

Inclusion of behavioural sciences. Over the years there has been realisation of the widening dimension of the study of international

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relations resulting largely from the impact of the behavioural sciences upon the field. The new diplomacy is closely related to crisis management. Much of international relations are concerned with conflict, its management and resolution. Conflict management is a term that embraces a multitude of techniques for the control, if not always the resolution to international conflicts.

War and Peace

International Politics and International Relations, often these terms as understood interchangeably. While international politics deals with the politics of the international community, centering on diplomacy and the relations among nations and other political units, international relations is a term properly embracing the totality of the relations among peoples and groups in the world society.

International Relations affect the external policies and the power of the basic units into which the world is divided. It includes a wide variety of transnational relationships, political and non-political, official and unofficial, formal and informal.

While the historian, the economist, the geographer, the sociologist, the psychologist, the anthropologist and other specialists have their distinctive and indispensable contributions, the fact remains that the working relationships of nations are conditioned most of all by the enactments and engagements of governments, however much these may be predetermined by underlying conditions and forces.

Almost all issues and studies in international relations leads, directly or indirectly, to questions of war and peace, questions which today more than ever involve human survival. A vast literature already exists on the subjects of disarmament and arms control. However fearful the prospects may be, "thinking about the unthinkable" is absolutely necessary. Almost all-conceivable methods of preventing World War III, and of limiting, if not preventing, lesser-armed conflicts have been examined and have found ardent supporters.

Many of the basic principles and underlying factors of international relations have not altered, but the international environment has changed and is still changing. The changes are result of the modifications in the nations system, the vast technological developments of modern times, the increasingly influential role being played by non-western societies, and the "revolution of rising expectations" which is affecting, directly or indirectly, the majority of the under privileged people of the world.

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2. NATIONAL POWER

The state system

Inseparable features of state system

National power- the concept

Forms of national power

Elements of national power

Consciousness of national power

World is made up of people everywhere, who live in "sovereign" states that "co-exist" on the same planet. Through sheer necessity these states have relations with each other to promote their well being and security. Added to these is a vast array of international organisations like the UN and its specialised agencies and other regional organisations. The nation-state system still forms the political basis and the political framework of international life. Consequently it is here that the study of the world community and of international relations must begin. To defend its sovereignty, its national honor and its material interests, each state organises its coercive resources; it builds up its national power.

The state system:

The term 'state' is an imprecise one. According to one definition it is "any body of people occupying a definite territory and politically organised under one government". The essential components of a state as per this definition are people, land and a government. A state is a self governing country or self-governing division of a country, example, the Irish Free State. It can be one of the political units forming a federal republic, example, the United States of America.

The terms, 'state', 'government' and 'nation' differ in meaning. A government is the established form of 'political administration' of a state. A nation is a body of people with common language, history and government. A 'nation' may be "a body of inhabitants of a country united under a single independent government" and in this sense the word is virtually synonymous with 'state'. But a 'nation' may also be "any aggregation of people having like institutions and customs and a sense of social homogeneity and mutual interest". Thus several nations may be present in one state, or a nation may extend beyond the borders of a single state. The state is a legal entity, and the term "state" is essentially a legal one. Strictly speaking, "nation" is a social cultural term and it may be used without implications of legal or political integrity.

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In general, writers commonly use "state", "nation" and "country" interchangeably, so as to avoid the excessive use of one word and not because the three words mean exactly the same thing.

Vast differences exist among states in population, size, resource, culture, economics, government, and military power and almost in every other conceivable respect. According to international law, however, all states are equal and sovereign. But in actuality there are many inequalities and many degrees of dependence among states.

Differences in population and size are common knowledge, to everyone. In national wealth and material resources the differences are truly startling. United Nations statisticians have estimated that the nineteen richest countries with sixteen per cent of the world population have sixty-per cent of the world's income, while the fifteen poorest countries have more than half the world's population and less than one tenth of its income. The national income of India, with a population of more than half a billion, is smaller than that of Britain with less than one-ninth as many people.

Inseparable features of state system:

The first is the concept of sovereignty, the second is the doctrine of nationalism and the third is the principle of national power.

Sovereignty is the legal aspect, which gives the state, unique and unlimited authority in all domestic matters and in its relations with other states. Nationalism is that psychological or spiritual quality, which unites the people of a state and gives them a will to stand for matters, which they regard as their national interests. National power is the right of a state; it provides the capabilities for getting done the things that the state wills to be done. It is a complex of many elements both tangible and intangible.

State system and the concept of sovereignty. The state has supreme power over its citizens and subjects unrestrained by law, that is, it is the supreme authority. Sovereignty in its meaning of absolute, unlimited and indivisible authority is incompatible with international law, perhaps with any law. So, no international law binding the states can be consistently conceived. But many people have started raising the idea that from the standpoint of international law the concept of absolute sovereignty is no-longer valid. States often enter into bilateral and multilateral commitments, which in effect limit their sovereignty. In the present interdependent world, no state, however powerful, can attempt to shape its future without giving due need to outside pressures and commitments, and most states are bound to other states by many formal as well as informal ties.

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Studies in international law have attempted to distinguish between internal sovereignty, which is absolute and indivisible and external sovereignty, which is subjected to limitations. The three aspects of national sovereignty that are in most need of limitation are power of self-judgement in international controversies, the power to prepare and use armed force in international relations, and the power to impose arbitrary barriers to international trade.

Sovereignty in its literal sense means supreme authority, yet it must be limited under present conditions. It is absolute and indivisible, yet it must be qualified and divided. It is incompatible with international law, yet it must be reconciled with international law. It is a fairly rigid and inflexible theory, yet it must be applied to an evolving pattern of interstate relations. Inspite of all pressures, the theory of sovereignty will persist as a term defining power or the status of that power, or as a term defining a legal order.

State system and nationalism. Nationalism has become a kind of secular religion alongside other religious faiths. Most people take nationalism for granted. The total behaviour of the state system may largely be explained in terms of national hopes, national fears, national ambitions and national conflicts. The meaning of the word nation has been claimed by some to be "any aggregation of people having like institutions and customs and a sense of social homogeneity and mutual interest". Some others hold that, "what constitutes a nation is not speaking the same tongue or belonging to the same ethnic groups, but having accomplished great things in common in the past and the wish to accomplish them in the future".

In fact and it may be conceived that "a state may be composed of several nations". But in modern parlance the terms nation and state are used almost interchangeably and the major political units which exist today may appropriately be called nation-states. The nation needs a state. 'One nation-one state' is the political postulate of nationalism, and nation-state is its ideal.

Nationality, one of the main source of nationalism implies either national character or the spirit of belonging to a nation or a group of people possessed of such a spirit. Nationalism is a state of mind, an act of consciousness. Nationalism differs in character according to the specific historic conditions and the peculiar social structure of each country. Nationalism is a product of political, economic, social and intellectual factors at a certain stage in history, is a condition of mind, feeling or sentiment of a group of people. Nationalism is a psychological response. It is a socially conditioned sentiment.

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The collision of opposing national interests led to two world wars. But the present century is an era of increasing interdependence and internationalism. Sovereignty and nationalism if uncontrolled and misused, both can lead to tyranny and war, but if directed to constructive purposes they can evoke finest human sentiments for the service of worthy ends.

State system and national power. For the study of international relations the most common and perhaps the most useful way of classifying states is in terms of national power. Although the power position of a state is the result of many variables and intangibles, certain yardsticks can be employed (though they are unsatisfactory basis for classification), to understand the relative power position between states.

National power - the concept

Power is the means by which states implement their policies, domestic as well as foreign. National power is a vital and inseparable feature of the state system. Power is the strength or capacity that a state can use to achieve its national interests. Power determines the capacity of a state to influence opinion, human behaviour as well as the international events. It sets the undertone of all international relations. The status of a state in the international sphere is determined by power. The security of a nation depends on the power at its disposal and the effectiveness with which it makes use of its power to solve its problems. It not only has its impact on the state's survival but also on its day to day diplomatic moves.

All nations possess power, but very different amounts and kinds of power. It can be said that national power is the bargaining power or supremacy, which a nation is able to exert in its affairs both domestic and international. This power it is able to cultivate due to the power of having various resources at its disposal.

Power is an essential element of politics or relations. There is no politics without power, and more so in the case of international relations. But the power aspects of international politics are often characterised as an evil which should be minimised or even exorcised if international cooperation and world peace are to be achieved. The need of states to possess power, in fact, the evil use of power by some states is the best reason why other states must have power.

Forms of national power:

In the context of international relations, power relates to the capacity to impose one's will on others by reliance on effective sections in case of non-compliance. Thus it is not only influence and force alone but also has an element of threat. Yet stops short of the actual use of force.

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It is generally observed that nations with military power are likely to be in a position to make effective use of devices of economic coercion. The absence of war, on the other hand, does not mean the absence of all coercion. Even friendly states try to induce each other to pursue certain policies, and they may use milder forms of economic pressure. There is discussion about "World Economy" because the nations of the world do relate to each other economically.

Nations also relate to each other politically, diplomatically, militarily and culturally. Many of these other elements of international relations are intertwined with economic considerations. For example, Marco polo's travel and the crusades had significant economic interest. The great voyage of discovery and the building of colonial empires were motivated by economic as well as political inspirations. More recently, economic considerations have played a role in regional cooperative movements such as European Community (EC).

International economic concerns are also frequent items on the agenda of the United Nations and its affiliated agencies. Because nations relate to each other economically, international business operations are possible. Today, international marketers are major participants in international economic relations.

For the purpose of analysis, national power may be divided into three categories: military power, economic power and power over opinion.

Military Power: Military power is of paramount importance, because when all other forces fail, military power is resorted to. States resort to war, not because it is a desirable weapon, but as a weapon which it requires to use as a last resort. The enemy's capacity to wage war has also to be viewed in the usage of military power.

The military element of national power depends both on the quantity and quality of its armed forces. A country with a large amount of armed personnel is always more powerful. From the quality point of view, the nature of training, morale of army and military leadership are important.

Military alliances and bases also constitute power. A country with a number of such alliances and bases is more powerful than a country that has neither military alliances nor acquired bases. Another important aspect of military determinants of national power is the quality of arms and ammunition. This to a great extent depends upon the financial resources, industrial capacity as well as military research.

Economic Power: Economic Power is inseparable from military power,

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for it is one of its basic components. One form of economic power is building military strength, the other forms consists of control of markets, raw materials, credit, transportation and the like.

Power over Opinion: Power over opinion, now usually spoken of as propaganda, lobbying and the like, encompasses the building of national morale at home and psychological warfare abroad. This power also is inseparable from other forms of national power, for it is used to stimulate domestic production, fighting spirit and is used abroad to create allies and weaken the enemy. Closely related to power over opinion is political warfare.

Diplomacy: Certain people consider diplomacy also a form of national-power, but other views it as an element of national power. Diplomacy provides a channel for relationship among nations, but it heavily depends upon a nation's military, economic and propaganda resources. It is also true that even without much of these resources, a country due to its astute diplomacy, be in a position to influence in power-political terms the world affairs, not in proportion to its actual power. The wit and wisdom may give a nation an influence unwarranted by all the other factors. When this happens, diplomacy is certainly both a source and a form of national power.

National power is gained through possession of various elements like natural resources, geographical determinants, population, people and their genius, ideologies, technology development and the like. And this national power, takes various forms of power, namely, diplomacy, propaganda, political

warfare, economic policy, imperialism and colonialism and war, and are used as instruments of national policy.

Elements of national power:

Atom bombs and armies, cotton and rubber, geography, technology, morale all are elements of national power. All the elements are interrelated, and no one element can be individually calculated and the appraisal of national power defies statistical calculation. Appraisal of the elements help to understand the great differentials in power that partially explain the differing roles which States play in world politics.

Power elements can be broadly classified into seven component elements, namely, (i) geography, (ii) raw materials and natural resources, (iii) population, (iv) technology (are tangible and which can to some extent be assessed in quantitative terms) (v) ideologies, (vi) morale and (vii) leadership (though intangible they also are very important).

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Geography:

There can be no doubt that geographical factors have a decisive effect upon civilisations arid upon national development. The modern means of transport and communications has increased interdependence and has brought people into closer contact. The geographic factors of size, location, climate, shape, topography and boundaries are important factors which influence decisions in the field of international relations.

Size: The land area of a state is in itself an element of power. Whether it is too small to exert effective power depends upon a host of other factors like location, fertility, rainfall, nature of the people, nature of its technology and the quality of its leadership. Size as a factor is related to population, military installations, transportation routes and so on. It adds to the difficulty of achieving national unity, effective administration and cultural integration.

Location: More important than size is location. Location contributes towards the economy of state to be basically dependent on agriculture, mining, commerce and manufacturing. Location tends to make a state a land power or sea power with attendant overall advantages and disadvantages. Location also has

a role in diplomacy and strategy of war. It might make a nation a battle field or generally aspected buffer area.

Location is one of the determinants of climate. Climate is claimed to have a direct effect on the health and energy of the people. It is one of the determinants of culture, natural resources and political organisation. It is not a coincidence that almost all of the major powers are located in the temperate zones. Continuous extremes of heat or cold are unfavourable for energy, productive capacity and national strength.

Distances to be navigated. Geographical implications, nearness of territories or distances to be navigated, kinds of transportation used are important considerations. In the context of distances to be covered, maps and map projections are vital resources. Proper understanding of maps helps in greater conquering of distances. An interesting point to note will be the concept of the "Azimuthal Equidistant" projection. Maps are indispensable tools for the study of international relations. Though there are various maps and map projections, the most we are used to is the Mercator projection, which has meridians of longitudes and parallels of latitudes. This type of projection is still the best map for surface navigation. But in this air age, where distances are covered through air transport, the arctic regions have become the shortest avenue between the United States and many places in Europe, the Soviet Union and Asia (on a

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surface map, United States seems to be isolated from all countries outside the Western Hemisphere by great oceans).

The air age uses map projection called 'Azimuthal Equidistant' projection. The map shows the actual relationships of the earth's areas from any given point. It is a map which is centered on a definite spot on the globe, and on which the distance to any or all other points on the globe can be accurately measured. The straight line connecting the center of the map with any other point on the globe is really a 'great circle' which is the shortest distance between these two points. The most common type, is one on which-the North Pole is the center.

Shape and Topography: It makes for long or short coastlines, good ports or no ports, ease or difficulty of access to centres of population and trade, efficiency or inefficiency in administration and military operations. Topography has given good ports to Europe but almost none to Africa. Mountains may cut a

land off from the travel paths as in Bolivia or may make of it a meeting ground for travelers of all nations as in Switzerland.

Boundaries: They may be artificial or natural. Boundary disputes continue to be always in the world. In several instances as in Korea, Vietnam, Kashmir and Israel boundaries are determined by the ceasefire lines fixed by truce agreements. Boundaries are always potent sources of conflict.

Natural resources:

A nation's natural resources include its actual and potential forms of wealth supplied by nature, for example, minerals and waterpower, as well as its land area, topography and climate. Local natural resources are important in evaluating a country, since they provide raw materials for local production. Another reason for exploring the country's resource base is to evaluate its future economic prospects. Some countries that today have relatively weak markets might develop more rapidly than others because of their richer resource endowment.

New technologies or discoveries can revolutionise a nation's economic prospects. Oil changed the outlook for Libya and Nigeria. In Australia it was the discovery of other minerals that started a boom in the late 1960's. In the same way, technological change can also impoverish an economy that is largely dependent on just one export commodity. The development of rayon, nylon and synthetic rubber did great damage to the countries exporting silk and natural rubber.

Natural resources and raw materials: Natural resources may be defined as gifts of nature, of established utility and they would include, for example, most minerals, flora and fauna.

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Some of these like minerals and forests are commonly both natural resources and raw materials. On the other hand, some raw materials must themselves be produced, as rubber, hides and cotton. Raw materials may be divided into vegetable products, animal products and minerals.

Statistics on mineral resources reveal the advantageous position of the Soviet Union and the United States. The U.S. ranks first among the world producers of crude petroleum, copper, aluminium, salt and gypsum. Second in the production of coal, iron ore and zinc and third in the production of lead. It has to import 100 per cent of its tin, 92 per cent of its manganese and 84 per cent of its bauxite.

The Soviet Union is the world's largest producer of coal, ironore, manganese and chromite, and the second largest producer of petroleum, copper, lead, aluminium, bauxite, asbestos, gold and natural gas. It has to import all of its tin.

Canada is the leading producer of aluminium and nickel, Jamaica of bauxite, the Congo of cobalt and industrial diamonds, South Africa of gold, Mexico of silver, Malaysia of rubber and China of tungsten. Oil is the chief export of Saudi Arabia, Iran, Kuwait, Iraq, Venezuela and several other countries, tin of Malaysia and Bolivia, coffee of Brazil, Colombia, El Salvador, Guatemala Haiti and Ethiopia, rice of Burma and Thailand, jute of Pakistan, rubber of Indonesia and Liberia and tea of Ceylon. Nearly every state is dependent in some degree on the export of raw materials. It is so even for United States in the case of wheat, cotton and tobacco.

No country is close to self-sufficiency in raw materials and all states are heavily dependent on foreign sources of supply. This dependence raises issues relating to accessibility of these materials, control of sea lanes and other routes, exchange and balance of payments problems, trade, commerce, barriers to trade and significant security and policy issues.

Some countries are heavily dependent on finding foreign markets for one or few basic products and their economy is affected by world price and demand. Producing countries are dependent upon markets abroad, importing countries are concerned with problems of procurement and supply.

Source of Energy: The sources range from the oldest human and animal power to atomic and solar energy. Coal is one of the major sources of energy in the world. The Soviet Union and the U.S. are by far the largest producers of coal, accounting for over 35 per cent of total world production.

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Oil now the major source of energy in the United States, ranks second in world importance. The U.S. is almost the world's largest consumer of oil. Most of the world's imported oil comes from the Middle East and Venezuela. Much of this business is controlled by huge American, British, Dutch and French companies.

Waterpower especially hydroelectric power is important in some states such as Japan, the U.S. and India. It is of potential significance in many parts of Africa. Now that man has learned to harness the power of the atom, this new source of energy is gaining importance.

Resources and national power: No country can develop an industrial base unless it possesses sufficient natural resources and raw materials. But the resource themselves do not create power. These have to be exploited and their exploitation requires capital, technical know-how and skilled labour.

Self-sufficiency on foodstuff (as exist in USA) is quite important if a nation is not to depend on others. Raw materials like coal, oil, iron are also vital for national power. The abundance of coal in Britain provided the base for the industrial revolution in that country. The rich oil deposits of USA gives it the economic power and these days' natural gas and atomic energy have become bases of national power.

The possession of rich natural resources does not make a state prosperous, but it is essential to greater national power. Advantageous geography, fertile soil or mineral deposits can contribute to the economic power for they can create dependence by other states. By producing the wealth which permits investments, by supplying essential goods or by affording a remunerative market, a state may gain economic power and its capacity to do so is greatly enhanced by if not entirely dependent upon natural resources of one kind or another. By nature, the basic raw materials are found concentrated in the hands of few states, yielding them vast superiority in this important element of national power.

Population:

Population figures are one of the first considerations in analysing countries. One striking fact is the tremendous differences in size of the nations of the world. The largest nation in the world has about 10,000 times the population of some of the smallest countries. Well over half of the people of the world live in the top ten countries that are populous. Asia contains six of the ten most populous markets. By contrast Africa, the Middle East and Latin America are rather thinly populated. Nigeria is the only populous African nation. Turkey is the largest market in the Mideast.

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Latin America has only two relatively populous countries, Brazil and Mexico. Europe though much smaller in land area is comparatively more densely populated than any other region.

The population growth of a country on the one side can mean the formation of new households and increased demand for goods, on the negative side; it can hinder development of the economy by keeping down per capital income. Over population is a relative term. Where population is too large in relation to levels of development and food supply, it creates all kinds of economic, social and political problems and pressures.

Large population may be a source of weakness or a source of strength in the modern world. Most populous states like China and India are not most powerful, but they are potentially major powers. The next most populous states, the Soviet Union and the United Slates, are two superpowers. The next three states in order of population, Pakistan, Indonesia and Japan, though not major powers. Japan is trying to regain its supremacy. West Germany, next in size is becoming increasingly powerful and influential. Britain and France have smaller population than all of these states, and also than Brazil, Nigeria and Italy, but they have a world status far higher than numbers would indicate.

The genius of people and technology:

The extraordinary predominance of technology is the decisive characteristic feature of modern times. Technology is often defined as applied science. Technological change reflects the actual adoption of new methods and products. One of the greatest achievements of modern science and technology has been the harnessing of the power of the atom. In the context of national power, technology is assessed in terms of how much it brings in security for the nation in the form of military effectiveness. Only when a technological base has been achieved can a state produce the weapons of modern warfare. To keep up the level of technology and to expand it, nations must develop long range programmes for training needed scientists and technical personnel. Technological progress is a function of the entire economy and social system of a country.

Technology affects not only the power base of a state but also the entire course of international politics. Technology up gradation has been significant in industrial technology communications and military technology. Technology has added to the power of nations and has affected their foreign policy. USA abandoned her policy of isolation, as a result of advances in military technology world over, which has made her

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fore vulnerable. In the early years, Britain was able to develop colonies because of her superior military power. Industrial technology development helps in gaining freedom from dependence. For example, the

discovery of synthetic rubber as a substitute for raw rubber helped USA to come out of its dependence on rubber imports from South East Asia.

As technologies enable a state to expand production and extend the variety and quality of goods produced, they add strength to its economy and hence to its economic power. The essence of economic power is other states dependence, whether for markets, raw materials, labour or capital and the greater the dependence the greater the power.

People and their ideologies, morale and leadership:

Intangible factors of national power are ideology, morale and leadership. An ideology is a cluster of ideas about life, society or government which gradually become the characteristic^ beliefs of a particular group, party or nationality.

The significance of ideologies in world politics today lies in the fact that in some instances they have become linked to national power. Just as power became the instrument of ambitious nationalism, it has now become the tool of ideologies.

The term ideology can be applied to a variety of the moving ideas of our time, namely, nationalism, anti-imperialism, communism, fascism, nazism, socialism, liberalism and so on. Democracy also is in many respects an ideology, the same is true of the major religions.

One of the recent trends has been the urge of totalitarian ideologies of universalism, which rests upon the 'one world' concept. Because ideologies can evoke, fanatical support they must be regarded as instruments of national policy. Ideology gives strength to worthy causes like unity of nations. Any progress towards effective international cooperation, which in itself an ideology, depends upon an ideological motivation.

With various developments in the modern days, the end of ideology is not yet at hand, but the relevance of several ideologies seems to be ending.

Morale is made up of loyalty, courage, faith and the impulse to preserve personality and dignity. It can make people work harder, sacrifice more and fight harder. Morales are certainly related to ideologies.

Leadership is interrelated with the other elements of national power because it is one of the measures of the extent to which those elements are

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utilised. Leadership in diplomacy is much needed these days. Even in times of peace, states possess power. One measure of that power is the effectiveness of the state's diplomacy, which in turn is in part the measure of the competence of leadership.

Consciousness of national power:

Elements like geography, natural resources, population, technology, ideologies, morale, national character and leadership all constitute the national power. National power is a relative term, that is, on comparison it is estimated whether a state is more powerful or less powerful. It is measured in terms of the power of other states.

Power is subject to continuous changes. A state's economic and political position and power may change fundamentally over a period of time. Much of human history is the rise and fall of nations and other political entities.

Leaders of states are aware of the essential elements of power and of their interdependence. Since power is relative, states would need to have detailed information on other states and this is never complete. Arms of the same size are not necessarily of equal effectiveness. We are in a world where nations feel that their best assurance of security lies in their own strength. Till such day, when organisations like the U.N. can provide security for all, the reliance on national power will continue to be there and statesman will remain deeply conscious of the elements of national power.

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3. DIPLOMACY AS AN INSTRUMENT OF NATIONAL POLICY

Nature of diplomacy

Diplomacy and foreign policy

Diplomatic factions

Diplomatic embryos and consular officers

Diplomacy in the twentieth century

Diplomacy by conferences

In the arena of international relations, states have to adjust their national interests which those of other states. They have to maintain a proper balance between their national interests and international responsibilities. Instruments like (i) diplomacy (ii) wide variety of economic instruments (iii) propaganda, lobbying, ideologies like imperialism, democracy (iv) declaration of war, are at the disposal of states to protect their national interests. In all these, the national power of the states denotes the status of the state in the international sphere, in influencing opinion, human behaviour as well as the international events, such as to protect their national interests.

In modern times, wherein most countries are bent on avoiding a third world war, the role of diplomacy in international affairs has turned out to be magnificent.

The nature of diplomacy:

According to the Oxford English Dictionary, "diplomacy is the management of international relations by negotiation". Diplomacy is the method by which international relations are adjusted and managed. It is ordinarily understood to be the application of intelligence and tact to the conduct of official relations between governments.

Diplomacy consists of techniques and procedures for conducting relations among nations; it is the normal means of conducting international relations. The use and value of diplomacy depends upon the intentions and abilities of those who practice it.

Diplomacy is practiced through a network of foreign offices, embassies, consulates and special missions spread over the world. It is generally concerned with relations between two nations and so bilateral in nature. But with the recent growing importance of international conferences, regional groupings and collective security measures, diplomacy has turned out to have multilateral aspects.

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Diplomacy covers from the simplest matter in the relations between two nations to the very critical issues of war and peace. And when diplomacy is lost, there comes in the danger of war or at least a major crisis.

Diplomacy and foreign policy:

Foreign policy of a nation is "the substance of foreign relations", where as "diplomacy is the process by which policy is implemented". The foreign policy of a nation is decided at the highest levels of offices of many different persons and agencies, it concerns with major matters of the nation and is subject to many kinds of controls. It is the purpose of diplomacy to provide the machinery and the personnel by which foreign policy is executed. But it is not easy to pinpoint where diplomacy ends and foreign policy begins. One is substance, the other is method. Both are concerned with adjustment of national objectives to international interests.

Foreign policy is based upon a general conception of national requirements. Diplomacy is not an end, but a means; not a purpose but a method. Diplomacy tries to by the use of reason, conciliation and exchange of interests, to prevent major conflicts, which might arise between nations.

Though foreign policy and diplomacy differ from each other they exercise great impact on each other. Even a strong foreign policy would loose its effectiveness if there exists a weak diplomacy, whereas, a strong and effective diplomacy can cover the lapses of the foreign policy. Diplomacy provides the personnel and the machinery for the implementation of the foreign policy. Foreign policy represents a definite content and diplomacy a process. Diplomacy transmits and explains the foreign policy and tries to negotiate which helps to secure the policy.

Through diplomacy, foreign policy seeks to attain its purpose by agreement rather than by war. The object of diplomacy, as of foreign policy is to protect the security of a nation, by peaceful means if possible, or by giving every assistance to the military operations if war cannot be avoided.

Diplomatic functions:

A diplomat keeps his government informed of major developments in the rest of the world. He executes the policies of his own country, to protect its interests and its nationals. He is an interpreter between nations, his home country and the one in which he serves. So he has to understand the country, which he serves, its conditions, mentality, actions and its underlying motives and explains them clearly to his own government.

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A diplomat undertakes the functions of representation, negotiation, reporting and protection of the interest of the nations and of its actions in foreign lands (Palmer and Perkins).

Representation: A diplomat is a formal representative of his country in a foreign nation. He holds communication between his foreign office and his own country. The home country is judged on the basis of the behaviour of the Diplomat, in the eyes of the nationals of the foreign country. The diplomat should develop wide variety of social contacts, with the officials of the foreign government, with influential persons in all sectors and with articulate' groups in the country. Though these contacts are less formal, have good scope since a trained observer can often pick up information or intelligence of great value in or from conversations at social functions.

Negotiation: An important duty of diplomats is negotiation. Negotiation aims at reaching an agreement by compromise and direct personal contact. Role of negotiation of diplomats is to a certain extent taken away, in these days, where major international agreements are negotiated directly by foreign ministers often at international conferences.

Reporting: The foreign policy of the country takes into account the reports presented by the diplomats. These reports cover from technical studies to appraisals of the psychology of nations. Diplomats are expected to observe, analyse, and report on political, social and economic conditions and trends of significance in the country to which they are assigned. Some of the major reports are on legislative programs, public opinion, market conditions, trade details, finance, production, labour, agriculture, shipping freights, tariff and laws. "

Diplomatic envoys and consular officers:

The general framework diplomatic personnel consists of (i) Counselor of Embassy, who ranks highest among diplomatic staff members, (ii) Secretaries of an embassy, usually ranked as first, second and third secretaries and (iii) Attaché's who may be junior career officers, including commercial, agricultural, military, petroleum, cultural and other attaché's. Within this general framework the foreign services of each country has many distinctive features.

In a professional sense, diplomats include two main groups: diplomatic officers and consular officers. Both types of officers fulfill the roles of representation, negotiation, reporting and protection of national interests. Yet generally speaking, diplomatic officials specialise in representation and negotiation, whereas consular officials are particularly concerned with the protection of the interests of the nationals of their country. Reporting is an important function of both groups.

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Diplomatic offices of US in India

Consuls General

Mumbai - Franklin P. Huddle

Calcutta - Cheryl J. Sim

Chennai - Michele Sison

U.S. Embany in India is on

Shantipath

Chanakiapuri

N.D. 110 021.

Principal U.S. Embassy Officials

Ambassador – Vacant

Charg d' Affaires - E. Ashley Wills

Public Affairs - Eric D. Tunis

Economic"Scientific Affairs - Alice A. Dress

Commercial Affairs - Carol Kim

Agricultural Affairs - Thomas A. Pomeroy

Administrative Affairs - Peter W. Bodde

Consular Affairs - Wayne S. Leininger

Director, USAID Mission - Linda Morse

India maintains an embassy in the United States at 2107 Massachusetts Avenue NW, Washington DC 20008 and consulates general in New York, Chicago and San Francisco.

Almost all nations have diplomatic envoys and their staff in foreign countries. These diplomatic missions are of a permanent character, although the persons of office may change from time to time. This institution of diplomatic representatives has become the principal machinery through which the talks between the nations are being conducted.

Originally, there existed some controversy around the classification of diplomatic representatives. Ambassadors sent on temporary mission were called 'Extraordinary' as contrasted with resident envoys. Later, the title 'Extraordinary' was given to all Ambassadors whether resident or temporary, and the title of 'Plenipotentiary' was added to their designation. Literally the term 'plenipotentiary' signified that the envoy was fully empowered to transact business on behalf of the Head of State who had sent him on the mission.

The designation 'Envoy Extraordinary and Minister Plenipotentiary' came to be applied to almost all-diplomatic representatives of the first rank, such as ambassadors and ministers, with the exception of ministers resident.

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The Congress of Vienna attempted to codify the classification and order of precedence of diplomatic envoys. This codification, known as Regulation of Vienna, subject to certain adjustments was incorporated in the provision of the Vienna Convention on Diplomatic Relations of 18th April 1961. According to these provisions, heads of diplomatic mission are divided into three classes:

i. Ambassadors, papal legates, papal nuncios or nuncios accredited to heads of state, and other heads of missions of equivalent rank. Other heads include ambassador's accredited to international organisations like UN, UNESCO or to certain long-term conferences e.g. an ambassador of disarmament.

ii. Envoys, extra ordinary and ministers plenipotentiary, ministers resident and internuncios accredited to heads of state.

iii. Charges d'affaires accredited to ministers for foreign affairs.

Consular officers form a separate branch of the Foreign Service, even though diplomatic and consular officials are interchangeable in most foreign services at the present time. Consuls are agents of a state in a foreign country, but not diplomatic agents.

Consular officer's functions pertain to commercial and business relations and to services to nationals. Their duties include promotion of trade, replies to trade inquiries, certification of invoices of goods supplied to their country, enforcement of provisions of treaties of commerce and navigation, protection and promotion of shipping and other duties related to international commerce. In addition to their primary duty of protection of the commercial interests of their appointing state, they also perform a great variety of other duties, for the subjects of their state, like execution of notaries acts, granting of passports, solemnisation of marriages and the exercise of disciplinary jurisdiction over the crews of vessels belonging to their state.

Consuls also help nationals who live or are traveling in the country to which the consul is sent. Consuls are usually divided into five classes (i) consuls general, (ii) consuls, (iii) vice consul of career, (iv) vice consul not of career and (v) consular agents. The laws as to the functions of consuls were codified, subject to certain adaptations in the Vienna Convention of 24th April 1963 on consular relations. The Convention covers a wide field, but does not preclude states from concluding treaties to supplement extend or amplify its provisions.

The institution of consuls is much older than that of diplomatic representatives. Consuls are frequently stationed in more than one city in the state to which they are sent, unlike diplomatic envoys.

Letter of Credence: As a rule, the nomination of a diplomat will be publicly announced only after the country to which he is to be sent has

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given its approval. The approval is called 'agreement' and the procedure of determining upon it is known as 'aggregation'. Before leaving to assume his new post he will be furnished with important papers, documents of full powers relating to particular negotiations or other specific written instructions, diplomatic passports for himself and his family and staff and a letter of credence. The letter of credence is diplomat's formal commission. It is signed by the head of the state and is addressed to the head of the state to which the diplomat is accredited.

When a consular officer is appointed he would receive a commission signed by the head of the state. An 'ex equatur' is a consul's official authorisation to discharge his duties at his assigned post. It is in fact an executive order of the foreign government, which recognises the official character of the consular office and grants him the privileges conferred upon his office by treaty, laws or custom.

Regular foreign service personnel are largely exempt from the formalities, which are required of top diplomatic and consular officials. They do not have to be accredited. All they need are diplomatic passports and visas. Consuls rarely have direct communication with the government of the foreign state in which they are stationed. Usually communication will be made through an intermediate channel, say, the diplomatic envoy of the state by which they are appointed.

Diplomatic and Consular privileges: Ordinarily diplomats enjoy exemption from direct taxes, from all dues and taxes, other than certain taxes and charges set out in Article 34(e.g. Charge for services rendered) and also from customs duties. Diplomatic envoys enjoy exemption from local, civil and criminal jurisdiction of the countries to which they are accredited and from the laws of the foreign state in general. They also have a right to inviolability of the person. This protects them from molestation of any kind and of course from arrest or detention by the local authorities.

The increase in the number of serious crimes committed against diplomatic envoys and diplomatic missions such as murder and kidnapping of envoys and attacks directed against the premises, led to the adoption by the UN General Assembly on 14 December 1973 of a convention on the prevention and punishment of crimes against internationally protected persons, including diplomatic agents.

Consuls are not generally accorded as many rights and privileges as diplomats and their status is regulated more by agreements between governments. Consuls are usually exempt from local taxes and custom duties, but except for the giving of testimony in the civil cases, they are customarily held to be subject to the laws of the state of their residence.

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The modern tendency is to amalgamate diplomatic and consular services and it is a matter of frequent occurrence to find representatives of states occupying, interchangeably or concurrently diplomatic and consular posts. With the continuance of this tendency, the present differences between diplomatic and consular privileges are gradually being narrowed.

Special Missions of a Non Permanent Nature: States are often obliged to send temporary missions to particular states to deal with a specific question or to perform a specific task and such missions may be accredited.

Non-diplomatic agents and representatives: Other than accredited diplomatic envoys or consuls, states may employ agents for various purposes. These may be of a permanent character, such as Trade Commissioners and officers of independent information or tourist services. Their rights and privileges may be the subject of specific bilateral arrangements or simply a matter of courtesy.

Diplomacy in the twentieth century:

The beginnings of organised diplomacy may be traced to the relations among the city-states of ancient Greece. The Romans had success in playing off potential rivals against each other, based on reports of their representatives at foreign courts. Their representatives became skilled diplomats and trained observers thus extending the practice of diplomacy to include accurate observation and reporting as well as representation.

The rivalries of the Italian city-states and the method, which their rulers used to promote their interests, gave rise to modern diplomacy as an organised profession.

By the seventeenth century permanent missions were the rule rather than the exception and diplomacy had become an established profession and a generally accepted method of international relations.

The Congress of Vienna made important contributions towards generally accepted standard rules for diplomacy and the diplomatic hierarchy.

The twentieth century has felt (i) the growing sense of community of nations, (ii) greater importance of public opinion and (iii) rapid increase in communications. The first two developments have led to enlargement of the diplomat's functions and enhanced his importance.

As the number of international organisations, groupings and conferences increased, multilateral diplomacy has gained added significance. The impact of public opinion is such that the policy makers of all the nations are very sensitive to currents of public sentiments. One of the main functions of diplomatic representatives is reporting on the attitudes of the people in the countries to which they are accredited.

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The rapid increase in communications has created changes in the functions of diplomats and opened up more convenient channels of international negotiation. The heads of governments can directly participate in all important negotiations doing away with regular diplomatic representatives. More and more, major international issues are being handled outside normal diplomatic channels. Roosevelt and Churchill talked by transatlantic telephone and exchanged views by direct correspondence and by special agents. United Nations representatives of the USSR and the United States met privately in a New York hotel room to arrange the ending of Berlin blockade. Diplomacy by conference and other multilateral procedures are becoming more and more popular.

Conference diplomacy:

The traditional diplomacy has mostly been bilateral and operated as a means of communication between two specific states. In this diplomacy, states try to promote their own national interests. When many states are involved in the process of negotiation and eventual agreement, the diplomacy is known as Multilateral or Conference diplomacy. It is sometimes also termed as "collective diplomacy". In multilateral diplomacy, states concentrate on community interests.

The foreign offices, diplomatic and consular offices are the normal channels of diplomacy. But in recent times these channels have sometimes been by-passed and the states have increasingly resorted to diplomacy by conferences.

Realising that urgent and important matters cannot be resolved through ordinary diplomatic channels, the UN has institutionalised the conference diplomacy.

Diplomacy by Conference meets the real needs and seems to be growing in popularity. Six thousand to ten thousand conferences are now held each year. Some deal with highly technical subjects and are attended by relatively few persons, mostly experts in their fields. Others are general international meetings, attended by hundreds of persons, including many foreign ministers or diplomats of the highest rank. Most numerous of all are the Conferences held under the aegis of the United Nations and its agencies, which now sponsor more than five thousand meetings each year. The preparation and staffing of these conferences is one of the main functions of the Secretariat of the United Nations, especially of its Department of Conferences and General Services, and of important divisions of every foreign office.

The advantages of diplomacy by conferences are elasticity of procedure, required numbers, mutual acquaintance, personal friendship, better perspective, secrecy in deliberation, publicity in results, reliable

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secretaries and interpreters. The conference diplomacy also enables those who are responsible for framing policy to conduct negotiations.

In spite of its popularity, there is also the constraint that Conferences might turn out to be such that they are useful only for registering and for getting peripheral consent to possible adjustments.

It is severely criticised that conferences conducted under a blaze of publicity make successful negotiations impossible for the participating members. The success of international conference is usually in direct proportion to the amount of confidential and expert spade-work done in advance. Those participating in the conference must aim at the solution of the problem and not 'short-lived' public approval for themselves.

Moreover prolonged negotiations at various conferences have hampered amicable solution of the problems and have made conference diplomacy to fail in its mission Another significant criticism has been that the system of arriving at decisions through majority votes aggravates the tension among the members rather than helping in resolving the issues. In the Korean problem voting in the UN did not in any way contribute to the settlement of the issue. The issue was settled on the battlefield and in diplomatic negotiations between East and West.

Though conference diplomacy suffers from certain shortcomings its role cannot be side tracked. It has played significant role in averting conflicts and promoting peace. Various timely conferences have contributed to the reduction of tension. The two superpowers have held several conferences to sort out their differences and reduced international tension. States of various regions have been meeting regularly to solve their problems and plan out programmes for prevention of war and promote mutual cooperation. Regular conferences have been held by the non-aligned countries, members of Islamic Conference, Arab Countries, G-77 and other regional groupings. These conferences have created a sense of involvement and have promoted a democratic style of diplomacy.

Personal diplomacy or the direct participation of foreign ministers, prime ministers and even heads of states in diplomatic negotiations/summits has become increasingly common in recent years. In an increasingly interdependent world it is useful for top leaders to meet their counterparts in other countries. This provides opportunities for fruitful exchange of views and more realistic character of the concern of other leaders.

In the modern times, the scope for diplomacy is increasing due to (i) the increasing incidence of public multilateral negotiations, (ii) the expulsion of diplomatic activity into the cultural and educational fields and (iii) the multiplication of informal channels of contact among people and nations. Diplomacy continues to be the central point for the conduct of international relations.

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4. ECONOMIC INSTRUMENTS OF NATIONAL POLICY

Tariffs policy

International cartels

Intergovernmental commodity agreements

Dumping and preemptive buying

Quotas and licenses

State trading and subsidies

Boycotts, Valorization, Embargoes, Black list

Towards fulfilling their national interest, countries maintain a measure of control on their economic activities within their borders and on their economic relations with other nations. This administration, both control and freedom are policies consciously adopted by the nations.

Whenever economic policies are shaped to promote national ends, they are economic instruments of national policy. Although all nations control their foreign trade, they vary in the degree of such control. Each nation invariably establishes trade laws that favour its nationals and discriminate against traders from other countries. And nations being dependent on other nations to some degree or the other, the economic policies of one have a bearing on the other. In the furtherance of national policy, economic instruments are in constant use. In times of peace, all nations have the objectives such as raising the standard of living, increasing employment, conserving natural resources, advancing technology and promoting foreign trade.

The growth of international trade and liberalism in the nineteenth century: The composition of world trade has shifted in emphasis from a primary reliance on spices, precious metals and textiles to industrial raw materials, agricultural products, machinery and other components of a modern trade pattern. The so-called invisible imports and exports, which had been negligible, are today a significant part of international trade.

The mercantilist doctrine of the seventeenth and eighteenth centuries held the view that the true wealth of a nation consisted of precious metals, and towards that nations should always try to achieve excess of exports over imports. But the Manchester economists insisted that trade could be advantageous to both parties. Each nation should be free to produce the goods for which it was best suited, and this natural advantage could be utilized only if trade were exempt from undue restraints. This Manchesterian liberalism was the gospel of free trade.

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Britain took upto free trade policy in 1846 and stayed in it till the great depression in 1930s. France followed in 1860 but lost faith in 1892. Germany, Russia and United States had their protective policies, but did not follow mercantilism. Belgium and the Netherlands followed free trade in principle and practice. World trade increased and on the eve of World War I it was found that four nations controlled fully half of the world's trade. The United Kingdom (17 per cent), the United States (15 per cent), Germany (12 per cent) and France (7 per cent). The foreign trade of the United States was increasing more rapidly than that of any other nation. On the whole, the international economy of the years before World War I appeared to operate reasonably well. But the increasing economic difficulties during the

Great Depression of the 1930's led one nation after another to impose restrictions on imports and exports by such devices as quotas, licenses, clearing agreements and higher tariffs.

These national actions minimised international trade. Thus in 1930s international trade was at low ebb and each nation tried to maintain domestic employment while restricting imports. The bankruptcy of these "begger my neighbour" policies was evident in the worldwide depression to which they contributed. There were many attempts to organise economic blocks in the 1930s and early 1940s, usually on regional lines. Since trade was no longer generally free it became increasingly to rest upon explicit agreements, thus fostering bilateralism against multilateralism, which is fundamental to a sound world economy. One of the many unhappy consequences of the mounting restrictions on trade and other adverse economic trends, such as the disastrous fall in prices, was a serious decline in international trade. The World War II completely altered the pattern of international trade and there by contributed to the struggle between economic nationalism and the ideal of a relatively free world trade.

The economic instruments: Comparative cost advantages between the nations give rise to international trade. Since the natural endowments of countries differ, as do other factors of production, nations stand to gain in production of certain products while comparing to other nations. International trade occurs because of international differences in costs.

The economic interdependence of states is one of the basic conditions of international life. Free trade between nations need not necessarily result in improved well being everywhere. Some modest controls must be available to under-developed states. Nations develop economic arsenals to protect their trade and the economy. The economic instruments that have been devised and used over the years are many. They are often so interrelated that the use of one leads to the use of another and so on.

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Tariffs policy :

A customs tariff is a duty or tax imposed upon imported or exported goods. A tariff might be levied for revenue purpose (to provide governmental revenue) or protective purpose (designed to protect domestic industry) and some times the same tariff may serve both the purposes. Generally speaking, a tariff low enough to avoid discouragement of imports will yield more revenue than a higher discouraging tariff.

Tariff policy is usually framed with the aim of enhancement of the nations economic power. But sometimes we find that, tariff protection encourages waste and inefficiencies. A protective tariff may be imposed to limit competition and protect domestic producers. The real motive may be increased profits for local industry, better wages or promotion of certain industries to improve the economic position of the nation in its relations with foreign countries. With national betterment and security as the objectives, the tariff may afford a general protection or it may give protection to a particular industry as per the existing necessity

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Tariffs discourage import of certain goods and encourage the production of certain goods. Discouraging imports helps to some extent to conserve foreign exchange or reduce a balance of payments deficit. High tariffs may also give the nation a position from which it might bargain or might use it as an instrument of retaliation. High tariff begets high tariffs and it is commonly found that one country tries to breach the tariff wall of another country by penalizing its export business.

Tariffs affect pricing product and distribution policies of the international marketer as well as foreign investment decisions. If a firm is supplying a market by exports, the tariff increases the price of its product and reduces competitiveness in that market. The examination of price will be accompanied by a review of other aspects of the firms approach to the market. The product may be modified or stripped down to lower the price or perhaps to get a more favourable tariff classification. For example, watches exported into a country could be taxed as timepieces at one rate or as jewellery at a higher rate.

Another way the manufacturer can minimise the tariff burden is to ship product CKD (Completely Knocked Down) for assembly in the local market. The tariff on unassembled products is usually lower than that on completely finished goods. In yet another circumstance, the firm might establish a subsidiary and benefit from tariff protection as against companies abroad.

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Shortages of foreign exchange, shortage of certain commodities and many political uncertainties require that governments continue their controls over foreign trade. Free trade being difficult, governments continue to rely on bilateral trade and payment agreements. Sometimes these are multilateral agreements. Such agreements reduce the share of outside countries in world trade and hence they are significant instruments of discrimination.

Since World War II the trend toward protectionism and economic nationalism has continued. Regional groupings tend to lower trade barriers among the member countries and tend to a common external tariff in dealing with other nations.

A great effort taken to reverse the trend toward protectionism has been the General Agreement on Tariffs and Trade (GATT) negotiated under the auspices of the United Nations in 1947 and extended in several later negotiations. GATT has helped in achieving substantial reductions in tariff duties and has contributed greatly to freeing world trade through bilateral and multilateral negotiations and agreements. But protectionists have affected its efforts and many concessions and loopholes weaken its position. In order to accommodate many of its signatories GATT had to be modified to permit special concession, to new nations, to states in balance of payment difficulties and to regional trading groups.

International Cartels:

Independent enterprises in the same or similar lines of business, to exercise some sort of control over competition, form into an association known as cartels. The word cartel is derived from 'Charta' meaning a contract. The essence of a cartel is the contractual agreement existing among independently owned businesses. The purpose is to exert a monopolistic influence on the market. It comes into being usually in the seller's market, when most of the enterprises, which had been competing with each other, agree to enter it. It may be a loose association based on informal understandings or a strong one based on explicit contractual agreements. Cartels might tend to fix uniform prices, limit production or divide sales territory. They do all possible acts to influence the market.

In the nineteenth century the cartel movement reached its greatest development in Germany, and the country is still considered "the classic land of the cartel". Cartels were eventually forbidden by law in England, the United States, France, Austria and many other countries. They were encouraged by Germany and Italy and at least tolerated in Russia, Spain, Rumania and Norway. German cartels of the 1870's are usually regarded as having come into existence from the economic depression of the times.

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The main aim of a cartel being to control prices, output and investment quotas for making the price control effective often accompany this. Cartels are common in oligopolistic markets where there is relatively small number of firms. In India the Monopolies and Restrictive Trade Practices (MRTP) Act 1969 controls cartels.

International cartels are agreements between producers located in different countries or between governments of different countries to restrict competition. While domestic cartels are often prohibited or controlled by the respective governments, international cartels are often sponsored by the governments for example, the Organisation of Petroleum Exporting Countries (OPEC), the International Air Transport Association (IATA).

Cartels should be distinguished from International Commodity Agreements. The cartel is basically a unilateral decision by producers to cooperate while a commodity agreement, in principle, includes consumers in the negotiations, although in practice consumers have little direct say in the operation. Although the major objective of a cartel is to raise price and restrict competition, it may have other goals as well, such as, to develop the industry, or as in the case of OPEC, to act as a distributor of international aid.

Intergovernmental commodity agreements :

The intergovernmental commodity agreement helps to assure a particular nation a definite share in the world market. It is entered into because of general overproduction in a specific commodity and to avoid cut throat competition that may exist in a buyers market. These agreements take a variety of forms. The most important are those, which set up a buffer stock agency, those, which allot export quotas, and those, which fix production quotas. When private agencies setup such •arrangements they are commonly regarded as cartels.

Under the buffer stock scheme, an intergovernmental agency establishes a maximum price at which it will buy the entire commodity offered and a maximum price at which it will sell any amount wanted. The scheme entails no export or production quotas.

International Buffer Stock Agreements seek to stabilise the commodity prices by maintaining the demand-supply balance. Buffer stock agreements stabilise the price by increasing the market supply of the commodity when the price tends to rise and by absorbing the excess supply to prevent a fall in the price. The buffer stock plan, thus, requires an international agency to set a range of prices and to buy the commodity at the minimum and sell at the maximum.

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Intergovernmental controls in the past have been applied to wheat, sugar, tea, coffee, beef, timber, tin, rubber, wool, cotton and other primary commodities. There are about seventeen international

commodity groups. Five are autonomous councils that report to the U.N.; they deal with wheat, tin, sugar, coffee and olive oil. In addition there are the six FAO subsidiary study groups and six independent study groups, each concerned with a special commodity such as rice, cocoa, rubber, wool, cotton or lead-zinc. Large financial resources and stock of the commodity are required to launch the programme successfully. In the absence of production and export quotas to protect the buffer pool, there is the prospect of some countries using it to create easy foreign exchange for themselves, through export subsidies and special exchange rates.

Agreements have tended to be more in agricultural crops and minerals but not in manufactured goods. This has been because agricultural crops and minerals are far more standardised than manufactured goods. A country is far more likely to be dependent upon a single crop or a single mineral than upon a single manufactured product and so the public welfare is more vitally concerned. Industrial commodities are more commonly produced by a few persons and they can readily combine in a private agreement, whereas the producers of minerals and particularly crops are so numerous that they can act effectively only through the government. Agricultural and mineral production responds more slowly to changes in short-term demand than does industrial production. All these factors lead to certain minerals and agricultural products being more suited for intergovernmental commodity agreements.

These agreements may serve a commendable purpose in some contingencies but must be carefully supervised and care must be taken that these do not become permanent. Such agreements should be only 'an umbrella for emergencies' and not a 'concrete shelter' for permanent residence of inefficient producers. The aim of commodity agreements should be to end the need for commodity agreements. If these agreements tend to be permanent and not end with their legitimate purpose they become unwarranted barriers to international trade, though instruments of national policy.

Dumping :

Dumping means the sale of goods for export at prices lower than those charged to domestic buyers. Dumping may take place to move a temporary overstock, to build goodwill in a depressed market, to introduce a new commodity, to weaken or remove a competitor in the foreign market or in retaliation against dumping in the producers domestic market. Dumping may be used for the purpose of obtaining foreign

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exchange, as the Germans and the Japanese used it on the eve of World War II to finance either military preparations and presumably also to enlarge their factories, train skilled workers and permit technological research. It may be used as an instrument of economic warfare.

Long term dumping is practiced in order to enable the producer to gain the economies of large-scale production. More or less monopolistic control of the domestic market is almost necessary to long-term dumping. Tariffs are also significant, as they help toward monopoly by giving protection against foreign competition. Added to this are export subsides, which help towards exports at lower prices.

The net effect of dumping for the exporting country may be that it can stabilise production and maintain employment, it may induce an expansion in production facilities and it may or may not reduce prices on the home market. For the importing country dumping may divert or ruin local competitive industries, offsetting the gain to consumers.

Pre-emptive buying :

Preemptive buying is peculiar to times of war and crisis. It is the purchase of goods in a neutral country so as to prevent their coming into the hands of the enemy. The main motive is depriving the enemy of needed goods. It is by no means a simple and easy operation. Often the prices go high and there might arise difficulties of availability of goods in the right currency and in the transport of purchased goods. Yet preemptive buying has become a conventional weapon of true economic warfare.

Quotas and licenses :

Quotas are a quantity control on imported goods. Generally, they are specific provisions limiting the amount of foreign products imported in order to protect local forms and to conserve foreign currency.

When a government wishes to impose a more direct control over imports it may use the quota system. By this it may fix a quota on each country separately or it may establish an overall global quota.

The purpose may be to protect domestic producers or to make sure that imports do not exceed exports. The use of quotas in export trade is limited to wartime, when it reduces the amount of goods, which a neutral may buy to transship to an enemy of the exporting state.

Quantitative restrictions or quotas are barrier to imports. They set absolute limits on the amount of goods that may enter the country. A firm has less flexibility in responding to it. Price or product modifications will not get around quotas the way they might get around tariffs.

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The government's goal in establishing quotas is not revenue, but the conservation of scarce foreign exchange and/or the protection of local production in affected product lines. A firm in response to quotas can assure itself a share of the quota or setup local production.

International Quota Agreements seek to prevent fall in commodity prices by regulating their supply. Under the quota agreement, export quota are determined and allocated to participating countries according to some mutually agreed form and they undertake to restrict the export or production by a certain percentage of the basic quota as decided by the central committee. Example-Coffee Agreement among the major producers of Latin America and Africa limits the amount that can be exported by each country. Quota agreements have already been tried in the case of coffee and sugar and are likely to be formed in commodities like tea and bananas.

A more rigid control over imports is attained by the licensing system, wherein, each new importation of goods requires a separate license and thus the government can effect a continuous limitation as per the nations economic position. As quota and licensing system give more control on free flow of trade than tariffs, they are more likely to invite retaliation.

The United States uses the quota system in a limited but important way. In consequence of the Great Depression, U.S. wants to protect its producers against imports from lower-producing-cost countries.

A quota has to be distinguished from an international commodity agreement, which is multilateral understanding to curtail ruinous competition among the producers of basic commodities and ensure that all participating countries receive a fair share of the worlds market.

Loans and grants :

Loans and gifts, in a wide range of names and forms, have been in practice from many centuries ago, and have become everyday occurrences in the modern world. Deals might be of various forms from being the purchase of military assistance to being gifts as disaster relief. States may also support

international economic agencies and programmes for the purpose of advancing national interests, such as, the United Nations Expanded Program of Technical Assistance, the International Bank of Reconstruction and Development, the International Monetary Fund, the Organisation for Economic Cooperation and Development.

Counter trade and barter agreements :

Counter trade has covered a significant volume of international trade. Counter trade refers to a variety of unconventional trade practices related

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to exchange of goods, directly or indirectly, in an attempt to dispense with currency transactions. Counter trade takes several forms, such as,

Barter - refers to direct exchange of goods of equal value, with no money and no third party involved in it.

Buy back - under this agreement the supplier of the plant, equipment or technology agrees to purchase goods manufactured with that equipment or technology. Under the buy back agreement, the full payment may be made in kind or a part may be made in kind and balance in cash.

Compensation deal - under this agreement the seller receives a part of the payment in cash and the rest in products.

Counter purchase - the seller receives the full payment in cash but agrees to spend an equal amount of money in that country within a specified period.

For political as well as for economic reasons, states enter into barter agreements whereby they commit themselves to exchange certain goods in stipulated quantities or of stipulated value. Examples: The rice - rubber deals between Communist China and Ceylon, the Soviet agreement with Burma to accept rice in exchange for products Burma needed.

Counter trade was very common between the communist countries. It became popular in the East-West trade mainly due to the foreign exchange problems faced by the East block. When the foreign exchange problem became more severe for the developing countries, due to oil price hikes, they started using counter agreements extensively so as to increase their exports by all means. Many companies in the developed countries have resorted to counter trade for various reasons like selling obsolete products, increasing the sale of capital goods, increasing the total sales.

Although counter trade has several justifications, particularly in the short run, it suffers from a number of disadvantages and problems, particularly in the long run. Although several developing countries regard counter trade as easy route to exports, they often stand to lose in terms of price. It adversely affects, competition and export market development. Counter trade encourages bilateralism at the expense of multilateralism.

Exchange Controls:

The supply of foreign exchange being not equal to the demand, the country establishes a rationing system. The government or designated central authority, receives the foreign exchange, which is due on the country's export, and it sells to importers the needed foreign exchange. Trade is affected by increasing or decreasing the buying and selling rates of the currencies.

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In addition to controlling trade and making a profit for the government, exchange controls may serve to prevent the flight of capital from a country, to maintain overvalued currencies and to protect domestic programmes by safeguarding the national economy. Financial regulations can also function to restrict international trade. These restrictive monetary policies are designed to control capital flow so that currencies can be defended or imports controlled.

Exchange controls limit the amount of the currency that can be taken abroad. Exchange controls also limit the length of time and amount of money an exporter can hold for the goods sold.

State Trading

State trading is a highly restrictive practice used by most governments on occasions and with a limited number of commodities. In this, the government itself becomes a direct participant in trade. In Communist countries state trading is more than a device, it is the basic pattern of the international

trading activities. The degree of government involvement in trade varies from passive to active. The types of participation include administrative guidance, state trading and subsidies.

Administrative Guidance: Many governments routinely provide trade consultation to private companies. To get private firms to conform to the Japanese government's guidance, the government uses a carrot-and-stick approach by exerting the prohibition.

Government Procurement and State Trading: State trading is the ultimate in government participation, because the government itself is now the customer or buyer who determines what, when, where, how and how much to buy.

Subsidies: Subsidies are payment made to encourage production at home or sales aboard. Subsidies may lead to dumping. According to GATT, "subsidy is a financial contribution provided directly or indirectly by a government and which confers a benefit." Subsidies can take many forms - including cash, interest rate, value-added tax, corporate income tax, sales tax, freight, insurance and infrastructure. Subsidised loans for priority sectors, preferential rediscount rates, and budgetary subsidies are among the various subsidy policies of several Asian countries.

There are several other kinds of subsidies that are not so obvious. Brazil's rebates of the various taxes, coupled with other forms of assistance, can be viewed as subsidies. Tennessee, Ohio, Michigan, and Illinois, in order to attract foreign automakers to locate their plants in those states, provided such services as highway construction, training of workers and tax breaks, which are simply subsidies in disguise. The

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General Agreement on Tariffs and Trade recognises that government subsidies distort the competitive forces at work in international trade.

Customs and entry procedures :

Customs and entry procedures can be employed as non-tariff barriers. These restrictions involve classification, valuation, documentation, license, inspection, health and safety regulations.

Blacklists:

Countries forbid their nationals to have commercial relations with certain other corporations and business units, which are in their blacklists. These blacklists generally are applied to private concerns and persons and not to states as such.

The Arab League has long maintained a blacklist of foreign firms, which have any economic dealings with Israel. United States has made rather ineffectual effort to discourage trade with Castro regime by maintaining a blacklist of foreign shipping firms, which are engaged in trade with Cuba.

Valorization:

It refers to action taken by a government to raise the price of a commodity, "above a level regarded as uneconomically low but not above, the price that would in the long run be set by free competition". When demand is less or there is bumper production, valorization is resorted to as a temporary measure, but in this the government itself gets no direct profit. Valorization in the past has been in Brazilian coffee, Ecuadorian cocoa, British rubber, Cuban sugar and Egyptian cotton. But nowadays instead of valorization, more effective multilateral intergovernmental commodity agreements are resorted to.

Embargoes and Boycotts:

The embargo may prohibit the shipment of all goods to a particular country or group of countries and the boycott, which is the opposite of the embargo, may be used to stop imports. Both embargo and boycott may be unofficial or official, that is, they may be imposed by private groups or by governments.

New economic instruments get formed up every now and then with the resourceful thinking of the governments. It is always difficult for governments to hold the interests of world community over its obligations to its own people. Yet, in recent times, it has been widely accepted that the well being of the whole world requires vigorous action be taken to reduce the barriers to world trade and finance.

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5. IDEOLOGIES AND PROMOTION OF NATIONAL INTEREST

Role of ideologies

Imperialism, colonialism, nationalism

Motives of imperialism

In controlling international relations, the national power any country is able to exert is most important. For in the view of "realists", all nations are driven by an interest to enlarge their territory and enhance their prestige and that only military power in the hands of other nations restrains them.

Role of ideologies:

"An ideology is a system of abstract ideas held by an individual which purports to explain reality, expresses value goals and contains programmes of action for the retention or attainment of the kind of social order in which its proponents believe the goals can best be realised" - Charles P. Scheicher. Viewed in this sense all ideas like liberalism, nationalism, socialism, communism, fascism etc., can be described as ideology.

In modern times lot of attention has been given to ideology. The rise of communism in Russia, Facisim in Italy and National Socialism in Germany and their subsequent spread to other countries has exercised significant influence on the foreign policies of these states. Ideology has become more important with the growing influence of the masses on decision-making. Modern states try to shape opinion in support of their policies. Ideologies in the view of certain scholars are "cluster of ideas about life, society or government which originate in most cases as consciously advocated or dogmatically asserted social, political or religious slogans which through continuous usage gradually become the characteristic beliefs or dogmas of a particular group, party or nationality".

Ideology plays an important part in the international politics in so far as it provides justification and nationalisation to any policy of a society. In fact, it performs a dual function in the international politics. Either it provides goals for political actions or it conceals all manifestations of a struggle for power.

Conflicting ideologies must be admitted into our considerations and resolved, otherwise conflicting ideas would generate misunderstanding and war in the place of peace and understanding.

Ideologies may be used to justify human behaviour while concealing the ulterior motives behind it. In spite of its limitations, ideological affinity

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between individuals and groups is conducive to cooperative relation. Ideology has both cooperative and oppositional role. Whereas a common ideology among a number of states may tend to unite them, the states professing different ideologies may not be able to get along and may work in opposite directions. Ideologies may divide or integrate people

Profs. Palmer and Perkins hold, "Ideologies are essentially irrational. They have a considerable emotional content. They can be used to obscure the real facts of a situation or the real motives of ambitious leader. They can be appealed to by extremists and thus can make reasonable approaches and compromises difficult or even impossible. They frustrate efforts to find areas of agreement. They make it hard to deal with international problems without undue sacrifice of national honour or prestige. They turn international conferences into propaganda forums instead of opportunities for the accommodations of diplomacy. When strongly held ideologies come into conflict with other strongly held ideologies, international crises are bound to happen and solutions are bound to be even more elusive. The significance of ideologies in world politics today lies in the fact that in some instances they have become linked to national power. Just as power became the instrument of ambitious nationalism, it has now become the tool of ideologies".

Though, the western world ideological factors continue to shape national, international politics, popular attitudes and reactions, it is now widely felt that ideology is becoming less significant in the present world politics. The end of ideology may not be at hand but at present the relevance of different ideologies is on the decline.

Imperialism:

The control or rule by a country over -the political and economic life of another country outside its borders is called imperialism. This extending of power over another country might be through military or other means. This term also means that one country acquires control over another country and makes it dependent on it. Imperialism aims to promote industrial, trade and investment opportunities, by the advocation of government power and diplomacy, to acquire territories, protectorates and/or spheres of influence, occupied usually by other races or people.

Imperialism extends, directly or indirectly, of the alien political, economic or cultural power of one nation into the internal life of another people. It involves the imposition of control, open or covert, direct or indirect, of one people by another. Imperialism may be with or without high regard for the welfare of the inhabitants of the occupied area, it may be developmental or exploitative, and it may promote the capacity for self-government or ruthlessly suppress all impulses in that direction.

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Imperialism, like the tariff or propaganda, is an instrument of the state, available for good purposes or bad. Foreign trade and foreign investments are everywhere, and some aspects of the cultures of many states find their way into many other states. All these exert some influence. But this alone does not constitute imperialism. The test for imperialism, is that, it must center on the freedom of the influenced people to muddle in their own way through their own problems, economic and cultural process included. Imperialism pertains to a relationship in which one area and its people are subordinate to another area and its government. Thus, imperialism, in essence, always involves subordination, it is a power relationship.

Imperialism and Colonialism: The policy of imperialism adopted by European countries from 1492 to 1763 is known as Colonialism. During this period England, France, Spain and Portugal established colonies in the American and Asian countries. The European countries were involved in a number of wars and unification movements from 1763 to 1870. Germany and Italy became unified countries by 1870.

After 1870, all the European countries including Germany, Italy and Belgium began to establish their political and economic power in Africa and Asia. This policy of imperialism followed by European countries from 1870 to 1945 is known as New Imperialism. The USA and Japan also adopted imperialist policy during this period. The European countries and Japan had certain methods to establish their imperialist power over other countries, (i) One method was by military conquest. By this method England conquered many parts of India and Burma. Japan conquered Manchuria in China in 1931. (ii) Another method was by establishing 'protectorates'. Almost all European countries negotiated with the African chiefs and concluded treaties and thus obtained vast territories in Africa which were later exploited by them, (iii) Yet another method was by establishing 'spheres of influence'. This method was adopted by European countries in China.

Imperialism and Nationalism: Imperialism is almost universally charged to nationalism. Nationalism, created the desire to make great in power their state and to add to its prestige which made men into carrying their flag, their culture, their language and their institutions into every power weak on earth. Their governments justified and defended the economic ventures of their nationals in foreign lands. Thus, nationalism, defended materialism with much sought after idealism and the concept of the 'white mans burden" with humanitarism and uplift of the 'little brown brothers'. Materialism with its 'economic necessity' advanced the national arguments of surplus outlets for capital and bursting overproduction.

Paradoxical as it may seem, pure nationalism has forced governments into the path of imperialism. Free education and enfranchisement, i.e.,

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give political rights to, especially the right to vote at parliamentary elections, brought the 'rank and file' of the British public into the 'political arena' where, 'colonial adventure and far-away conflict satisfied the carving for excitement'. The upper crust of the working class was easily converted to the teaching of imperialism and took pride in the extension of empire.

Motives of imperialism:

Many conditions existed in the world in the nineteenth century, which favoured the growth of imperialism. The imperialist countries took full advantage of these conditions and easily justified their conquests. The leading motives appear to have been the following:

Search for new markets and industrial revolution: Industrial revolution in European countries resulted in a very great increase in the production of goods. The concept of "Capitalism" strongly emerged, where in, maximum profit and payment of minimum wages was practiced. The increase in production was not followed by increase in demand in the domestic market. Payment of low wages meant less purchasing power. So the capitalist countries in Europe, had to find new markets for their finished products. Moreover all the European nations began to follow the protective trade policy.

European countries searched for markets in Asian and African countries, where industrial revolution had not taken place. If these countries were politically dominated then it was easier to unload the excess production in these markets. The foreign goods were cheaper than the handmade articles of the natives, which were ultimately eliminated.

Demand for raw materials and the improvements in transport and communication: With the increase in the mechanisation of production there was scarcity for raw materials in the European countries. This led to colonizing many countries in Asia and Africa mainly for raw materials.

With the discovery of steam ships, finished goods and raw materials, could be carried quicker from one country to another. In the colonies, the imperialist countries built roads and railways and developed water transport also. So it was easier to bring raw materials and send finished goods to the markets in the interior parts of the colonies in Asia and Africa.

Economic Gains: All the above mentioned factors, the conquest for the sake of loot, quest for competition, free markets, sources of raw material, the search for new fields of investment of imperial powers are some of the leading motives which brought in spread of imperialism.

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National Prestige: Many believed that a state must achieve its "place in the sun". Generations of English men gloried in the boast that "the sun never sets on the British Empire". English workers of the nineteenth century at times preferred to speak of "the Empire on which the sun never sets and wages never rise". The taproot of French imperialism in the Far East from first to last was national pride - pride of culture, reputation, prestige and influence.

Besides the economic urge, psychological motives played a great role in imperialism. The lust for adventure and for power, the added prestige and glory which seemed to accrue from a vast colonial empire not only to the governing classes but even to the masses of the colonizing nations, the new sentiment of pride and superiority which animated even the lowest members of the white races in their dealings with the backward races.

Thus the later part of the nineteenth century saw extreme nationalistic ideals in Europe. Many nations developed pride over their race, culture and language and started feeling superior to other countries. They felt that acquisition of colonies would enhance the prestige of their nations. imperialism became the fashion of the age.

The white man's Burden: Many Europeans considered the Asian and African countries very backward and uncivilized. They felt that it was their duty to civilize these people whom they considered to be inferior races. They believed that their state had a moral obligation to carry the blessings of their own religion and civilisation to backward people. The white man believed to have a duty to uplift his less fortunate brothers, usually the yellow man in Asia or the black man in Africa. They talked a great deal about roads, medicine, schools, trade and self-government.

The Christian Missionaries dedicated themselves to the spread of Christianity. These missionaries were followed by traders and soldiers, started believing that "God has made us adept in government that may administer government among savage and servile people".

National Defence: Some of the imperialist countries of Europe acquired some colonies for their military or strategic importance. England took over Port Said, Aden, Hong Kong and Singapore to protect her conquered lands and her trade routes. The manpower of the colonies was used in army to fight against other nations. The manpower of the colonies was also used for work in plantations, mines and factories. The colonies became the places of strategic importance. During World War I, France drew nearly 500,000 troops and more than 200,000 labourers from her colonies, while England drew nearly 400,000 troops from India. During World War II casualties among British colonials exceeded 200,000.

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The Explores/Adventurers and the conditions in Asia and Africa: The explorers/adventurers brought out reports of abundance of natural wealth in the countries of Africa and Asia, The explorers brought Africa (dark continent), into limelight for colonization.

Most of the Asian and African countries were undeveloped and backward. Industrial revolution had not spread to these countries. The hand made goods were of fine quality but were costly and scarce in quantity. The political condition was weak. The kings were weak and they did not care for their subjects. Cheap labour and abundance of natural wealth attracted colonization of these nations.

Colonialism today: The assault on colonialism reached a climax in 1960, when 17 new members were admitted and when the General Assembly passed a historic Declaration on the Granting of Independence to Colonial Countries and Peoples. A special committee for the implementation of the declaration was created. Soon known as the Committee of 24, it has become the General Assembly's "overseer of decolonisation". Although the majority of the original members of the UN came from the

western world more than one-half of its members today are states that have attained independence since the end of World War II.

Though, the colonial age is over, the colonial hangover continues. Vast areas of Asia and Africa are charging most of their woes to the colonialism of the once-great colonial powers and to so-called neo colonialism in its various forms. The 'neo-colonialist' argument is that the imperialists, though surrendering political power, retain real control by economic, military or cultural means or by a combination of all three. Trade and aid' which may look to be benefiting the new nation, becomes a veil to the benefit of exploiters.

The United Nations has been a main forum for the continuing struggle against colonialism in all its manifestations. Organs and agencies of the UN have enormously reduced the territorial limits of imperialism and the harshness of imperialist practices, bringing to be over the great ages of imperialism.

The world today is out of imperialism and colonization. What is gaining strength is the democratic form of government. At the close of the 20th century it is clear that there is no alternative to liberal democracy. A variety of other forms of governance claiming to be superior versions of democracy have come to grief. Even in the Islamic world there are stirrings in favour of liberal democracy. US has taken the initiative of creating a global community of democracies and as one of the oldest democracies outside the western world, India's participation in this forum is of importance to Washington.

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6. BALANCE OF POWER

Characteristics

Devices for maintaining the balance of power

Bipolar or multipolar world

Today's world order: Multipolarity - vision and reality

Economists lay importance on interdependence of nations and legalists talk in terms of the rights and duties fixed by international law. Saying that national power is important for the security of a nation does not imply that all nations are aggressive and predatory. It only stresses on the point that nations must be strong because there might be times when certain nations might go against all controls and in those situations, only the national power can be the defence available. National power can be used for peacemaking as well as for war making and many a times it has proved to be the only effective instrument for halting aggression.

The nature of balance of power provides the most general explanation, though other factors also have had an influence, for the oscillation of peace and war in Europe in the twentieth century. Applied to a world of sovereign nations, the concept of balance of power assumes that through shifting alliances and countervailing pressures, no one power or combination of powers will be allowed to grow so strong as to threaten the security of the other nations.

It is spoken about as maintaining a certain amount of stability in international relations that under favourable conditions is produced by an alliance of nations or by other devices. The balance of power may be described in a number of ways. In his "Politics Among Nations", Professor Hans J.Morgenthau has stated that he would use the term in four different senses:(i)as a policy aimed at a certain state of affairs, (ii)as an actual state of affairs(iii)as an approximately equal distribution of power(iv)as any distribution of power. Balance of power is of universal application wherever a number of sovereign and armed nations co-exist.

Characteristics of Balance of power

First, the term itself suggests 'equilibrium', that is 'balance' is what is aimed at in the international relations status of the world. But it is a known fact that it is subject to constant, ceaseless change to shifting political patterns and power relationships, that only disequilibrium exists.

Second, in practice balance of power systems have proved to be temporary and unstable. That is, it is ever subject to changes. Due regard must be given for the forces making the change.

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Third, balance of power is achieved by the active intervention of man. Nations have to strive towards reserving a balance against the hegemonic power of the period. In this sense, it deals with a diplomatic contrivance and not with a matter of historical causation.

Fourth, it is difficult for a nation to tell when a balance of power has been achieved. The only real test, presumably, is that of war, and resorting to war not only upsets the balance, but also creates a situation which a balance of power policy is designed to prevent.

Fifth, the balance of power has generally tended to favour the status quo, but a policy which disregards the forces making for change would eventually fail. To be effective, a balance of power policy must be changing and dynamic.

Sixth, it offers both an objective and a subjective approach. A historian takes the objective view, and says that balance of power exists when opposing groups seem to be equal in power. The statesman takes a subjective view, and says that there is balance when he thinks that his side is stronger than the other. He says his country holds the balance, when it has the freedom to join one side or the other according to its own interests.

Seventh, the balance of power has not been primarily a device for preserving the peace. It had served as a major factor in preserving peace, but it has also tended to increase tensions between nations and to precipitate wars. The primary purpose of the balance of power is to maintain the independence of states and not to preserve the peace. But it so happens that the first objective cannot be achieved without the second.

Eighth, the balance of power game is obviously one for the great states. The small ones although concerned about the outcome, are more often victims or at the best, spectators. Collectively they might exert pressure upon even the most powerful states. Individually they may be important factors in regional balances and may try to maintain their independence to improve their bargaining positions. Nepal for example, maintains a kind of balance of power policy against its giant neighbours, India and Communist China.

Ninth, some argue that balance of power is largely inoperative under present conditions. It was more pronounced when confined to the European state system. They say that the nuclear and space age has relegated balance of power techniques to diplomatic history. But the fact is that, the balance of power game continues to be played, with nation-states as the chief actors. New forces and patterns are developing, though still in their formative stages.

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Devices for maintaining the Balance of Power

The balance of power is an uncertain regulator, for it creates an equilibrium that is at best temporary and improvised. Various techniques and devices have been developed towards reaching it.

Alliances and Counter-Alliances. These have been the most commonly employed devices. When one nation threatens the balance, the other nations form coalitions to curb the power of the overly ambitious nation. Ad hoc or temporary alliances of a constantly shifting character have been standard practices in modern European history.

Alliances are often looked at as offensive or defensive alliance. An offensive alliance seeks to upset the balance in favour of its members and defensive alliance aims at restoring the balance in favour of the nations making up the alliance.

Balance of power considerations in the national policy may be the world balance or it may be a strictly regional balance. The balance of power considerations whether regional, hemispheric or worldwide, are a controlling factor in virtually every alliance of nations.

To be effective, (i) alliance should have power enough to achieve the purpose for which it was formed, and (ii) there should be a common fundamental interest between or among the allying states. Other factors, such as strategy, geography, common ideologies, cultural similarities and complementary economy help to make alliances relatively stable, but they are not prerequisites for a temporary purpose.

Some people have perceived that alliances tend to promote wars. It is true to the extent that successful offensive alliances bring wars. These alliances are usually to be condemned but purely defensive alliances are quite another matter. But it is not always easy to say whether an alliance is offensive or defensive since an alliance is open to the most divergent interpretations. Every alliance is defensive from the point of view of those nations which participate in it, and aggressive from the point of view of those nations which are opposed to it.

Compensations. This entails the annexation or division of territory. Territorial compensations have frequently been made by strong powers at the expense of weaker ones, and almost invariably by victor

nations at the end of a war. For example, Poland was partitioned three times, in 1772, 1793 and 1795 to maintain balance of power.

Armament and disarmament. All nations more so the major powers, place great emphasis on military preparedness. This policy leads to armament race, intensifies rivalries among the major powers and to an even more dangerous and uncertain state of affairs. Armaments race is

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intensified by the improvements in weapons and methods of warfare. Theoretically, a more stable balance of power could be created by ending armaments races and by proportionate reduction of armaments by rival powers.

Various kinds of disarmament have been proposed from time to time — quantitative and qualitative disarmament, arms-building holidays, revision of the rules of war, even moral disarmament but the results of all of these well-intentioned efforts have been disappointing. The problem of disarmament, in essence, is the problem of maintenance of the balance of power.

Intervention and Non-intervention. Countries in the position of 'balancer' have employed these devices. Most often Great Britain's intervention ranged from slight deviations from neutrality to full scale military participation in a major war. Non intervention is usually followed by small nations and those great powers which are satisfied with the political order and can follow peaceful methods to preserve the balance.

It is sometimes remarked that non-intervention is a political term meaning virtually the same thing as intervention. Non intervention also suggests neutrality to the extent that such a policy is possible. It is particularly insisted upon by small nations seeking means of protection or even survival in a world dominated by great powers.

Intervention is quite different from acquisition of territory. Through this method a major nation tries to regain a lost ally or pick up a mew ally by interfering in the internal affairs of a smaller country and maintaining a friendly government there. Britain interfered in Greece to ensure that Greece did not fall under the influence of the Communists. USA intervened in Guatemala, Cuba, Lebanon and Laos to

promote its interests. USSR did likewise in Korea, Hungary and Czechoslovakia. Even India intervened in Bangladesh on account of flight of large number of refugees from that country to India.

Buffer States. Without buffer zones and neutral areas the rival powers being in direct contact with each other in a bipolar world situation would make balance of power situation precarious. Buffer States are of great importance because of their cushioning effect between great powers; they may be neutralized nations, or dependent territories or they may be actively associated with one of the two or more aggregations of power in a relatively honorable role.

Afghanistan served as a buffer state between Russia and the British Empire in India. Poland served as a buffer state between Germany and Russia, while Belgium and Holland served as buffer states between France and Germany.

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One of the most important buffer zones in the world is that which separates the Soviet Union from the major non-communist powers. If Russia should break through one of the weak points in the buffer zone -through the straits to Mediterranean, through Iran to the Persian Gulf and the Indian Ocean, through Afghanistan to the Indian sub-continent, through Manchuria and Korea to the China Seas and the Pacific - if any one of these developments, which are impossible during peacetime but highly probable in the event of war, should occur, it would turn out to be a great threat to the balance of power.

A bipolar or multipolar world

Balance of power policies have tendered toward the polarization of power, usually around the strongest member of rival alliances or groupings. It is a known fact that in the years following World War II nations tended to associate either with Soviet Union or the United States thus creating a bipolarity of power. This bipolarity was made even more dangerous by (i) the absence of other power centers, (ii) by the ideological differences between communist and democratic systems and (iii) by the growing nuclear weapons which each of the superpowers was accumulating.

Once bipolarity exists, it tends to become rigid as well as unstable. It becomes difficult to have a peaceful transition to a complex balance involving many nations. One of the great questions of our day is whether other centres of power will arise in the world in time to transform the bipolar balance of the present into a multiple balance in the future, without resort to war. By and by, multipolarity is setting in. In the formerly strong Communist block now there tends to be power concentration around Moscow

and Peking. Eastern Europe is showing signs of more independent nations in defiance of the Soviet Union. Yugoslavia has been a nonaligned communist state for some years. Albania has identified herself with Communist China against the Soviet Union and Rumania is trying to develop independent links with the non-Communist world and is openly demanding a relaxation of soviet controls over COMECON and the Warsaw pact.

The countries of Western Europe are working out new and more independent patterns of relationships with both the United States and the USSR. The United States is still the dominant member of the NATO alliance, but other members are demanding a larger role and a greater voice in decision-making on vital issues.

Among the Asian countries, today communist China, independent India and Japan, while not great powers, play major roles in international politics. Indonesia, Pakistan, the United Arab Emirates and Turkey are not without influence.

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The 35 independent African States though are too weak to exert much influence, are to the extent that they can cooperate on matters of common interest, especially through the organisation of African Unity and the Asian-African Group in the United Nations, are definitely factors in the existing world balance of power. These nations along with those of Latin America comprise a Third World that is contributing to the evolution of a complex balance of power. A complex balance of power as exists in a multipolar system is generally regarded as more conducive to international stability and peace than a bipolar balance.

Today's world order : Multipolarity-vision and reality

With the end of the Cold War, and the disintegration of the erstwhile Soviet Union, the bipolar order of the world came to an end. The world now finds the U.S. alone has a greater power. Hence there lies in the minds of the world leaders that more power centres should get acknowledged over the world such that there comes to exist a multipolar world. Is this visioning on multipolarity, actually a reality? If so, what developments are leading to this state?

The Russian President, Mr. Vladimir Putin, first joined the Chinese leader, Mr. Jiang Zemin, to voice the need for a new global order, namely multipolarity. He reiterated the same, co-opting with India, to emphasis the imperative need of a future multipolar political system. But question now is, is it truly

realistic in scope, though considered necessary in principle to bring down the present unipolar order of, the dominance of the U.S.

Whether or not the U.S., insists on exerting totalitarian powers on the international stage, it is arguably an undemocratic trend in global politics. It is a law of nature in global politics that the weaker states, whatever be the reasons for their conditions, resent the strength and dynamism of the more powerful ones. However, who is to be blamed for the current state of affairs, the U.S. or the other powers, that is, the major and medium states, collectively.

Mr. Putin has hinted at multipolarity being of help to gaining -international security architecture. Mr. Putin's view is that, Russia and China as also India can, over a period of time, hope to contribute to the emergence of a multipolar world. Yet has not discounted the role of, the other Asian states such as Japan in particular and the European powers in fabricating a new multipolar system.

The U.S dominates today's global security architecture. To counter act the, moves of China (the red dragon rising), U.S. continues to have overwhelming military presence in East Asia, substantively endorsed by post-imperial Japan as Washington's political friend.

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Even after having won the cold war, the U.S. in alliance with the European Union (U.S. being the major power in this transatlantic reality) is geared to keeping a possibly resurgent Russia of the future on a leash. Thus, the U.S. and not its allies is the central character in containing both China and Russia.

The U.S. present policy can be seen as 'containment-plus' a phrase not used by Washington though. The former U.S. President, Mr. Ronald Reagon steered the U.S. towards victory in the Cold War, his successor Mr. George Bush, was not clear in his view and it was left to Mr. Bill Clinton to define the substance of containment - plus, as seen by those opposed to unipolarity. The present policy of the U.S. is a dual policy of "engagement and enlargement" parleying with the countries varyingly opposed to the US's supremacy in world affairs and expanding Washington's influence through the power of ideas such as free markets.

To judge on the reality of multipolarity, it is to be seen whether the motive-forces of state-actors gets changed/altered in the international theatre of competition. For instance, bipolarity came to existence

in the wake of World War II, with the spread of fear of the West on the spread of an "Iron Curtain" across the Soviet Union. From the mid 1940's bipolarity was a competition between these two separate strategic clusters of countries. The strategic contiguity of an "Iron Curtain" and a "Bamboo Curtain" encompassed China, too, until the Sino-Soviet ideological rift of the 1960s and 1970s.

Bipolarity gave room for non-alignment, but non-alignment did not really break the mould of bipolarity. What really began to distort bipolarity was the strategic overture to China by the U.S. at the beginning of the 1970s in the context of Beijing's enduring rift with a post Khrushchev Soviet Union.

Prior to bipolarity, the then Euro-centric world had known a form of multipolarity in the context of the historical rivalries among the European nations namely Great Britain, France and Germany. The conventional wisdom today is that the latest calls by Russia as also India and China cannot be welcomed by the U.S. So it must be found out whether this latest idea of multipolarity can be suitably packaged so that the U.S. can see it an aspect of genuine competition among sovereign states.

While an ideal multipolar world may be impossible to visualize or accomplish, the unanswered question relates to the number of possible poles of power. One way of delineating a new multipolar world is to treat the existing permanent members of the UN Security Council (P-5) as powers independent of each others even if not necessarily hostile to one another. Here again, it is now the European Union rather than the U.K. -France dichotomy, which is the more important power in question.

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Hence, it would be better to treat the P-5 and the potential members of an expandable Security Council as the nodal power centres in a future multipolar world. This will include Japan, Germany, India and one or two others from Africa and Latin America. But, would leave out some existing and potential members of the G-7 club of the rich. Although ignored in this will be the Islamic bloc and Israel.

In the multipolar world envisaged, new international coalitions of interests must be considered for e.g., the coalition that is geared to fighting transnational terrorism and drug trafficking. A conceivably expanded Nuclear Club can also be a new multipolar configuration. In fact, multipolarity may be spawned inadvertently by the U.S. if it decides to build a national missile defence shield without mollifying Moscow under Mr. Putin.

Towards multipolar world : Shanghai five that groups China and four former Soviet republics - Russia, Kazakhstan, Kyrgyzstan and Tajikistan (which share a 4000 mile border with China) have pledged to join hands in building a multipolar world and fighting security threats to the region, at the two-day summit held at Bighkeh, capital of Kyrgyzstan, on 14th, July 1999. These countries stand in favour of multipolar world concept, primarily to counterbalance the U.S. influence in global affairs. Their view is that hegemony and the politics of force are on the rise, with new forms of so called neo-interventionism being revived.

Though the future is not predicted, for it would depend on various happenings on the face of the world, these above observations only hint at the multipolar world which might get developed over the years.

An Appraisal: With concepts of bipolar and multipolar pattern of power of modern times, the concept of balance of power has lost much of its validity. New forces like nationalism, industrialism, democracy, new techniques of warfare, the growing importance of public opinion, development of international organisations and international law, growing economic interdependence of nations, the shrinking world into global village, the advent of nuclear and space age, all have made the balance of power a too difficult a policy.

Yet it is an important concept in international politics. As long as the nation-state system is the prevailing pattern of international society, balance of power politics will be followed in practice.

If effective international grouping on a regional or world level are formed then tendencies towards war may be counter acted and it might contribute to "just equilibrium" which has always been the aim of such collective security efforts.

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7. COLLECTIVE SECURITY AND PEACEFUL SETTLEMENT

Nature of collective security

Methods of pacific settlement

The future trend

Collective security is the united strength of a group of nations who are determined to keep the peace and who confront the would-be aggressors. It involves a commitment to go to war if necessary. Immediate peace is affected but it is assumed that future peace will be more secure. Peaceful settlement of disputes aims at prevention of war by the use of noncoercive, nonviolent procedures. But both the approaches are thought to go hand in hand and have been resorted to, to gain peace. By and by, it has come to be commonly accepted that collective security and peaceful settlement are the most promising approaches to peace. The machinery of collective security has not been satisfactorily developed but techniques for peaceful settlement have been well developed and are available for all who would use them.

Nature of collective security

After World War II more is the awareness and insistence on developing collective security. There had been recurrent movement toward and away from translation of the collective security principle into a working system.

The concept of collective security in reality is a complex one. Collective Security implies collective measures of dealing with threats to peace. It is machinery for joint action in order to prevent or counter any attack against an established international order. It implies far-reaching commitments and obligations on the part of the majority of the states of the world, including all or at least many of the great powers.

When nations form international organisations and really cooperate to preserve peace, then there will not be any need for alliances, shady territorial deals, burdensome armaments, political manipulations, instability or war, which are all charged to be inherent in the balance of power system. Collective Security is often looked upon as a pattern of international relations, which is able to dispense with the balance of power, and thereby work towards peaceful coexistence. But we observe that even to reach collective security, efforts are certain to be associated with balance of power policies and cannot operate unless a foundation of power politics exists. Three outstanding examples of systems of collective security of modern times have been the concert of Europe, the League of Nations and the United Nations.

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The Concert of Europe was a loose relationship among the major European powers which came into being soon after the Napoleonic wars and lasted until World War I. It was most successful in dealing with the Balkan area. But the rise of Germany and division of Europe into two armed camps disintegrated the concert.

The League of Nations (1918) functioned haltingly, even in minor political disputes and proved to be impotent in the face of aggression by powerful states. With the worldwide depression of 1930s, the rise of Hitler to power in Germany and Japan's invasion of Manchuria in 1931, the inadequacy of the League became painfully evident.

The United Nations, was framed by leaders taking into account the lessons learned by the League of Nations during the acts of depression, aggression and global war. It was launched with high expectations on the part of its founders.

The system of collective security has been subjected to severe criticism. The cold war between the West and the East made the collective security system less effective and unworkable. In collective security small states should have greater say because they depend more on collective security than their own forces. The big powers on the other hand are normally reluctant to put their power behind an effort that does not confirm to their national interests. Collective security fails to work effectively in cases where big powers are involved

Collective security and Regional arrangements: A collective security system, to be effective must be strong enough to cope with aggression from any power or combination of powers, and it must be invoked if and as aggression occurs. It will never work unless all the nations that are part in it are prepared simultaneously to threaten with sanctions and to fight, if necessary, an aggressor.

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Such arrangements are generally not sufficiently binding in character and do not represent such an aggregation of military strength that they can deal with any other power or combination of powers. The NATO possesses adequate might, but here also the members do not voluntarily assume more binding obligations. Regional arrangements could conceivably be an important part of a broader collective security system.

Collective security and Disarmament: These two have been regarded so far, as separate approaches to the problem of war and peace. But if substantial reduction of armaments could be achieved, it would make the task of developing a collective security system a simpler and more feasible one. If the nuclear race continues, then the hope and prospect of effective collective security will be lost.

Collective Security and the UN: The founders of the United Nations have incorporated elaborate provisions for both approaches into the Charter. Chapter VI (Articles 33 - 38) deals with the peaceful settlements of disputes and Chapter VII (Articles 39-51) deals with action in respect to threats to peace, breaches of peace and acts of aggression

The UN itself is the most important agency for collective security and peaceful settlement. But even though it takes all possible measures to maintain international peace and security there is no unanimity of opinion among its members on the relative emphasis that should be placed on particular means or on relative priorities.

Some member states of the UN and many organisations and individuals in most nations, believe that the emphasis should be more on peaceful settlement. If UN is to strengthen its effect in the field of negotiation and peaceful settlement it should lay emphasis on collective measures to deal with acts of aggression and other threats to the peace.

The price of the failure to provide collective security after World War I was World War II. The UN body especially the Security Council may call upon the member States to take any of a wide variety of non-military and if necessary military measures against an act of aggression or other threat to peace.

Article 43 provides that, "All members of the UN undertake to make available to the Security Council, on its call or in accordance with a special agreement, armed forces, assistance and facilities, necessary for the purpose of maintaining international peace and security.

The potentials of collective security under UN were for the first time put to test during the Korean case. The Security Council passed a resolution condemning the Korean attack and called for immediate cessation of hostilities and withdrawal of forces by North Korea. Failure to comply with the resolution prompted Security Council to set up United Command and requested the member states to provide military assistance. Sixteen states offered forces for the UN Command. This was a historic decision because for the first time organised community of nations employed armed forces against an aggressor.

To ensure that Soviet Union does not block any action similar to that taken in Korea, a Uniting for Peace Resolution was passed by which it was decided (i) if the Security council failed to take any action the General assembly can consider any situation threatening international peace and security, (ii) a Peace Observation Committee was constituted to observe and report the areas of international tension, (iii) it impressed on member states to keep special contingents ready to be made available to the UN

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promptly, (iv) it urged members to meet and discuss problems which were likely to threaten international peace and security. By this resolution the General Assembly became ultimate custodian of collective security.

In certain other cases also UN applied security measures though it did not .achieve much success. In the Suez canal case it succeeded in restoring peace and secured withdrawal of Israeli, British and French troops. In Congo the Peace Forces of UN restored peace. In Hungary, USSR was forced to respond to the strong protests of the UN. In 1990 collective security measures were taken against Iraq following annexation of Kuwait. As Iraq refused to comply with various resolutions of the UN, Security Council authorised use of necessary means, including force to drive out Iraqi troops. Thirty countries contributed troops, which liberated Kuwait after 42 days of war. The collective security measures in Iraq differed from Korea in so far as each country acted on its own and the Soviet did not use its veto power. However, in both cases US played a leading role.

Until the Korean crisis, which developed in 1950, the potentialities of the UN for collective action against aggression were largely untested. The Military Staff Committee was unable to bring under command, the forces which member states were expected to place at the disposal of the security Council. These forces were non-existent inspite of Article 43 There was strong reaffirmation of these obligations in the General., Assembly-Uniting for Peace Resolution of November 1950. Korea has become a tremendous spur to the UN efforts to build an effective system of collective security.

Under the Uniting for Peace Resolution, UN established a Peace Observation Committee of fourteen designated members including the Soviet Union. It recommended that the members fulfill their obligations under Article 43 of the Charter. It also established a Collective Measures Committee of fourteen members to study and report on methods which may be used to maintain and strengthen international peace and security

The Unity for Peace Resolution was a conscious effort to develop and implement the security provisions of the UN. Since its adoption more attention has been given to problems of implementation than ever before. The UN played a significant, if limited, role in several peacekeeping operations, including the stationing of UN forces along the borders of Israel and the varied and expensive operations in the Congo.

Methods of pacific settlement:

Peaceful settlement though closely related to collective security, it is based upon a different set of assumptions and procedures. It gives stress to negotiation, conciliation, arbitration and other amicable methods rather than

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sanctions and non - amicable procedures. Some landmarks in the evolution of the machinery for peaceful settlements are (i) the Hague conventions of 1899 and 1907 for pacific settlement of international disputes, (ii) the Inter-American arbitration and conciliation treaties drafted at the Washington Conference of 1929, (iii) the statute of the international court of justice.

The chief methods of pacific settlement are negotiation, conciliation, enquiry, mediation, arbitration, judicial settlement and regional arrangements. These devices can be divided as (i) those based on persuasion, with no binding force, and (ii) those, which have a binding character, such that the parties commit themselves in advance to accept the findings of a neutral board or court. Negotiation, good offices, enquiry, mediation and conciliation fall under the first category; arbitration and judicial settlement fall within the second. The object of the first category is to reach settlements based on mutual agreement of the parties, the objective of the procedures of the second category, is to reach, on the basis of international law, decisions binding on the parties.

Negotiation. Most disputes are settled through the normal channels of diplomacy, that is, negotiation. These efforts may be by meetings of foreign ministers or heads of states; by international conferences; through the UN or by a regional organisation. Negotiation is generally the first step that is resorted to whenever a dispute arises. If it fails then there arises a real threat to peace and security, for the devices of diplomacy tend to break down in crisis situations

Good offices and mediation. A third party is said to offer its good offices if it agrees to be of service in attempting to compose differences between two other states. If the offer is accepted by the disputing states, good offices may lead to mediation. In good offices the third party acts just as a 'go-between', whereas a mediator may make suggestions. In 1905 President Roosevelt tendered his good offices to Japan and Russia to end the Russia-Japanese War. The offer was accepted and he acted as a mediator in bringing about an agreement. In 1965 and 1966 Premier Kosygin of the Soviet Union expressed his willingness to offer his good offices to India and Pakistan and this led after the armed hostilities, in 1965, to the Tashkent Conference. The UN has also performed many useful services in the field of mediation

Small neutral powers, especially, Switzerland have often assisted in arranging terms of peace between belling rants through good officers or mediation. The UN Good Offices Committee for Indonesia and its successor the UN Commission for Ind6nesia performed notable service in helping to settle many disputes between Dutch government and the self proclaimed Indonesian Republic.

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Enquiry and Conciliation: A commission of enquiry investigates the facts of a dispute, but largely confines itself to a statement of the facts and a clarification of the issues. Its recommendations are not binding on the disputants. This technique was successfully employed in the Dogger Bank incident of 1904 when the Russian Baltic Fleet fired upon some British fishing vessels in the North Sea, sinking two of them.

Conciliation assumes an obligation on the part of third parties to take the initiative in the search for agreement. It may advance proposals, ask for compromise or concessions and actively seek to effect an understanding between the contending parties. Mediation is commonly performed by an individual and conciliation by a committee, commission or council.

Arbitration and Judicial Settlement: Arbitration is a judicial process whereas conciliation is an attempt at accommodation. Conciliation recommends, arbitration decides. Conciliation is friendly counsel, Arbitration is binding decree. Arbitration must keep to the letter of the law. Judicial Settlement or adjudication is in a sense a form of arbitration, one in which a permanent court is the arbitral tribunal. The Permanent the International Court of Justice made a real advance in the prospects for compulsory adjudication.

Pacific Settlement and the UN: The UN Charter commends the settlement of disputes not only by conventional methods and through normal channels of diplomacy but also by resort to regional agencies and arrangements. The Charter of all regional arrangements generally contain some provision for the pacific settlement of disputes among the participating states in the spirit of the United Nations Charter.

One of the major objectives of the UN is to bring about by peaceful means, in conforming with the principles of justice and international law, adjustment or settlement of international disputes or situation which may lead to breach of peace.

Collective security and peaceful settlement of international disputes are only two of the approaches to the problems of preventing war. Inspite of its obvious limitations and some failures, peaceful settlement has a rather encouraging record. It provides a framework for the resolution of international conflicts or at least for keeping them from becoming major threats to peace. It recognises the realities of international politics, in which it plays an active and constructive role. It is compatible with the existing and future patterns of international relations. It would help to bring into reality an effective system of a collective security. When both get developed they would lead to a world order based on justice under law.

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The future trend:

The UN has to safeguard world peace and for that all countries of the world has to accept in principle and practice this duty of the UN. But in reality, in the past decade, the UN has in many instances been reduced to the status of a spectator and not permitted to play its legitimate role as guarantor of peace. The disquieting ease with which the UN has been undermined by moves such as those by the European Union to form its own peace forces underline the urgency for reviving and reforming the world body.

Moreover, with the end of the cold war, there has been a unipolar world with the aggressive policy pursuits of the single superpower. Now, Russia is slowly finding its feet, even if not its strength. China, while engaging the US for a rightful role in the global trade arena, has not shied away from taking opposing independent stands.

China and Russia have declared that only a multipolar world is the best guarantee for global peace and there should be end of acceptance of unilateralism in international affairs. These two countries have

stressed that their policy would be the safeguarding of the authoritative role of the UN in international affairs. These two permanent members of the Security Council in concert with countries like India which always valued the role of the UN, have to work for the restoration of the authority of the world body and help to restart the stalled initiative of the long awaited restructuring and reform.

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8. THE UNITED NATIONS

Organisational setup

Political and security issues

Social achievements

Economic issues

Organisational issues

UN and India-Current affairs

UN-The Millennial Summit

UN-Sanctions

Note worthy international organisations have been formed in the twentieth century in the field of international relations. Of them, some like the UN are specialised agencies, broad in membership, but more limited in function, while others like the Economic Commission for Europe, are both regional and specialised. Regional organisations of a general character like the North Atlantic Treaty Organisation (NATO) and some with specialization in function, like Organisation for Economic Cooperation and Development (OECD) are also numerous and are active. In addition to many number of public

international organisation, concerned with almost every conceivable aspect of international relations, many number of private international organisations namely, the non governmental organisations, like the International Red Cross, Rotary International, International Chamber of Commerce, play useful although less publicised roles.

The twentieth century witnessed two world wars, which were highly destructive of life as well as material. These two wars highlighted the need for peace and cooperation among nations. The first attempt was in the form of League of Nations after the First World War, but this was of course a failure, as it could not prevent the Second World War. The search for peace resulted in the formation of the United Nations after World War II. The UN came into existence on October 24, 1945, when its Charter was satisfied by China, France, the USSR, UK, US and by a majority of other signatories.

The main purposes of the UN are:

(i) To maintain international peace and security.

(ii) To develop friendly relations among nations.

(iii)To cooperate internationally in solving international economic, social, cultural and humanitarian problems and in promoting respect for human rights and fundamental freedoms.

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(iv) To be a centre for harmonizing the actions of nations in attaining these common ends.

The United Nations grew out of the alliance of nations throughout the world against Nazi Germany in World War II. In 1941, a meeting between Franklin D. Roosevelt, President of the US, and Winston Churchill, Prime Minister of Great Britain, resulted in the phrasing of the Atlantic Charter-a set of principles for world peace and cooperation among nations. Two years later (October 1943) the leaders again conferred, this time with Joseph Stalin, Premier of Russia, in Teheran (Iran) and agreed on the need for an effective instrument for maintaining international peace.

At the Dumbarton Oaks Conference in Washington, D.C, in 1944 (in which the US played a leading part), the first blueprints were formulated for organising the UN. The leaders of the three powers met again in February 1945 at Yalta and established a voting procedure for the UN.

In 1945, representatives from 50 nations met in San Francisco to phrase the basic Charter for a world organisation which would "save succeeding generations from the scourge of war...". The aims of this organisation, as stated in the Charter, were to keep peace and, through collective action, eradicate illiteracy, poverty, disease and chronic ill health, and promote respect for human rights.

Preliminary drafts of the Charter, which had been worked by specialists, were drafted in the final form at San Francisco. Ratified by 29 nations-the necessary majority, including the five permanent members of the Security Council - it became effective on October 24, 1945. This day is now the official birthday of the UN and celebrated each year as United Nations Day throughout the world.

Organisational set up:

The United Nations headquarters are located in New York. The United Nations has a post office originating its own stamps. The competition success review yearbook 1999, details out the UN structure as below:

1) General Assembly:

Membership: The General Assembly is the discussion body of the United Nations and consists of all members of the UN. While each member-nation can send five delegates and six alternates to the Assembly, each nation has only one vote.

Voting : A two-thirds of majority is needed to pass resolution on important questions such as recommendation on peace and security, admission of new members to the council, budget considerations, and 'so

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forth. Other questions are decided by a simple majority vote. No Nation in the General Assembly has a veto power.

Meetings : The Assembly meets regularly once a year (beginning on the third Tuesday of September) and also holds special or emergency sessions whenever necessary.

Agenda : The General Assembly can discuss any issue in any area except those issues on the Security Council agenda. When, however, the Security Council is unable to reach a decision on political action, under the "Uniting for peace" resolution, on a simple majority vote, the Security Council can drop the issue from its agenda. The General Assembly can then deals with the problem and make its recommendations.

The Assembly receives and makes recommendations on reports from the Economic and Social Council and Trusteeship Council.

Other duties : On the recommendation of the Security Council, the General Assembly elects the Secretary - General. Voting separately the Security Council and the General Assembly elect the judges of the International Court of Justice. The Assembly votes on new members approved by the Security Council and can also expel or suspend member countries The Assembly also elects the non-permanent members of the Economic and Social Council, as well as, certain members of the Trusteeship Council.

2) Security Council:

The Security Council has the basic responsibility for the maintenance of peace and security. It is also responsible for the functions of the UN in trust territories classed as "strategic areas".

Members : Although originally made up of 11 members, the strength of the Council by an amendment to the Charter, has been raised to 15 members, five of which are permanent: the United States, Britain, China, France and Russia. Its ten non-permanent members are elected by the General Assembly by two-thirds majority for a two-year term. Retiring members are not eligible for immediate re-election. The Presidency of the Security Council is alternated on a monthly basis by its member-states (in English alphabetical order).

Voting : Each member of the Security Council has one vote. In voting on substantive rather than procedural measures, all permanent members must vote "yes" if the measure is to pass. A single negative vote (veto) by a permanent member automatically prevents the proposal from being passed.

"Substantive" measures are those which require action by member states, thus involving political decisions; "Procedural" measures pertain to decisions on the internal functioning of the Council's work.

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Meetings : Members of the Council must always be represented at UN headquarters since the Council can be called into session at any time in a matter of hours.

Upkeep of world security : When a complaint is brought before the Security Council, the Council usually recommends negotiation or mediation as a means of settling the dispute. If this fails and fighting breaks out, the Security Council has the power to take collective action in recommending diplomatic and /or economic sanctions. Armed forces, supplied by member nations, may be called to repel the aggressor or act as a buffer until the issue is settled.

The Security Council also recommends (to the General Assembly) new nations for membership and names its candidate for secretary-general.

3) Economic and Social Council:

The Economic and Social Council (ECOSOC), reporting to the General Assembly, works on economic, social, cultural and humanitarian problems.

Members : It is made up of representatives of 54 member-states (elected by a two-thirds majority of the General Assembly). Any country, not a member of ECOSOC, involved in a problem under discussion is invited to participate without the right to vote.

Meetings : At least two regular sessions of ECOSOC are held each year - one at UN headquarters in New York and the other in Geneva, Switzerland, Special meetings are called, if needed, Each member of ECOSOC has one vote and resolutions are passed by a majority vote.

Functional Commissions : ECOSOC has established five Regional Economic Commissions. These are ECE (Economic Commission for Europe-Geneva); ESCAP (Economic and Social Commission for Asia and the Pacific-Bangkok); ECLA (Economic Commission for Latin America-Santiago, Chile); EGA (Economic

Commission for Africa-Addis Ababa); ECWA (Economic Commission for Western Asia-Baghdad). These Commissions have been established to enable the nations of the major regions of the world to cooperate on common problems and also to produce economic information. Additional functional commissions deal with such matters as statistics, population, human rights, economics and employment, status of women, transportation and communication and control of narcotic drug traffic. The Council helps coordinate the activities of the inter-governmental specialised agencies.

4) Trusteeship Council:

Members : The Trusteeship Council prepares people for self-government

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or independence. Membership consists of permanent members of the Security Council plus those nations, which administer trust territories, and the needed additional members to maintain an equal balance between administering and non-administering nations. The latter are elected by the General Assembly.

Scope of work : The Trusteeship Council supervises the administration of various territories governed by nations designated by the UN trustees. The administrative power and the Council ensures that social, economic and educational progress is made and that the territories are prepared for effective self-government. The Trusteeship Council receives reports from missions, administering authorities and individuals. Any person with a complaint, in a trust territory, may make suggestions for improvement. The Council, however, does not determine or enforce a country's laws.

Regular meetings of the Trusteeship Council are held twice a year. Each member has one vote and decisions are made by a simple majority.

5) International Court of Justice:

The International Court of Justice, established by the UN Charter, settles international legal problems. All members of United Nations come under the rules of this court although they are not required to bring cases before it.

Judges : The Court is made up of 15 judges, chosen without regard to nationality, who are elected by the General Assembly and the Security Council. No two judges may represent the same country, but judges can, when their nine-year term expires, be re-elected. The President and Vice-President of the Court are elected for three years and may, when their term expires, be re-elected.

Scope of work : Cases may be referred to the Court by member-nations involved in a dispute, in which case the Court's decision is binding upon them. Advisory opinions may be requested by the UN itself, in which case the Court's opinion must be accepted by a two-thirds majority vote. All questions are decided by a majority vote of the judges present. Where votes are equal, the president of the Court casts the deciding vote.

The Court is permanently in session at The Hague, in Holland, but may hold its meetings elsewhere, if necessary.

6) Secretariat:

Secretary - General : The secretary-general heads the Secretariat. He is appointed by the General Assembly, on the recommendation of the Security Council, for a term of five years and is the chief administrative

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officer of the United Nations. He has the over all responsibility to carry out the aims of the Charter. The Secretary - General may bring any matter before the Security Council which he considers a threat to international peace. He presides as Secretary - General or authorizes a deputy to do so, over all meetings of the General Assembly and other major UN organs. He must also carry out all functions entrusted to him by these organs and submit an annual report to the General Assembly on the work of the UN.

Administrative Setup : Offices of the Secretary - General consist of the Executive Office; Under-Secretary for General Assembly Affairs; Under -Secretaries for Special Political Affairs and Legal Affairs; Offices of the Controller of Personnel. The Secretariat is organised into administrative units, each of which is headed by an Under - Secretary. These include the following: Department of Political and Security Council Affairs; Department of Trusteeship and Information from Non-Self- Governing Territories; Office of Public Information; Office of General Services of UN Office at Geneva. The Secretary - General is assisted by 12 Under - Secretaries General.

The first Secretary - General was Trygve Lie (Norway) - 1946-53; the second, Dag Hammarskjoeld (Sweden) - 1953-61; the third, U Thant (Burma) - 1972-81; the fifth, Javier Perez de Cuellar (Peru) - 1982-1991; the sixth, Dr Boutros Ghali (Egypt) - 1992-1996. The Present incumbent is Kofi Annan of Ghana who was appointed on January 1, 1997, for a five-year term.

Member states of the UNO. To become a member of the UN, the country (i) must be peace loving and willing to accept the aims, objects and rules of the UN charter, (ii) must be judged by the UN as being able to carry out these aims and objects, (iii) must be recommended by the UN Security Council for the membership, and (iv) the membership must be confirmed by the UN General Assembly by a two-thirds majority vote. Of the states of the world, 195 are now member nations of the UN.

UN Associated Agencies

Working in partnership with the United Nations in various economic, social, scientific and technical fields is a group of inter-governmental organisations related to the United Nations by special agreements. Among these agencies are:

International Labour Organisation (ILO): Established in 1919 as an autonomous institution, associated with the League of Nations. In 1946, ILO became the first specialised agency of the United Nations Structure : The governing body of ILO has 48 members. The Director General is the head of ILO. The governing body elects him. ILO. is an inter-governmental agency with a tripartite structure, in which

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representatives of governments, employees and workers participate.

Meetings : ILO's member countries meet annually at a conference at ILO headquarters. It is attended by delegates, technical advisors and observers. Each member country can send four delegates, two representing the government and one each representing employers and workers.

Scope of work : ILO introduces international labour standards. It provides assistance in improving such standards. It aims to promote social justice, improve conditions and living standard and promote economic stability. (Headquarters: Geneva)

International Atomic Energy Agency: The Agency, which functions under the aegis of the UN, came into force on July 29, 1957. It is an autonomous, inter-governmental organisation under the patronage of the UN.

Objectives : 'Atoms for Peace' is its guiding principle. It aims to promote the peaceful uses of atomic energy and to ensure that assistance provided by it or at its request or under its supervision or control is not used in such a way as to further any military purposes. It also assists in research and application of atomic power for peaceful uses such as the production of electric power in less developed countries. It promotes the exchange of scientific and technical information; provides technical aid and supplies material and equipment.

Structure : The three organs of IAEA are the General Conference, the Board of Governors and the Secretariat, headed by a Director General. The General Conference consists of all member states and it meets once a year and decides issues by a majority vote. (Headquarters: Vienna)

Food and Agriculture Organistion (FAO): Established on October 16, 1945, at a meeting held in Canada.

Objectives : It aims to raise nutrition levels and living standards; to secure improvements in production and distribution of food and agricultural products; to improve the living conditions of the rural population; to eliminate hunger.

Structure : FAO works through a Conference, a Council and Staff. The Conference is the policy-making body in which each member has one vote. It meets every two years and elects the FAO programmes to improve the world food and agricultural situation. The Council consists of 49 member nations elected by the Conference. FAO gives technical assistance to fisheries, forestry, nutrition, animal husbandry, poultry, irrigation, soil and water management, horticulture, dairying seed production etc. (Headquarters: Rome)

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United Nations Educational, Scientific and Cultural Organisation (UNESCO): Established on November 4, 1946, the purpose of UNESCO is to contribute to peace and security by promoting collaboration among nations through education, science and culture in order to further justice, rule of law, human rights and

freedoms without distinction of race, sex, language or religion. The USA withdrew from the UNESCO on December 31, 1984 and the UK did it exactly one year after.

Structure : It is governed by a General Conference, and Executive Board and a Secretariat. The General Conference consists of representatives from every member state and holds meetings every two years. The Executive Board supervises activities on behalf of the General Conference. The Secretariat works under a Director General with international staff and is responsible for cutting the programmes.

UNESCO conducts conferences and smaller meetings on special subjects; gives assistance to non-governmental organisations and publishes books on a wide range of topics. The idea is to promote international intellectual cooperation. (Headquarters: Paris)

World Health Organisation (WHO): Established on April 7, 1948. Structure : The main organs of WHO are the World Health Assembly, Executive Board, six Regional Committees and the Secretariat. The World Health Assembly is the supreme governing body, which meets annually. It determines the policies and programmes of WHO and prepares its budget.

Scope of work : It aims at promoting the health of all people and works for eliminating diseases. It assists member countries in their national public health services and standards of health. It encourages medical research.

WHO unifies, codifies, standardizes and transmits data and information concerning health statistics, biological standardization, and public health and laboratory methods through official and technical publication.

WHO has expert committees, study group, regional and inter-regional technical conferences, seminars, teaching missions, training courses and centres. It provides experts, consultants, professors and lecturers and awards fellowships. WHO has successfully campaigned for the eradication of malaria, tuberculosis and smallpox.

Further, WHO has been designated as the lead agency in the United Nations system to eradicate the dreaded disease Acquired Immuno Deficiency Syndrome (AIDS). In close collaboration with UNDP and

the pharmaceutical industry, it is striving hard to develop vaccines and drugs to checkmate its spread. (Headquarters: Geneva).

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World Bank: The World Bank is a group of four institutions: The International Bank for Reconstruction and Development (IBRD), established in 1945; the International Finance Corporation (IFC) established in 1956; the International Development Association (IDA), established in 1960; and the Multilateral Investment Guarantee Agency (MIGA), established in 1988.

International Bank for Reconstruction and Development (IBRD):

Conceived at the Bretton Woods Conference in July 1944, the Bank came into force on December 27, 1945. However, its operations began on June25, 1946. The Bank aims to help reconstruction and development of economics of members by facilitating investment and supplement private investment by providing loans for productive purposes out of its capital, funds raised by it and its other resources; and to promote growth of international trade and equilibrium in balance of payments. (Headquarters: Washington, D.C.)

International Development Association (IDA): Established on September 24, 1960, IDA is an affiliate of the World Bank and has the same officers and staff as the Bank. Its main object is to help the underdeveloped countries in the task of raising their living standards. (Headquarters: Washington, D.C.)

International Finance Corporation (IFC): An affiliate of the World Bank, IFC came into force on July 20, 1956. It aims at further economic development by encouraging productive private enterprise in its member countries, particularly in the less developed areas. It is empowered to invest in private enterprises in association with private investors and without government guarantee of repayment in cases where sufficient private capital is not available on reasonable terms; and to bring together private capital and experienced management. (Headquarters: Washington, D.C.)

Multilateral Investment Guarantee Agency: The Multilateral Investment Guarantee Agency (MIGA) was formally set up in April 1988. By March 1992, 77 countries had become its members, and an additional 35 were in the process of joining, having already signed the MIGA Convention. MIGA helps money to flow from private investors to developing countries even during war and civil disturbances. It does this by providing insurance to those who invest money in these countries. MIGA also provides insurance to

these investors if they run the risk of being dispossessed of their assets. MIGA provides consultancy and advisory services also.

World Meteorological Organisation (WMO): The Convention which created the WMO was adopted at the Conference of Directors of the

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International Meteorological Organisation held in Washington DC in 1947 and came into force on March 23, 1950.

WMO aims to facilitate worldwide cooperation to establish a network of stations and centres, for providing meteorological services and observations. It aims to promote the establishment of systems for quick exchange of weather information.

WMO encourages the application of, meteorology to aviation, shipping, agriculture and other humanistic activities for economic development. It has recommended the establishment of a World Weather Watch (WWW) based on meteorological satellites and a system of world and regional centres. It has also started an international programme for research in the light of developments in outer space.

The World Meteorological Congress meets once in four years. It adopts technical regulations on meteorological practices and procedures. The Executive Council of 24 members meets at least once a year. The Secretariat is headed by a Secretary General. (Headquarters: Geneva)

International Maritime Organisation (IMO): Established on March 17, 1958. IMO's objectives are to provide machinery for cooperation and exchange of information among governments on technical matters affecting shipping; to ensure the achievement of the highest practicable standards of maritime safety and efficient navigation. IMO has a special responsibility for safety of life at sea.

IMO also aims at removing discriminatory actions and unnecessary restrictions by governments. IMO considers matters concerning shipping when referred to it by the UN.

IMO functions in a consultative and advisory capacity. The IMO Assembly consisting of all members, meets every two years and is the policy-making body.(Headquarters: London)

General Agreement on Tariffs and Trade (GATT): It was negotiated in 1947 and entered into force on January 1, 1948. It is the only treaty setting rules for world trade. GATT's special efforts include development of international trade with particular emphasis to increase the export trade of developing countries. (Headquarters: Geneva)

United Nations Children's Fund (UNICEF): Established in 1946, it is the only distinctive inter-governmental organisation concerned with children's welfare. Supported entirely by voluntary contributions from governments and individuals, UNICEF helps children all over the world. It is governed by a 30-nation executive board designated by the Economic and Social Council. (Headquarters: New York)

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United Nations Development Programme (UNDP): It helps developing countries increase the wealth-producing capabilities of their natural and human resources by providing experts or training of the local people. (Headquarters'. New York)

United Nations Environmental Programme (UNEP): Established in 1972, it provides machinery for international cooperation in matters relating to the human environment. (Headquarters: Nairobi)

United Nations Fund far Population Activities (UNFPA): It was set up in 1967. It aims at promoting population programmes and in extending systematic and sustained assistance to developing countries and helps them in dealing with their population problems. (Headquarters: New York)

United Nations High Commissioner for Refugees (UNHCR): Established in 1950, the office of High Commissioner for Refugees aims at providing international protection for refugees and seeks permanent solution to their problems through voluntary repatriation, migration to other countries or local integration, besides undertaking special humanitarian tasks. The office of the UNCHR was the recipient of the Nobel Prize for 1981. It was awarded the 1954 prize for resetting European refugees after World War II. (Headquarters: Geneva)

United Nations Industrial Development Organisation (UNIDO): UNIDO was established as an organ of the General Assembly in 1967. It promotes industrialization in less developed countries with particular emphasis on the manufacturing sector.

UNIDO programmes also include Special Industrial Service (SIS) designated to supplement other assistance. UNIDO helps solve urgent industrial problems at short notice, and on flexible terms.

However, according to a newly formulated strategy, five priority areas on behalf of UNIDO have been fixed in response to the needs and demands of developing countries. These are: (i) strengthening of national capacity and effectiveness, particularly in human resource development; (ii) promotion of international competitiveness in industry; (iii) more effective international industrial cooperation in the promotion of foreign investment and technological transfer as well as in regional and sub-regional cooperation; (iv) development rehabilitation and promotion of the private sector specially small-scale industry; and (v) ecologically sustainable industrial development. (Headquarters: Vienna)

International Monetary Fund (IMF): It was established on December 27, 1945 but the Fund began operations on March 1, 1947.

Objectives : It aims at promoting international monetary cooperation

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and expansion of international trade; promoting exchange stability and avoiding competitive exchange depreciations; assisting in the establishment of multilateral system of payment in respect of currency transactions between members and in the elimination of foreign restrictions.

Structure : IMF has a Board of Governors, Executive Directors and a Managing Director. All powers of the fund are vested in the Board. It may delegate any of its powers to the Executive Directors, except the power to admit or suspend members, approve a revision of quota or a uniform change in the par value of members currencies, determine the distribution of the Fund's net income and decide to liquidate the Fund.

The executive directors are responsible for the operation of the fund. The executive directors elect the managing director. He is also the ex-officio Chairman of the board of directors and the chief of the operating staff of the fund. (Headquarters: Washington, D.C.).

International Civil Aviation Organisation (ICAO): It was established on April 4, 1947, after working as a provisional organisation since June 1945.

Scope of work : Its purpose is to study problems of international civil aviation and establish international standards and regulations. It promotes safety of international civil aviation, provides statistical and economic information for governments and airlines, works to reduce the red tape of customs formalities, and helps developing countries benefit from air transport.

ICAO encourages the use of safety measures, uniform regulations and use of new technical methods and equipment. It has evolved a pattern for meteorological services, better traffic control, communications, radio beacons and ranges, search and rescue operations and other facilities required for safe international flights.

ICAO lends technical assistance, especially to developing nations to train personnel in civil aviation. It has simplified customs, immigration and public health regulations as they apply to international air transport. ICAO is responsible for drafting international air conventions and the economic aspects of international air transport.

Structure : The ICAO Assembly, composed of delegates from 183 member countries meets once in three years. The ICAO Council, composed of 30 members, elected by the Assembly, is the executive body of the organisation. It carries out the Assembly's directives and administers the finances of ICAO.

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The Council elects its President and Secretary General. (Headquarters: Montreal)

Universal Postal Union (UPU): Established on October 9, 1874, it became specialised agency of UN in 1947. UPU aims at forming a single postal territory of countries for exchange of correspondence, organising and improving postal services and promoting international collaboration. Thus members

agree to send the mail of all other members by the best means used for sending their own mail. UPU makes provision for inter-nation postal services.

Structure : The principal organs of UPU are the Universal Postal Congress (UPC), the Executive Council, the Consultative Committee for Postal Studies and the International Bureau.

The Universal Postal Congress is composed of all 188 UPU member countries and usually meets at intervals of five years. Extraordinary Congress may be held at the request of a two-third majority of the members.

The Executive Council consists of 40 members, elected by the Congress on an equal geographical basis, maintaining close contact with the postal administration.

The Consultative Committee for Postal studies consists of 35 members. The committee organises studies on major problems affecting postal administration in all UPU countries. It also gives advice on technical, operational and economic fields to improve postal conditions all over the world.

The International Bureau is the Secretariat of UPU and is responsible for postal administration, liaison, information and consultation. (Headquarters: Berne)

International Telecommunication Union (ITU): ITU was founded in 1865 in Paris, as the international Telegraph Union. It was reorganised in 1945 and entered into an agreement with the UN, whereby it was recognised as the specialised agency for telecommunications.

ITU is responsible for regulating co-ordinating and planning all types of international telecommunication, including space communication. ITU promotes the improvement, extension and rational use of telecommunication services of telephone, telegraph, space and aeronautical telecommunication, broadcasting and television with a view to making them generally available to all countries.

ITU is particularly concerned with the development of new techniques such as space communication. It endeavors to promote standardization in

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telecommunication. It fosters the creation, development and improvement of telecommunications in newly independent and developing countries. Through international conferences and meetings, publication of technical information and extending technical cooperation, ITU works to fulfill its aims and objectives. (Headquarters: Geneva)

Economic and Social Commission for Asia and the Pacific (ESCAP): Earlier known as Economic Commission for Asia and the Far East (ECAFE), the ESCAP is a regional commission of the UN Economic and Social Council. The Commission seeks to promote economic development of Asia and Far East countries by promoting better social, economic, education and health conditions of the countries in this region. ESCAP's golden jubilee session was held in New Delhi in April 1994. (Headquarters: Bangkok)

World Intellectual Property Organisation (WIPO): The Convention establishing WIPO was signed in Stockholm in 1967 and came into force three years later. WIPO became a specialised agency of the UN in December 1974.

Membership of WIPO is open to any State, which is a member of the UN or is invited to join it by the General Assembly of WIPO. The General Assembly of WIPO consists of all 147 member States. It appoints a Director General and reviews and approves his reports. It adopts the triennial Budget.

The objectives of WIPO are to protect intellectual property throughout the world; to ensure administrative cooperation among the unions established by various treaties for the protection of intellectual property.

The convention provides legal-technical assistance at the request of States. WIPO performs the administrative tasks of international treaties, dealing with Intellectual Property. It gathers and disseminates information concerning the protection of Intellectual Property. (Headquarters: Geneva)

International Fund for Agricultural Development (IFAD): Established in December 1977, the IFAD is a $ one billion fund which is used for raising food production in developing countries, employing poor and landless farmers and reducing malnutrition in the Third World countries. The fund is a major joint project of the industrialised countries, the petroleum exporting developing countries. The industrialised nations have made a contribution of $600 million and the OPEC nations $400 million to this fund. (Headquarters: Rome)

The United Nations - Political and Security Issues:

Maintenance of peace and security is one of the prime objectives of the UN. According to Article I of the Charter, it is expected to take

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effective collective measures for the prevention and removal of threats to peace and for the suppression of acts of aggression or other breaches of peace.

UN's obligation is to promote conditions of general security so that breach of peace by any nation will become less likely failure of which, effective sanctions can be invoked if breaches do occur. Its responsibilities pertain to the performance of three specifically assigned security duties: (i) The placing of military forces at its disposal, (ii) The regulation of armaments, and (iii) The international control of atomic energy.

Political Issues : The most difficult task of the UN has been the settlement of political disputes.

(i) The charter imposes primary responsibility on the Security Council but under certain conditions the General Assembly may take up the issue.

(ii) The Security Council is bound to no specific procedure. It is authorised to use any or several indicated warp of reaching a settlement or it may device ways of its own. Preference is given to settlement through negotiation.

(iii) The distinction between political disputes and legal disputes should be kept in mind, but it should not be overemphasized.

Generally political disputes go to the Security Council and/or the General Assembly and legal disputes to the International Court of Justice. But dividing all disputes into these two categories would only lead to confusion.

The operations undertaken can be classified into four categories, although these are by no means clearly delineated.

(i) Observer Groups to supervise cease-fires and truce lines. Example: Operations in the Balkans (1946-47) Indonesia (1947-49) Palestine (1947-64) Kashmir (1948-64) Lebanon (1958) West Iran (1962-63) Yemen (1963-64).

(ii) Military forces interposed between armies and used to patrol frontiers. Example: The patrol on the Israeli border, UNEF (United Nations Emergency Force).

(iii) Military forces with a mandate to curtail military conflict by all necessary means and to assist in maintaining internal order. Example: The operation in the Congo, OUNC (Operation of the United Nations in the Congo).

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(iv) Military presence to prevent the expansion of a communal conflict. Example: The Cyprus forces, UNFICYP (United Nations Force in Cyprus).

Though no spectacular success have been scored, the UN has contributed directly or indirectly to the settlement of several controversies. To state a few political issues in which UN has taken great efforts are:

Iran - It was settled entirely by direct negotiation on the urging of the Security Council. The complaint by the Iranian government on Jan 19, 1946, two days after the Security Council met for the first time, was

that the Soviet Union was continuing to interfere in the internal affairs of Iran through the medium of Soviet agents, officials and armed forces. On negotiations, actions were taken and it was subsequently declared that evacuation of Soviet troops from Iran had been completed.

Indonesia - Here the original complaint was brought by a Communist State. On negotiations the Defendant State cooperated to effect a satisfactory settlement. (Negotiations between the Netherlands government and Indonesian leaders, begun in 1945). Both Dutch and Indonesian leaders approved of the UN Commission and implemented the agreements after great power struggle and as a result, a new state- the Republic of Indonesia came into being.

Greece - This dispute was marked by persistent communist aggression. Cases involving the political independence and territorial integrity of Greece were on the agenda of the Security Council almost continuously from 1946 to 1951.

Kashmir - The first important use of a personal mediator was produced at this India-Pakistan dispute. The Security Council was unable to accomplish anything beyond a continued truce. India brought Kashmir question before the Security Council. She complained that tribesman, backed and assisted by Pakistan, had invaded Kashmir. Pakistan not only denied the charge but also pleaded that the accession of Kashmir to India was illegal. Security Council called on both parties to improve situation and appointed a UN Commission for investigation on the spot. Commission brought about cease-fire but failed to secure plebiscite. After sometime the Commission was replaced by Owen Dixon for securing demilitarization, but failed in his mission. In March 1951, Dr. Frank Graham replaced him. He also made number of proposals but failed to achieve any success.

In 1965 severe clashes took place between the regular forces of the two countries. In September 1956, the council called for an immediate cease-fire and withdrawal of forces to position before August 5, 1965.

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Though both the countries accepted the recommendation of the Security Council, violations of cease-fire continued. The differences were ultimately patched up at Tashkent, when the two countries agreed to withdraw their armies.

In December 1971, Pakistan launched an aggression against India, which once again brought the Kashmir problem to limelight. The war was brought to a unilateral action of India and the bilateral agreement between the two countries at Simla led to minor changes in the earlier cease-fire line but the Kashmir probiern still remained unsolved.

In July 1992 India and Pakistan signed Simla pact which defined line of control in Kashmir, and the two parties agreed to settle their differences through peaceful means. Though several rounds of talks have been held between the leaders of the two countries they have not been able to make any substantial progress in resolving the issue. As a result the UN Military Observer Group in India and Pakistan continues to deploy observers along both sides of cease-fire line established under Simla Agreement.

Palestine - UN mediator helped to produce a cease-fire but no final settlement. It was one of the most complex problems brought before U.N.O. It was admitted on the request of Great Britain. The special committee of UN on Palestine was set up which recommended division of Palestine into three Parts-Arab States, a Jewish State and special area under international government. The General Assembly accepted the recommendations of the committee.

After the Britishers gave up their mandate the Arab State instituted armed action in Palestine. With the efforts of UN mediator a four-week truce was arranged, after which hostilities again started. After great efforts mediation proved successful and the Governments of Egypt and Israel concluded general armistice. Israel concluded similar armistices with other Arab countries.

In 1956 trouble broke out following nationalisation of Suez Canal by Egypt and Israel's decision to intervene along with England and France. General Assembly called for cease-fire and set up UN Emergency Force to supervise withdrawal of troops. In 1967 when fight again broke out between Israel, Egypt, Jordan and Syria, the Security Council called for cease-fire and stationed observers in the Golan and Suez Canal sectors to supervise cease-fire. It also set up a Special Representative to bring about peaceful settlement, but no significant progress could be made. Once again hostilities broke out in 1978 following attack on Israel by Egypt and Syria. The Security Council again called for cease-fire and set up new UN Emergency Force. A Peace Conference was convened and efforts were

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stepped up to bring about disengagement between Egypt and Israel, which was achieved in January 1974. In 1977 as a result of direct negotiations between Egypt and Israel, two agreements were signed

which are known as Camp David Accords. Thereafter the General Assembly and the Security Council continued with efforts to, bring about peace and find a negotiated settlement of the problem, even though these efforts did not yield the desired results. Ultimately in 1993 as a result of secret negotiations between PLO and Israel, an agreement was reached between PLO and Israel. Under this agreement Israel recognised PLO as a representative of Palestinian people. PLO and Jordan contributed to resolution of the outstanding problems and paved the way for just and lasting peace. In all these efforts the UN played an active role.

Korea - Communist aggression in Korea prompted the UN's first use of military sanctions. In June 1950, the forces of North Korea attacked South Korea. U.S.A. requested for an immediate meeting of the Security Council. On June 25. the Council passed a resolution that the North Korean armed attack was a clear breach of peace and called for immediate cessation of hostilities. Two days later the Security Council through another resolution requested the members to furnish such assistance to the Republic of Korea as was necessary to repel armed attack and restore international peace and security. A Unified Command under the UN Flag was set up to which sixteen member states contributed combatant units. After a long drawn out war the two sides agreed on cease-fire in April 1952. In 1954, another effort to resolve the problem was made at Geneva but without any success. Though both sides professed their desire for unification, they differed regarding the method of election and its supervision. Thus the deadlock remained unresolved. In 1974 the General Assembly urged two Koreas to further their dialogue to expedite unification, but no success could be achieved. In September 1991 two Koreas were admitted as members of UN.

Suez - This crisis produced realignments in the Security Council and the first major peace keeping operation by the UN (UNEF). In July 1956, President Nasser of Egypt announced nationalisation of Suez Canal. England and France took the case to Security Council, which adopted a resolution, that free transit through the canal shall be permitted to all nations without discrimination, the toll and taxes to be charged shall be decided by the users and Egypt, fair proportion of the dues shall be allotted for development etc. In 1956, Israel backed by U.K.and France attacked Egypt. General Assembly expressed grave concern at the military operations and ordered immediate cease-fire. The UN Secretary General was given the authority to clear the canal under UN's auspices. Egyptian government on its part agreed to respect the obligations contained in the Treaty of Constantinople and the UN Charter. In 1958, the final agreement

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regarding compensation of Suez stockholders was reached.

Hungary - UN efforts to compel a great power to suspend military operations and withdraw its forces proved to be unavailing. Hungary proved that the UN is particularly impotent in dealing with events inside the Communist World. In 1956 U.K., U.S.A. and France brought it to the notice of the Security Council that Russia in violation of the Charter had suppressed the Hungarian uprising. General Assembly adopted a resolution asking Soviet Union to withdraw troops from Hungary. Fresh elections were to be held under the auspices of the UN resolution, a committee was appointed to collect appropriate information and report to the UN. The committee recommended that the Soviet authorities had planned the armed intervention much in advance. Though the recommendations of the Committee could not be carried out, its finding helped in creating a favourable international opinion. In September 1957, the General Assembly condemned Soviet Union for depriving Hungary of its liberty and political independence and the Hungarian government for violating the human rights. The Hungarian question demonstrated that UN was paralysed even when a whole nation was being brutally oppressed simply because the oppressor himself had a veto power.

The Congo - Here the UN under took its most massive operation, both in peacekeeping and in nation building assistance. While the situation in the Congo is still precarious, the country seems to have survived the struggle for independence. For this the UN deserves a fair share of the credit. In June 1960, Congo, a colony of Belgium was granted independence. Soon a province of Congo, Katanga revolted against the central government. Belgium backed by Western powers encouraged and supported Katanga. On July 14, the Security Council by a resolution called upon Belgium to withdraw its troops from Congo and the secretary-general was authorised to send peace forces to Congo. During next four years UN helped Congo to maintain independence and maintain law and order in the country. It also rendered service to keep the administration going.

Cyprus - In the Cyprus issue the UN took limited operation without incurring heavy financial obligations, which helped to avert a major clash on the troubled island. No proposal has been acceptable to both Greek and Turkish Cypriots. The UN has been helpful in preventing a major explosion and has persuaded the powers involved to resolve their differences peacefully. The question came before UN due to differences between Greece and England over the possession of the island. Ultimately the General Assembly adopted a resolution for continuation of negotiations for grant of independence and the people were finally

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granted independence in 1960. But the tranquility was distributed in 1963 due to tension between the Greek and Turkish Cypriots. After efforts to resolve difference through Conference failed the UN Security Council set up peacekeeping force, but it could not bring the fight to an end. Ultimately in the Cyprus Question it prevented the situation from taking an explosive turn. The Greek Cypriots who favoured

union with Greece and Turkey intervened and occupied northern parts of island. UN brought about a cease-fire and urged the withdrawal of all foreign troops. It also arranged fresh talks between two parties. It was only after persistent efforts that in February 1994 the two sides agreed on agenda for proximity talks. Despite several extensions the proximity talks did not lead to any agreement. Amidst all these developments the UNFICYP continued to supervise cease-fire and maintains surveillance over the buffer zone between the cease-fire lines and promotes a return to normal conditions through inter-communal humanitarian activities.

Arab-Israeli War 1967 - Reluctance of Israel to permit the UN any significant political role left it with only a diminished presence. But the UN was the only agency, which was at least partially acceptable to both Israel and the Arab States. Towards the close of the 1966, tension begun to mount on the Arab borders with Israel. In May 1967, U.A.R. and Syria proclaimed a state of emergency and begun to mobilize forces along Israel's borders. On May 24, the U.A.R. leaders closed the straits of Tiran to Israeli shipping. As this constituted a denial of free navigation rights to Israel she called on UN. But before the UN could take any action a war between two countries broke out. During the war the Security Council was almost continuously in session and called upon both the parties to effect cease-fire. Israel won a quick victory and ultimately concluded a cease-fire agreement with the Arabs on June 10, 1967. Russia tried to raise the Arab-Israel question first in Security Council and then in the General Assembly but all that she was able to achieve was a resolution calling upon Israel to desist from all measures which aimed at altering the status of the city of Jerusalem. As Israel failed to comply with UN resolution, the Arab countries made an offensive to recover their lost areas in October 1973. However, after some fighting a cease-fire was established which proved of very unstable character. In October 1973, the Arabs and the Israelis were involved in yet another conflict, which was followed by another cease-fire. After prolonged negotiations the two reached an agreement in September, 1975. Thereafter efforts were also made both inside the UN and outside the UN to resolve the Arab-Israel dispute, but no success could be achieved.

Kampuchean case : In January 1979, Security Council took up Kampuchean question and asked for withdrawal of Vietnamese forces.

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However, Soviet Union vetoed the resolution. Thereupon the General Assembly debated the issue and urged all the parties to conflict to cease hostilities and urged states to refrain from interfering in internal affairs of Kampuchea. In 1981, it convened an International Conference on Kampuchea to find out a comprehensive political solution of the problem. It also set out the basic principles for such settlement and set up an ad hoc committee to assist conference in finding a solution. In subsequent years the General Assembly reiterated its demand for restoration of Kampuchear, independence, sovereignty and

territorial integrity, and urged states to follow policy of non-interference in internal affairs of Kampuchea in the interest of lasting peace. The UN Secretary General also made efforts to find peaceful settlement of the problem even though he did not quite succeed in his mission. Following withdrawal of troops from Cambodia by Vietnam, a Conference of 18 Nations was held at Paris in 1989. In January 1990 the five permanent members of Security Council started high-level meetings which culminated in an agreement on the main elements of a political settlement and holding of UN supervised elections.

Elections were held under the supervision of UN in 21 provinces of •Cambodia (Kampuchea), and a new Constituent Assembly was formed. This Constituent Assembly formulated a new Constitution, which was promulgated in September 1993. In accordance with the provisions of he Constitution the King of Cambodia appointed heads of new government. Though by middle of November the UN withdrew from Cambodia, but the UN agencies continued to assist in the development of Cambodia. They also rendered valuable help to the Government of Cambodia in its recovery efforts.

Soviet intervention in Afghanistan- In January 1980, Security Council considered case of Soviet Intervention in Afghanistan despite protests by Afghanistan that it amounts to interference in internal affairs of that country. Soviet Union vetoed it and proposed a resolution deploring armed intervention. Thereupon the issue was taken up by General Assembly, which worked towards withdrawal of all foreign troops from Afghanistan . In subsequent years also the General Assembly, asserted the right of Afghan people to determine their own government. It impressed the need of political settlement and brought Afghanistan on negotiating table. Thereafter the secretary-general made frantic efforts to bring the negotiations to a logical conclusion, but did not quite succeed in his mission.

The persistent efforts of UN yielded results and ultimately Pakistan and Afghanistan reached an accord in 1988. Again Soviet Union also

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agreed to pull out its troops from Afghanistan. Thereafter UN put forth a five-point plan to resolve the issue. After the withdrawal of the Soviet Union, the UN played a vital role in relief and rehabilitation of Afghanistan. In 1989 the Secretary General appointed a Personal Representative who made a bid to find a peaceful solution to the conflict in consultation with the various elements involved in the conflict. In April 1992, various Afghan parties reached an agreement regarding formation of an Interim Government, which paved the way for the return of the refugees. However, peace did not last long and soon hostilities broke out. This greatly hampered the UN humanitarian assistance. Thereafter also the Secretary General continued to make efforts to secure cease-fire but did not meet with any success. Despite this UN is carrying out programs of humanitarian assistance in Afghanistan.

Security issues: This relates particularly to military security as per the provisions of Chapter VII of the UN Charter. The efforts of UN relate to (i) armed forces for the UN (ii) the regulation and reduction of armaments and (iii) the control of atomic energy. Article 47 provides for the setting up of a Military Staff Committee to be composed of the Chiefs of Staff of the five permanent members of the Security Council or their representatives. Article 26 places upon the Security Council, responsibility for formulating plans for the establishment of a system for the regulation of armaments.

(a) Armed forces for the United Nations : The Security Council established the Military Staff Committee on January 25, 1946 in accordance with the provisions of the Charter. Article 43 reads as following, "All member of UN" in order to contribute to the maintenance of international peace and security, undertake to make available to the Security Council, on its call and in accordance with a special agreement or agreements, armed forces, assistance, and facilities, including the rights of passage, necessary for the purpose of maintaining international peace and security.

Beginning with the Korean action in 1950, military operations have been carried on under the UN flag on several occasions, In the Gaza strip and in the Congo, the UN undertook its first peacekeeping operations, In Cyprus the UN was also able to establish a peacekeeping force at a critical stage of affairs, but this operation was limited.

(b) Disarmament and Arms Control: Article 11 of the UN Charter directs the General Assembly to consider "the principles governing disarmament and the regulation of armaments". Article 26 makes the Security Council responsible of "plans for the establishment of a system for the regulation of armaments". However, the Charter did not state the

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functions or responsibilities of the UN in the vital areas of disarmament and arms control.

Disarmament is dependent upon agreement among the major powers and though the role of UN is limited, it has been almost continuously involved either directly or peripherally in disarmament negotiations. In 1946, the General Assembly established first an Atomic Energy Commission, and then Commission on Conventional Armaments, both directly responsible to the Security Council. In 1952 these two commissions were merged into a single Disarmament Commission.

(c) The Control of Atomic Energy: In January 1946. the General Assembly established the Atomic Energy Commission, composed of one representative of each of the states on the Security Council and one from Canada. The Council was to issue directives to the AEC, approve its reports, recommendations and transit such of these as it choose to other UN agencies.

UN role is greatly affected by nationalism, sovereignly, nation-state psychology and also by the perversities of the human race. Unless the great powers of the world supports its efforts, the UN cannot do much in control of atomic energy.

Social Achievements

The Department of Social Affairs of the UN Secretariat and a number of the specialised agencies look after the social development. They make efforts to improve the living conditions, housing, town and country planning, community development, family, youth and children welfare, rehabilitation of the handicapped population, migration as well as the refugee questions.

UNO has tried to improve the health conditions of the people throughout the world through WHO. It provides advisory and public health services to member countries. It has given major assistance to many countries in the fight against malaria, tuberculosis, poliomyelitis, venereal diseases, influenza, smallpox, leprosy, yaws and other communicable diseases. The UNO has also given assistance to many countries in establishing an efficient national health administration. It has also imparted education to the people on health matters through training programmes, seminars, conferences, etc. UN has tired to establish control over narcotic drugs and set up a Commission on Narcotics Drugs. It keeps a control over the production of narcotic drugs through various agencies to prevent its misuse. In view of the grave threat posed by the drugs, the UN has in recent years stepped up efforts to prevent and reduce demand for narcotic drugs and psychotropic substances.

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In 1990 the General Assembly held a special session devoted to international drug control and proclaimed the United Nations Decade against Drug Abuse (1991-2000). It urged the member states to take action against drug abuse and illicit trafficking. In 1991 the fund of the United Nations International Drug Control Programme was established by the General Assembly to provide financial and technical assistance, mainly to the developing countries. This fund is supported entirely from voluntary contributions of the member states and private organisations. UNO through its International Refugee

Organisation has done a commendable job in assisting persons to resettle. In Palestine refugee problem created by the conflict between the Jews and Arabs over Palestine, UNO did a remarkable job through United Relief for Palestine Refugees established by the General Assembly in November 1948. During the Arab-Israel war of 1967 the refugee problem again cropped up which was solved with the assistance of the UNO. In 1951 the office of the United Nations High Commissioner for Refugees (UNHCR) was established with two main functions viz. to provide international protection to the refugees and to seek durable solution to their problems. Since its establishment the commission has helped more than 30 million refugees to start a new life by finding solution to their problems.

In 1995 the UNHCR provided humanitarian relief to internally displaced persons in Azerbaijan, Bosnia and Herzegovina, the Chechnya region of the Russian Federation, Georgia, Rwanda, Somalia, Sri Lanka and Tajikistan. UNHCR has also sought to promote the adoption and implementation of international standards for the treatment of refugees. UNICEF as the exclusive UN agency devoted to the needs of children speaks on their behalf and promoter universal ratification and full implementation of the convention on Rights of Children. This Convention, which became operation in 1990, is the most comprehensive treaty ever to address the rights of children and sets universally accepted standards for their protection. UNICEF in cooperation with the World Health Organisation has tried to save lives of several million children suffering from six diseases- diphtheria, measles, pertussis (whooping cough), poliomyelitis, tetanus and tuberculosis. In recognition of the valuable services rendered by UNICEF it was awarded Nobel Peace Prize in 1965.

UNO has also made a sincere effort to eradicate illiteracy and raise educational standards throughout the world. It has encouraged fundamental education, fostered scientific research, promoted dissemination of scientific knowledge, and helped exchange of persons to promote cultural activities and international understanding. The UNO has also devoted great attention to the promotion of universal respect for

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human rights and fundamental freedoms without any distinction of race, sex, language or religion. Its first achievement in this direction was the adoption of Universal Declaration of Human Rights. UNO has also devoted attention to the improvement of status of women throughout the world. To secure equal status for women the UNO set up a commission on the status of women. It tried to secure better protection for women under national laws, extension of national educational opportunities for women, equal pay for equal public service and their increased participation with the work of government. One of the most important document adopted by the General Assembly for the protection of rights, of women was Convention on Elimination of All Forms of Discrimination against Women, adopted in 1979.

UNO has tried to protect interests of minorities by consistently pleading for self-determination in non-self-governing territories. It has also condemned the policy of racial discrimination pursued by South Africa. The Security Council imposed mandatory sanctions against south Africa on account of the policy of apartheid. UN also provided political, moral and material support to the people of South Africa in their liberation struggle. It cannot be denied that on account of growing pressure from UN, the South African Government was obliged to lift ban on organisations like ANC, PAC and South African Communist Party etc. and also dismantled various laws, which promoted apartheid. Security Council also played important role in elimination of violence in South Africa and holding of fair elections which ultimately resulted in installation of non-racial government in South Africa.

Economic issues

The UN is concerned not only with the maintenance of peace but also with promoting the conditions under which genuine peace will be possible.

The Economic and Social Council (ECOSOC) of the United Nations the Council's commission and specialised agencies, the Trusteeship Council and the Secretariat are primarily concerned with work on economic and social issues. The Charter of the UN specifically states that the UN shall promote "higher standards of living, full employment and condition of economic and social progress and development".

Towards planning and action, the basic necessity of getting hold of vital statistics is done through its general economic surveys. The Secretariat and the specialised agencies have published a number of studies in the field of technical assistance and economic development.

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Finance and Trade : The awareness of the need for more organised international cooperation in the economic and financial field and the growing interest in the question of international liquidity are the strategic confrontation of the commercial policies in forums like the World Trade Organisation, the United Nations Conference on Trade and Development. The UNACTAD places extensive attention to the interests and needs of the developing countries. The UNACTAD is an affiliate of the UN General Assembly, which meets at intervals of not more than three years and has a permanent Trade and Development Board of 55 members, with permanent committees on commodities, manufactures and financing related to trade and such other subsidiary organs as might be deemed necessary.

Technical Assistance and Economic Development : The UN in 1949 created two new bodies: the Technical Assistance Board (TAB) consisting of the executive heads of the UN and of the specialised agencies and the Technical Assistance Committee (TAG), composed of delegates from states with representation of ECOSOC. The General Assembly, established a Technical Assistance Administration (TAA) as a separate branch of the Secretariat.

Under its regular programme the UN has two main sources of funds for technical assistance, a relatively smaller item in its regular budget and larger voluntary contribution to the United Nations Development Program (UNDP) which came into existence in November 1965. Its major field of activity has been in agriculture, health services, education, resource surveys and administrative improvement.

The only organisation in the UN system which have the resources to make substantial loans are the International Bank and its affiliate, the International Development Association (IDA). The Bank makes loans only at commercial rates and with iron clad guarantees. Most of its loans, however, have been for purposes related to economic development. In 1957, another World Bank affiliate, the International Finance Corporation (IFC) was created to further economic development by investing in productive private enterprises in association with private investors in developing countries. The various technical assistance provided includes regional projects in underdeveloped countries, the provision of experts, extensive fellowship programmes and training centres.

Towards tackling the world food problems, the FAO of the UN has played a significant role, especially during the post war world food crisis. In 1960 it launched a Freedom from Hunger campaign. The FAO has aided in a variety of problems like, animal and plant disease control, storage of grains, conservation and preservation of soil erosion, fishery production and conservation. Joint working groups have been setup to eliminate

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bottlenecks in the production and distribution of food, fertilizers and agricultural machinery.

In the field of transport and communication, the UN gives particular attention to such problems as the coordination of sea and air safety activities, the simplification of passport and frontier formalities and the improvement of road and motor traffic regulations. The Inter-Governmental Maritime Consultative Organisation has important functions in the field of maritime safety. The International Civil Aviation Organisation is working towards increasing the safety of international air travel.

The International Telecommunication Union tries to solve the technical problems in the allocation of radio wavelength frequencies. Another area of service is the supervision and regulation of international mail. The Universal Postal Union is making effort to assure uninterrupted postal communication

The International Labour Organisation has been working for the improvement of labour standards and conditions throughout the world. Upon request by member states ILO sends commissions of inquiry to look into particular problems. It collects and makes available in publications such as the International Labour Review and the Yearbook of labour Statistics, a vast amount of information from all over the world.

Social issues in which the UN has rendered service covers a wide area of social welfare, health problems, aid to children, educational, scientific and cultural associations, human rights and fundamental freedoms, freedom of information, status of women, protection of minorities, racial discrimination and trusteeship system.

Organisational issues.

On the subject of Charter revision many nations of the world have expressed their views in favour of amending the existing document, towards changes in the operations that would permit still more effective performance. There have been dissatisfactions expressed regarding the achievements of the UN. But these people forget that the basic character of the UN is that it is an organization of sovereign states and that success in political and security issues is dependent upon great power unanimity and the U.N is limited in its coercive power. There is complaint that states peruse national interests and national polices in an international organization, but can any state do anything else.

Another important issue is the veto in the Security Council .It has been the most criticised aspect of the UN's procedure. 'Veto' refers to the voting procedure in the Security Council. Any one of the five permanent members

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of the Security Council, namely, China, France, the United States, the United Kingdom and the U.S.S.R., can veto a decision on nonprocedural matters which all other members support. A negative vote by one of the Big Five is a veto only if this vote defects an action, which would otherwise have been approved.

In practice various methods have been employed to evade the veto. One such measure is the enhanced importance of the General Council, where the power of veto does not exist.

The UN's role - an assessment

Maintenance of international peace and security is one of the important responsibilities of the UN. But usually the UN is called into the picture only after the disputes assume serious dimensions and pose a real threat to the peace of the world. Under the Charter the parties are expected to settle their disputes through peaceful methods and only when these pacific methods prove insufficient the General Assembly and the Security Council are called upon to maintain peace.

The UN has done a commendable job of maintaining international peace and security. The UN has contributed directly or indirectly to the settlement of numerous controversies, which could have posed a serious threat to world peace. The UN though not have settled any issue completely, it has relieved tensions in many crucial situations. Issues have been compromised, postponed or otherwise prevented from leading to serious international crisis. Thus UN has played a useful role in 'defusing' disputes.Its services as a mediator have been valuable in several instances. It encourages the parties to a dispute to resort to peaceful means of settlement.

Though the UN failed to 'settle definitely' most of the disputes it relieved the tension in many crucial situations. The failure of the UN to settle certain political issues was mainly due to stubborn attitude of parties. The failure of UN was due to nationalism, sovereignty and national state psychology. Veto power also handicapped the UN. Any big power could stop the UN from taking any step against the aggressor. The lack of coercive force at the command of UN and the fully armed great powers further reduced its effectiveness. The effectiveness of UN will depend greatly on how much the people of the world or atleast those of the great powers are willing to support its efforts on their behalf.

Security Council - Membership Expansion :

The efforts to expand the UN Security Council have gained momentum. The council presently has 15 members of whom five are permanent. The Americas proposal on expansion proposes the strength to be expanded to 21, the NAM is looking at a figure of 26 for the new security council, France and Britain are willing to endorse a council of 24

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members. Any expansion of the Security Council must be approved by two thirds of the total membership (not just present and voting) of the UN General Assembly.

The U.S. has come in favour of early expansion of the security council may be because of its hope that Germany and Japan which it wants as permanent members in the expanded council would accept a large share of the UN financial burden.

Permanent seat for India in the Security Council of the UN. For years now, India has been lobbying to get a permanent seat in the Security Council of the UN.

The French and British endorsement has been gained, and among the other permanent members, Russia has already backed India's claim. As on April 2000, the latest fact is that, the U.S. has given reconfirmation of its decision not to support India's candidature for a permanent seat in an expanded UN Security Council.

The next session of the UN General Assembly may only elect Germany and Japan and postpone election of other permanent members or may freeze the question for another year.

The current position:

(i) The U.S. does not want any more permanent members with the veto privilege. It feels quite comfortable with the present P5 and is willing to add on Japan and Germany.

(ii) Since the end of cold war the U.S. has been able to wield power single-handed The G-7 developed countries have always supported the U.S. despite murmurs from France. The G-7 has expanded to include Russia, which also demurs impotently.

(iii) China has not been able to do much other than abstain on such issues as Iraq or Kosovo.

(iv) Security decisions are made directly or through NATO bypassing UN and using it for follow-up legal enforcement purposes.

(v) UN's 195 members being represented by only Britain, China, France, Russia and USA, (P5) along with Japan and Germany is the height of inequity. Europe, which has only 25 per cent of the world's population, has more than double Asia's representation, which has 50 per cent of the world's population. Africa with 8 per cent has none and the Americas with 16 per cent have only the US. Hence a balanced representation of the people of the various continents is not there in the permanent membership of the UN Security Council.

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Points for future action:

(i) The popular idea is that a more representative member composition might be: China, Japan India, Indonesia, Iran, Saudi Arabia, Papua Newguinea (Asia), Russia, EU President, Turkey (Europe), USA., Brazil(the Americas), South Africa and Egypt (Africa).

(ii) A more equitable arrangement would be to abolish country membership and the Veto and have the Security Council constituted of the representative of regional organisations like the EU, NATO, ASEAN, SAARC, Caribbean Community, MERCOSUR and Arab League. Regional questions could be handled regionally with the global UN providing support.

Thus there is considerable room for innovation, flexibility and preventive action. In a way, India is better off perhaps outside the Security Council, fighting for reform. Global security should concentrate on nuclear and missile disarmament and peace-building. Hegemony and super power status should be completely avoided from getting build up.

UN - Current state of affairs - The Millennial Summit

The historical Millennial Summit of the United Nations concluded on 8th September 2000 with the 150-odd world leaders assembled at the summit meet adopting a wide ranging declaration to deal with peace and security, eradicate poverty, fight diseases and protect the earth. The leaders reaffirmed their faith in the U,N, and its Charter as "indispensable foundations of a more peaceful, prosperous and just world".

The UN is the world body that has been created to uphold the collective security of the member nations and to be an effective basis for peaceful settlement of disputes.

This world body that was created in the year 1945, by the end of world war II, through its Charter had enlisted the various activities which it should concentrate on to fulfill its prime duties of attaining collective security and pave way for peaceful settlement, but it was found that it was side tracked in many issues and its proper importance was not asserted.

With the conduct of the millennial summit of the general assembly of the UN, it is high time that focus is brought upon the issues to be concentrated upon by the UN. An insight into the UN Secretary General's pre-summit report would give an understanding on the sentiments prevailing and an overview of the various declarations at the summit would provide the issues earmarked by the world leaders as framework for future actions of the UN.

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Summit Declarations

At the summit, the world leaders identified certain fundamental values essential to international relations in the 21st century, namely, freedom, equality, solidarity, tolerance, respect for nature and the concept of shared responsibility. With a view to translating these shared values into actions, the participants listed objectives that have been assigned special significance- peace, security and disarmament, development and poverty eradication, environment protection, human rights, democracy, good governance and protection to the vulnerable.

The final declaration laid emphasis on meeting the 'Special needs of Africa' and in strengthening the United Nations, on which there has been much talk and debate.

The declaration also resolved to take concerted action against international terrorism, to counter the world drug problem and fight transnational crime and money laundering. In order to minimize the impact of UN sanctions, sanction regime would be subject to regular reviews, besides eliminating adverse effects of sanctions. The leaders also agreed to strive for the elimination of weapons of mass destruction, particularly nuclear weapons. From the viewpoint of the developing countries and the poorer nations, the thrust should be on developmental and economic fronts. Population control, deadly diseases, gender equality were also discussed. another theme was how the UN should take on the challenges of the 21st century and the kind of structural and functional changes necessary.

The Secretary - General's Report

On the eve of the UN General Assembly's millennial summit the Secretary General Mr. Kofi Annan submitted a report entitled "We the Peoples: the hole of United Nations in the 21st Century". A popular comment on the Report is that the report has missed a historic opportunity to draw the world leaders attention to the vast erosion in the UN's role and functions in the last 20 years.

Some of the gravest problems that have been left out are (i) the UN being kept constantly on the brink of financial bankruptcy (ii) the marginalisation of its peace-making and peace-keeping role, and (iii) the transfer of its functions in the economic field to the IMF, the World Bank and the WTO.

The minimum that is needed now is to restore to the UN its Charter functions. Unless this is done the organisation can serve neither an "international world" nor a "global world'

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An attempt is made in the report to define the UN's "core competence". In this it is put on the same footing as the IMF and the world bank, which is not absolutely correct, since the UN is the overall body and hence it is wrong to pit it against its own specialised agencies.

The analysis in the report of changes in the world situation does not bring out such adverse consequences of globalisation as accentuation of inequalities, growing marginalisation of the poorest and increasing homogenisation of culture, consumption patterns and production structures. These lead to social tension and conflicts and pose a threat to global peace and stability.

The report has very little to say on the emerging international financial architecture, beyond suggesting that it has to be strengthened. The UN was seriously involved in designing this architecture. The system that is emerging is a continuation of the status quo with much greater discretion to major economic powers and much enhanced role for the IMF for the surveillance of the developing economies. .

The report suggests several targets to be persued in the economic and social fields during the next 15-20 years. However, the targets suggested are those of goals and not of the means to achieve them. Their implications in terms of the resources to be mobilised for meeting them have not been worked out. This imparts an air of unreality to the targets.

Among some of the positive features of the report is the secretary general's recommendation to industrialised countries "to consider granting duty-free and quota-free access for essentially all exports from the least developed countries. However, this concession should not be allowed to establishment of a link between trade and labour and environmental standards.

To sum up

(i) The issues identified by the world leaders to be handled in the immediate future by the UN are international peace and security, hunger and poverty eradication, environmental protection, human rights, sanctions regime, and economic development.

(ii) UN has to be strengthened financially and its peacekeeping capability and its contributive capacity to the economic development of world nations should be revamped.

(iii) UN should be vigilant to take up each and every opportunity to bring to the understanding of the world leaders the insufficient importance given to the UN to act effectively according to its Charter.

However, the meeting concluded without any discussion to the issues like the bankruptcy of the UN, declining recognition and financial stringency of the UN.

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As on 25th Dec.2000, the UN has adopted a major change in its financing system, the first in 28 years, which will effectively cut down the contribution of the US and Japan and increase payments by developing countries whose economies have recently been picking up. The decision opens the way for the US Congress to pay arrears estimated at $1.3 billion by the world body and claimed by Washington as less than $1 billion. The new formula substantially increases payments by South Korea, Singapore, Brazil and Argentina. In all, 18 developing countries will see their contributions go up. India's contribution has been fixed at 0.343 percent for 2000 and 0.344 percent for 2001.

UN. Sanctions - in the news

UN sanctions on Afghanistan, as on Dec. 19, 2000. The UN and other international agencies have withdrawn all their international staff from Afghanistan fearing backlash against the proposed additional sanction by the UN security council

The draft sanctions, which include an extension of the November curbs, include an arms embargo, freeze on Taliban assets abroad and restrict the sale of chemicals used to make heroin from poppies.

The UN agencies involved in humanitarian assistance in Afghanistan are opposed to further sanctions on the ground that they hurt the people more than those who are sought to be targeted.

Led by the UN and Russia, the security council on 19.12.2000 imposed harsh new sanctions on the Taliban government of Afghanistan, leaving the UN profoundly split over the human and political damage the measures could inflict on one of the world's poorest nations. The vote in the 15-member Council was 13 for the embargo, with China and Malaysia abstaining.

On 19.12.2000, the UN removed all its remaining relief workers from the country, fearing a backlash from the Taliban, who will be completely isolated diplomatically when the resolution takes effect in 30 days and the Taliban leaders will be barfed from international travel. Air links will be cut and arms and military embargo will be imposed only on the Talibans and not their armed opposition, which is supplied by Russia, Iran and lately India. All assets belonging to Osama, the Saudi-born financier of Islamic militancy who is thought to be living in Afghanistan will be ordered frozen around the world.

The US has been demanding Osama's expulsion from Afghanistan to stand trial for master minding explosions at US embassies in Kenya and Tanzania in 1998. The new sanctions are linked to the refusal of the Taliban to meet that demand, made in a first round of sanctions a year

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ago. For Russia, the Taliban is assumed to be behind an Islamic rebellion in Chechnya. There is no issue in Washington that has stronger bipartisan support than combating terrorism.

Pakistan has warned of a grave human catastrophe in Afghanistan if the UN Security Council were to go ahead with the draft resolution proposed by the US and Russia for new sanctions against the Taliban

regime. Asked about Osama Bin Laden, the Pakistan Foreign Minister, Mr. Abdul Sattar, said that Pakistan had facilitated a dialogue between Afghanistan and the US and it was on the latter to sort out the issue. To another question, he said 'pre-occupation' with one person would result in suffering for the whole people. Pakistan is one of the three countries that recognises the Taliban regime and the only country to have a full fledged embassy in Kabul.

India opposes continued sanctions against Iraq as on 21.12.2000 :

India has sounded the members of the UN sanctions committee for Iraq for their support to its strong case under a special provision of the world body's charter for purchase of large quantity of crude from that country than is possible under the present limited arrangement.

Under the existing oil-for-food programme, India gets 1.5 million tonnes at the normal OPEC price, while its requirement of Iraqi crude is of the order of 14 million to 15 million tonnes. The five permanent members of the Security Council constitute the committee.

As a result of the recent discussions, the final round of which was held during the Iraqi Vice-President, Mr. Taha Yassin Ramadhan's recent visit to India, Baghdad is willing to meet India's needs to a very large extent, at lower than the prevailing market rates. This however is possible only if the sanctions committee gives clearance, under Articles 50 of the UN Charter. Under it, if the UN sanctions against a state create special economic problems for any other country, the latter "shall have the right to consult the Security Council with regard to a solution of those problems". So far Jordan is the only country which takes Iraqi crude under the special provision, while other countries secretly get supplies from Baghdad. This is done at a sizeable scale and as such could not have escaped the notice of those responsible for enforcing sanctions.

The "special economic problems", confronted by India because of the UN sanctions against Iraq, has been brought to the notice of the sanctions committee. The cumulative effect of the lost trade and project opportunities being to tune of $20 billion to $30 billion, apart from the blocked funds of $one billion of Indian enterprises that had taken up

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projects in Iraq. Added to this is the heavy burden of the hike in international price of oil, so much that India's export bill this year may go up by $six billion.

As against that, India had a large surplus of food grains, which could be bartered for Iraqi oil. Some 27 million tonnes of wheat, costing Rs,6000 crores, were stored in warehouses in various parts of the country. Iraqis like Indian wheat and its supply would, on the one hand, meet a major humanitarian need and on the other enable India to make use of the stored stocks to meet its oil requirements. While seeking to invoke the special provision of the UN Charter, India continued to voice its opposition to the continuation of sanctions against Iraq, which has caused untold suffering to the people there. Mr. Ramadhan's discussion at Delhi centered on the establishment of the framework for strategic and long-term relationship with India. Iraq had invited India to take part in developing an oil field there- a highly promising proposition with immense potential of gain to both countries.

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9. INTERNATIONAL LAW

Nature

Material sources of international law

International disputes

Treaty relations

International law and business houses

International Law not only presumes the sovereignty of states but also seeks to preserve sovereignty. It incorporates the experience of many centuries during which people have lived side by side and have done business with each other. It is a law 'among' states and not 'over' them.

International Law is generally defined as law applicable to relations between states, but in modern times, individuals are becoming more and more subject to international law such that the law of nations is applicable to individuals in their relations with states and even to certain interrelationship of individuals.

This law is also sometimes spoken as 'public international law' to distinguish it from what is known as 'private international law', a branch of the law which deals entirely with the relations of persons living under different legal systems.

Nature of international law:

International law is that body of law, which is composed of the principles and rules of conduct which, states feel themselves bound to observe, and which they observe in their relations with each other. It also includes the rules of law relating to the functioning of international institutions or organisations, in their relations with each other and their relations with states and individuals and certain rules of law relating to individuals and non-state entities, so far as the rights or duties of such individuals and non-state entities are the concern of the international community.

The institutions like U.N., W.H.O., the Council of Europe, OECD (Organisation for Economic Cooperation and Development), which undertake movements to protect human rights and fundamental freedom for individuals, develop new rules of international law.

International law is primarily a system regulating the rights and duties of states inters. International law is also frequently referred to as the 'law of nations' although strictly speaking the word 'nation' is only in a crude way a synonym for the word State. The principal component of the international law system is represented by binding rules, imposing duties and conferring rights upon states, though to this are added guidelines and

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recommended standards expressed in non-binding form (e.g. Declarations adopted by the U.N. General Assembly, Resolutions of ILO Conferences). It is also possible that treaties or provisions in treaties, may impose no binding obligations, or be intended not to create legal relations between the parties, but serve simply to formulate moral or political rules or guidelines for behaviour.

The main objective of international law has been to produce an ordered rather than a just system of international relations The modern law of nations aims at securing justice for human beings.

International law is primarily concerned with the rights, duties and interests of states. Normally the rules of conduct that it prescribes are rules that the states are to observe, and, in the same way treaties may impose obligations which the signatory states alone agree to perform. The duties resting on a state at international law are ultimately duties binding on individuals. International law as a matter of technique does become binding on the individuals, only mediately and through the concept of the state.

International law is an indispensable body of rules regulating for the most part the relations between states without which it would be virtually impossible for them to have steady and frequent inter-relations. In the absence of some system of international law, the international society of states could not enjoy the benefits of trade and commerce, of exchange of ideas and of normal routine communication. Over the years, there has been remarkable development in 'law making treaties' and in the use of arbitration to settle international disputes. The settled rule of international law deals with an immense variety of matters. Some of the issues are claims for injuries to citizens abroad, questions of nationality, the extra territorial operation of certain national legislation, the interpretation of the numerous complicated treaties or arrangements entered into by most states with reference to commerce, finance, transport, civil aviation, nuclear energy and the like.

Breaches of international law results in wars or conflicts. International law has not been able to cope up with problems like disarmament, international terrorism and trafficking in conventional arms. These receive adverse attention and generally leads to the false feeling of complete breakdown of international law. Lapses from ideals are as inevitable as the existence of law itself.

Material sources of international law:

The material sources of international laws are the actual materials from which an international lawyer determines the rule applicable to a given situation. These materials can be broadly classified into the following five categories: (i) International custom, as evidence of a general practice accepted by law, (ii) Treaties, (iii) Decisions of judicial or

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arbitrate tribunals, (iv) Juristic works, (v) Decisions of the organs of international institutions.

(i) Custom: These rules had generally evolved after a long historical process culminating in their recognition by the international community. These have led to a large number of 'law-making' treaties being concluded.

Usage is an international habit of action that has not yet received full legal attestation. Usages may be conflicting, but custom must be unified and self-consistent.

Customary rules crystallise from usage or practices which have evolved either (i) during diplomatic relations between states or (ii) by practice of international organs or (iii) by state laws, decisions of state courts and state military or administrative practices.

(ii) Treaties: There are (i) 'law making treaties' which lay down rules of universal or general application and (ii) 'treaty-contracts' between two or only a few states dealing with a special matter concerning these states exclusively.

The law making treaties deal, with the protection of industrial property, the suppression of slave trade, aerial navigation, international waterways, the peaceful settlement of international disputes, international economic and monetary questions and many others (examples: UN Charter, Single Narcotic Drugs Convention - 1961, Vienna Convention on Diplomatic Relations - 1961 GATT - 1947).

(iii) Decisions of judicial or arbitral tribunals: The only existing permanent international judicial tribunal with a general jurisdiction is the International Court of Justice (1946). The decisions of state courts may in certain cases lead to the formation of rules of International Law.

Decisions of international arbitral tribunals such as the Permanent Court of Arbitration, the British-American Mixed Claims Tribunal and others have contributed to the development of international law.

The main distinction between arbitration and judicial decision lies not in the principles which they respectively apply, but in the manner of selection of the judges, their security of tenure, their independence of the parties and the fact that the judicial tribunal is governed by a fixed body of rules of procedure instead of by ad hoc rules for each case.

(iv) Juristic Works: Juristic works are not an independent 'source' of law, although sometimes juristic opinion does lend to the formation of international law. It is of no authority in itself, although it may become so if subsequently embodied in customary rules of international law. Article

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38 of the statute of International Court of Justice directs the Court to apply, the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law.

(v) Decision of the organs of international institutions and international conferences: Decisions of the organs of international institutions and conferences, (i) may represent intermediate or final steps in the evolution of customary rules, particularly those governing the constitutional functioning of these institutions, (ii) be a resolution of the organ and have full legal effect as laying down rules which are binding on the members and other organs of the institutions, (iii) may be binding determinations concerning the interpretation of their constituent instruments. For example, the Executive Directors and the Board of Governors of IMF have such powers. These interpretative decisions will form part of the law of the international institution in question.

Thus of the various material sources the order in which these sources are set out in para 1 of Article 38 of the statute of the International Court of Justice, that is, (i) Treaties and Conventions, (ii) Custom, (iii) General principles of law recognised by civilised nations, (iv) Judicial decisions and juristic opinion 'as subsidiary means for the determination of rules of law', is the order that is generally followed in practice.

International Disputes:

International disputes might be disputes between states as such or between states on the one hand and individuals, corporate bodies and non-state entities on the other. Disputes might be minor differences or might be situations of prolonged friction and tension between countries. To settle international disputes as early as possible and in a manner fair and just to the parties involved has been a long-standing aim of international law and the rules and procedures are partly a matter of custom or practice and partly due to a number of important law making conventions, such as the Pacific Settlement of International Disputes (1907), the United Nations Charter drawn up at San Francisco in 1945.

The method of settling international disputes fall into two broad categories:(i) Peaceful means of settlement, that is, where the parties are agreeable to finding an amicable solution and (ii) Forcible or coercive means of settlement, that is, where a solution is found and imposed by force.

Peaceful and amicable means of settlement:

They may be classified as (a) Arbitration, (b) Judicial Settlement, (c) Negotiation, mediation and conciliation and (d) Settlement under the auspices of the United Nations Organisation. This classification does not mean they are rigid separate compartments, more so in the practical world.

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(a) Arbitration: It means the reference of a dispute to certain persons called arbitrators, freely chosen by the parties, who make an award without being bound to pay strict regard to legal considerations. However practice has shown that many disputes involving purely legal issues are referred to arbitrators for settlement on a legal basis. Moreover, various treaties specially instruct arbitral tribunals to apply international law. Arbitration as an institution is neither permanent nor it is a Court. Arbitral procedure is more appropriate than judicial settlement for technical disputes and less expensive. If necessary, arbitrations can be conducted even to the extent that parties can agree that awards be not published. Arbitral procedure is flexible enough to be taken in combination with the fact-finding process of negotiation and conciliation.

(b) Judicial settlement: It is a settlement brought about by a properly constituted international judicial tribunal, applying rules of law. The only general organ of judicial settlement at present available in the international community is the International Court of Justice at The Hague. The Court is a permanently constituted tribunal governed by a statute and its own body of rules of procedure. It possesses a permanent registry, its proceedings are public. Article 38 of its statute specifically sets out the different forms of law, which the Court is to apply in cases and matter brought before it. The membership of the Court is representative of the greater part of the international community. The Court consists of fifteen judges. The candidates are nominated by the national groups of the panel of the Permanent Court of Arbitration. From this list, the General Assembly and Security Council voting independently, elect the members of the Court, an absolute majority in both the Assembly and the Council being required for election. Under a kind of 'gentlemen's agreement', currently applicable, the regional distribution of judges to be elected is Africa-3, Latin America-2, Asia-3, Western Europe and other countries-5, Eastern Europe-2.

The Court's jurisdiction is (a) to decide contentious cases and (b) to give advisory opinions. In the contentious cases the exercise of the Courts jurisdiction is conditional on the consent of the parties to the dispute. If a dispute is referred to the Court by one party only, it will be sufficient if the other party to the dispute consent to the reference then or subsequently.

Only states may be parties in cases before the Court, but the Court is empowered to obtain or request information from public international organisations relevant to these cases, or such organisations may furnish this information on their own initiative.

As to advisory opinions, the General Assembly and the Security Council of the United Nations Organisation may request such opinion

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from the Court. Other organs of the United Nations and the specialised agencies or other members of the United Nations group may if authorised by the General Assembly request the Court to give advisory opinions on legal questions arising within the scope of their activities.

(c) Negotiation, Good Offices, Mediation, Conciliation or Inquiry: These methods are less formal than judicial settlement or arbitration. The value of continued negotiation could be felt in the conclusion of the US-Soviet Intermediate Range Nuclear Forces Agreement (INF) in December 1987. Under good offices and mediation, a friendly third state assists in bringing about an amicable solution to a dispute. In the case of good offices the third party, brings together the dispute parties to work towards settlement, without itself actually participating in the negotiations or inquiry into the various aspects of the dispute. The initiative of Soviet Government in 1965 in bringing representatives of India and Pakistan together at Tashkent for a settlement is an example of good offices and mediation.

Conciliation in the general sense, covers the methods whereby a dispute is amicably settled with the aid of other states or of impartial bodies of inquiry or advisory committees. In the narrow sense, conciliation signifies the reference of a dispute to a commission to make a report with proposals for settlement, such proposals not being of a binding character. Not to adopt the proposed terms of settlement distinguishes conciliation and arbitration.

The object of inquiry is without making specific recommendations to establish the facts, thereby prepare the way for a negotiated adjustment.

(d) Settlement under the auspices of UN: The General Assembly is given authority, subject to the peace enforcement power of the Security Council to recommend measures for the peaceful adjustment of any situation. The Security Council acts in two kinds of disputes: (i) disputes, which may endanger

international peace and security, (ii) cases of threats to the peace, or breaches of peace or acts of aggression. The Council may call on the parties to settle their disputes by the methods considered above or it may recommend appropriate procedures for settlement, or it may call on the parties concerned to comply with certain provisional measures.

Forcible or coercive means of settlement:

When disputes are not settled by amicable means by states, then coercive means like the following may be resorted to: (i) war and non-war armed action, (ii) retorsion, (iii) reprisals, (iv) pacific blockade, (v) intervention.

(a) War and non-war armed action: The main purpose of war is to overrule the opponent and to impose terms of settlement, which that state has no alternative but to obey.

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(b) Retorsion: It is retaliation by a state against discourteous acts of another state, such retaliation taking the form of unfriendly legitimate act. Example, severance of diplomatic relations, revocation of diplomatic privileges, withdrawal of fiscal or tariff concession. Practice of retorsion is greatly varied.

(c) Reprisals: The term was restricted to the seizure of property or persons and it connotes coercive measures adopted by one state on another. Examples: a boycott of the goods of a particular state, an embargo, a naval demonstration. Reprisals consist of act which would generally otherwise be quite illegal whereas retorsion consist of retaliatory conduct to which no legal objection can be taken.

(d) Pacific Blockade: The blockade of a belligerent state port in times of war is a very common naval operation. Pacific blockade is a measure employed in time of peace. Sometimes classified as a reprisal, it generally aims at to coerce the state whose ports are blockaded, into complying with a request for satisfaction of the blockading states. If not now obsolete, its admissibility as an unilateral measure is questionable under the UN Charter.

(e) Intervention: Intervention is generally forbidden where it is much stronger than mediation or diplomatic suggestion. Intervention might even go so far as to include military measures. It might also be 'subversive intervention' which denotes propaganda or other activity by one stale with the intention of

supporting, for its own purposes, revolt or civil disturbances in another state. International law prohibits such subversive intervention.

Treaty Relations:

A treaty is an agreement whereby two or more states establish or seek to establish a relationship between them selves governed by international law. The agreement between states must generally be attested, it should create a legal relationship. Even oral exchange between states involving undertakings may constitute a treaty. It also includes an agreement between international organisations, or between an international organisation and a state or states.

Prior to 1969, the law of treaties consisted mostly customary rules of international law. These rules were to a great extent codified and reformulated in the Vienna Convention on the Law of Treaties, concluded on 23 May 1969 and which entered into force on 27 January 1980 following the deposit of 35 ratifications or accessions as required by its Article 84.

The treaty is the main instrument, which the international community has for the purpose of initiating or developing international cooperation.

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Under the domestic law. contracts, leases, licenses, settlements, acknowledgements and so on, are there for executing some legal act or for attesting a transaction. In the international level, the treaty has to deal with every kind of legal act, be it bilateral bargain between states or a multilateral agreement, like the UN Charter of 1945.

The main object of a treaty is to impose binding obligations on the states who are parties to it. Once a state has bound itself by agreements in a treaty, it is not entitled to withdraw from its obligations without the consent of all other states who are parties to the treaty. With the establishment of the U.N. and its specialised agencies the number of treaties is on the increase.

The forms and terminology of treaties in practice are far from being systematic and lack uniformity. The various principal forms are (i) Head of states form - drafted as an agreement between sovereign heads of state, and the obligations are expressed to bind them as High Contracting Parties, (ii) Inter-governmental form - drafted as an agreement between governments and is generally employed for

technical or non-political agreements, (iii) Inter state form - an agreement between states. The signatories are often referred to as 'the parties', (iv) Between ministers of respective countries generally the respective Ministers of foreign affairs, (v) Inter-department concluded between representatives of particular government department example, respective customs administration of the countries concerned.

The form in which treaties are concluded does not in any way affect their binding character. Treaties go under a variety of names, some of which indicate a difference in procedure or a greater or a lesser degree of formality. Besides the term 'treaty', the following titles have also been given (1) Convention, (2) Protocol, (3) Agreement, (4) Arrangement, (5) Process-verbal, (6) Statute, (7) Declaration, (8) Modus Vivendi, (9) Exchange of Notes/Letters, (10) Final Act and (11) General Act.

Convention: A formal instrument of a multilateral character. It also includes the instruments adopted by the organs of international institutions, example, the International Labour Organisation, the Assembly of the International Civil Aviation Organisation.

Protocol: It is less formal than a convention and is generally never in the heads of state form. It might be a subsidiary to a convention on matters such as the interpretation of particular clauses of the convention or supplementary provision and the like.

Agreement: It is less formal than a convention and is generally applied to agreements of more limited scope and with fewer parties. It is also

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employed for agreements of a technical or administrative character only. Signed by the representatives of government departments but not subject to ratification.

Arrangement: They are similar to Agreements, but are employed for a transaction of a provisional or temporary nature.

Process-Verbal: Originally it denoted the summary of the proceedings and conclusion of a diplomatic conference, but now used as well to mean the record of the terms of some agreement reached between

the parties. It is also used to record an exchange or deposit of ratifications, or to effect a minor alteration to a convention. It is generally not subject to ratification.

Statue: A collection of constituent rules relating to the functioning of an international institution or a collection of rules laid down by international agreement as to the functioning under international supervision of a particular entity or an accessory instrument to a convention setting out certain regulations to be applied.

Declaration: The term denotes (a) A treaty proper, example: the Declaration of Paris 1856, the Joint Declaration Dec. 19, 1984 of the U.K. and the People's Republic of China on the revision of Hong Kong to Chinese Sovereignty in 1997, (b) an informal instrument appended to a treaty or convention, explaining the provision of the latter, (c) an informal agreement on a matter of minor importance, and (d) a resolution by a diplomatic conference.

Modus Vivendi: It is an instrument recording an international agreement of a temporary or provisional nature intended to be replaced by an arrangement of a more permanent and detailed character.

Exchange of Notes/Letters: It is an informal method, whereby states recognise certain obligations as binding them. Sometimes the exchange of notes is effected through diplomatic or military representatives of the states concerned.

Final Act: It is the title of the instrument that records the winding up of the proceedings of the conference summoned to conclude a convention. The Final Act is signed but normally does not require ratification.

Practice as to entry into force of treaties:

The various steps in the creation of obligations by treaty are (i) Accrediting of persons who would conduct negotiations on behalf of the contracting states, (ii) Negotiation and adoption, (iii) Authentication, signature and exchange of instruments, (iv) Ratification, (v) Accessions and adhesions, (vi) Entry into force, (vii) Registration and publication, (viii) Application and enforcement.

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Accrediting of negotiators: To commence negotiations, in practice, a representative of a state is provided with a very formal instrument given either by the Head of State or by the Minister of Foreign Affairs showing his authority, called the Full power or 'Pleens Pouvoirs'.

Negotiation and Adoption: Negotiations are conducted by holding a diplomatic conference. The delegates remain in touch with their governments. The procedure at diplomatic conferences run a standard pattern. Apart from Steering Committees, Legal and Drafting Committees are appointed to receive and review the draft provisions proposed by the various delegations. The Conference appoints a prominent delegate to act as reporter in order to assist the conference in its deliberations. Besides the formal public sessions, many discussions are conducted in the corridors at special dinners and functions, the results of these appear in due course in the decisions reached by the Conference.

Authentication and signature: Once the final draft has been agreed upon, the instrument is ready for signature. The text may be made public for a certain period before signature. The act of signature is usually a most formal matter. Each delegate signs on behalf of the head of state or government by whom he was appointed. If the treaty is not subject to ratification/acceptance or approval, in the absence of contrary provision, the instrument is binding as from signature.

Ratification: The delegates who signed the treaty refer it back to their governments for approval, if such further act is expressly or impliedly necessary. Ratification is the approval by the head of the state or the government of the signature appended to the treaty by the duly appointed plenipotentiaries. Ratification is called for, such that, States have an opportunity of reexamining and reviewing instruments signed, before undertaking the obligations. Moreover, often a treaty calls for amendments or adjustments in municipal law. The period between signature and ratification enables states to pass the necessary legislation or obtain the necessary parliamentary approvals.

Accessions and Adhesions: A non-signatory state may accede or adhere even before the treaty enters into force. In the view of some authors, accessions involve being party to the whole treaty whereas adhesion may be an acceptance of part only of the tready. Some others view that, accession involves participation in the Treaty with the same status as the original signatories whereas adhesion connotes merely approval of the principles of the treaty.

Entry into Force: Many treaties become operative on the date of their signature, but when ratification, acceptance or approval is necessary, the treaty comes into force only after the exchange or deposit of ratifications

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or acceptances. Sometimes a precise date for entry into force is fixed without regard to the number of ratifications received. Sometimes a treaty comes into operation only on the happening of a certain event.

Registration and Publication: The UN Charter 1945 provides that all treaties entered into by member of the UN as soon as possible be registered with the Secretariat of the Organisation to be published by it in the United Nations Treaty Series.

Application and Enforcement: The final stage, of the treaty making process is the actual incorporation of the treaty provision, where necessary, in the municipal law of the state parties and any required administration and supervision by international organs.

International law and business houses:

The world today is more economically interdependent than at any other time in history, which has led to the globalisation of product, services and capital market. Economic interdependence is the result of many factors like availability of raw materials, technological advances in travel and communications and the like. Nations have changed from protectionism to free trade. The world has seen a steady movement toward economic integration, the development of free trade areas and common market among 0nations. The inter-relatedness of financial markets, the worldwide flow of capital and the coordination of economic policies between nations have had a tremendous impact on the global economy.

Political changes also have increased interdependence among countries. Countries are moving towards greater political freedom and democracy. The breaking up of the Soviet Union in 1991 has freed much of Eastern and Central Europe from communist oppression leaving them open for foreign investment. In many of the Latin American and Asian countries, military rule is being replaced by democracy, opening them up to foreign investors. The greater economic interdependence has required the nations to reach agreement on important legal issues and to the development of widely accepted legal norms and conventions.

The international business can be broadly classified into (i) trade (ii) international licensing of technology and intellectual property (trademarks, patents and copyrights) and (iii) foreign direct investment. From

the legal point of view they represent the form of doing business in a foreign country and the legal relationship between parties to a business transaction. Considerable overlap occurs among these different forms of doing business.

Trade- Trade consists of the import and export of goods and services. Trade is often a firm's first step into international business. Compared to the other forms of international business like licensing and investment, trade is relatively uncomplicated.

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Importing and exporting are governed by the laws and regulations of the countries through which goods and services pass. Countries regulate trade in various ways. The most common methods are tariffs and non-tariff barriers. Import tariffs are import duties or taxes imposed on goods entering the customs territory of a nation. It is generally imposed for (i) collection of revenue (ii) towards protection of domestic industries and (iii) for political control, favouring friendly nations and prohibiting/ controlling goods from unfriendly nations.

Unlike tariffs, which are published and easily understood, non-tariff barriers are often disguised in the form of government rules or industry regulations. Countries impose non-tariff barriers to protect their national economic, social and political interests. Imports might be banned for health and safety reasons. One form of non-tariff barrier is the technical barrier to trade or product standard. Product standards include safety standards, electrical standards and environmental standards. A quota is a restriction imposed by the law on the numbers or quantity of a particular type of goods allowed to be imported. An embargo is a ban on trade with a particular country and a boycott is a refusal to trade with certain firms usually from a particular country on political or other grounds.

Tariffs and non-tariff barriers have a tremendous influence on how firms make their trade and investment decisions and they get reflected in the patterns of the world trade and flows of investment capital.

GATT (now WTO) and IMF, both agreements are part of the limited body of effective international law. Both agreements identify acceptable and non-acceptable behaviour for the member nations.

Their effectiveness lies in their power to apply sanctions. The IMF can withhold its services from members who act illegally, that is, contrary to the agreement. GATT allows injured nations to retaliate against members who have broken its rules. In IMF and GATT are international bodies with reasonable legislative, executive and judicial powers.

The international marketer is interested in both IMF and GATT because of a shared concern in the maintenance of a stable environment conductive to international trade. The firm is concerned about the IMF's ability to reduce restrictions on international finance. The firm supports GATT's efforts to free the international movement of goods. The legal implications of GATT and the IMF apply to the behaviour of the nations within which the firm is marketing.

Intellectual property rights and licensing agreements - Intellectual property rights are a grant from a government to an individual or firm of the exclusive legal right to use a copyright, patent or trademark for a

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specified time. Intellectual property can be sold or licensed for use to others through a licensing agreement. A firm may realise many advantages in having foreign company produce and sell products based on its intellectual property instead of simply stuffing finished goods to that market. Rights in property would be worthless if law cannot protect their rights. The protection of intellectual property is a matter of national law.

Foreign direct Investment: It refers to the ownership and active control of organising business concerns, including investment in manufacturing, mining, farming, assembly operations and other facilities of production. Foreign investment provides the firm with the most involvement and greatest risk. Multinational Corporations are characterised by their ability to derive and transfer capital resources world wide, to operate facilities of production and penetrate markets in more than one country. Entry into foreign market through direct investment can be (a) by opening up of subsidiaries, (b) by entering into joint ventures (c) or by acquisition of an on going firm by stock purchases. The government has restrictions on foreign investment through measures like local participation requirement, restrictions on repatriation of profits and the like.

Many countries including Eastern Europe, Latin and South American ones have been changing their laws to attract foreign investment, including laws on government approval for foreign investment and

technology transfer agreements. These changes in national laws greatly affect the business climate of a country. Each country depending upon its stage of development as well as past experience with foreign investment will develop unique investment codes, for example, while one country allows wholly owned foreign companies, other countries may require some level of local participation.

Impact of treaties on business: International law is the collection of treaties, conventions and agreements between nations, which have more or less the force of law. International law involves some mutuality with two or more countries participating in the drafting and execution.

International agreements have a general effect on international business. The United States has signed treaties of friendship, commerce and navigation (FCN) with many countries. The FCN treaties cover commercial relations between the two signing nations. They commonly identify the nature of the right of American companies to do business in those nations and which through the treaties usually guarantee "national treatment" to the foreign subsidiary.

Of a similar type are the tax treaties that the US has signed with a number of nations. The purpose of the tax treaty is to avoid double taxation, that is, if a company has paid income tax on its operations in a

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treaty nation, the US will tax that income only to the extent that the foreign tax rate is less than the American rate. Treaties have significant impact on private individual's rights. Tax treaties are part of international law and can have a significant impact on business. Example - Tax treaty between United States and Mexico on 1 Jan 1994, which was approved along with NAPTA agreement.

During business internationally requires an understanding of inter national law (public and private), national law and organisations. Political allegiances shift and trade is affected.

Knowledge of the host country's legal system and its ramification for business is important. International business law draws from both public and private law as they relate to business transactions.

Organisations like the United Nations, WTO and various treaties have expanded their effect on business transactions. Treaties such as bilateral tax treaties or multilateral conventions (Convention on the

International Sale of Goods or CISG) create obligations for private parties. National law such as investment codes plays a significant role in business decisions. All these issues together are international business laws.

Private International Law : It is defined as the laws applying to private parties in international transactions, and is described as the domain of rights, duties and disputes between and among persons from different places. Just as in public international law, private international law has no uniform codified set of accepted law. It consists of three areas: (i) choice of law i.e., which law applies to the transaction, (ii) choice of forum i.e., who has jurisdiction or the power to hear the case recognition and (iii) enforcement of judgement.

Private international law is also affected by multilateral conventions that provide a base for initial unification of substantive law, examples: Convention on the International Sale of Goods, Recognition and Enforcement of Foreign Arbitrate Awards. These conventions have helped in securing national agreement that arbitration awards should be honoured and that foreign courts must be assisted by national courts in collecting evidence. National law is a major factor in private international law, because in dealing with conflicts of law (e.g., which states law applies) the national legal system takes centre stage.

International organisations

International Organisations both governmental and non-governmental play an increasingly important role in today's global society as forums for legal, political and economic issues. Of these the UN and its affiliated organisations stand to the forefront.

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The UN and its affiliated organisations: If the transaction crosses national borders, two nations law apply to the transaction. No single body of law or comprehensive code called international law governs activities like national laws.

The development of international law can be studied through treaties, custom and national law. In addition, international organisations such as FAO, ILO, IBRD, IMF, UNESCO, the WTO, the UN, have a direct impact on the conduct of transnational business. These organisations undertake a number of activities affecting the international business environment.

UNESCO consists of members elected by the General Assembly for three-year terms and coordinates the efforts of all specialised agencies established by governmental agreement and having wide international responsibilities in economic, social, cultural, educational, health and related fields.

Numerous commissions have also been established to deal with special issues. For example, UNCTAD promotes trade, particularly of developing countries. UNCTAD fosters the signing of multilateral trade agreements and the systematising of trade and policy.

The objective of the United Nations Commission on International Trade Law (UNCITRAL) is to promote international trade through the harmonisation of trade law among nations. One of its major achievements has been the entry into force of the Convention on Contracts for the International Sale of Goods (CISG). The United Nations Convention on the Carriage of Goods by Sea in 1978 was initiated by UNCITRAL and it deals with international bills of lading used in the shipment of goods. In 1976, UNCITRAL adopted arbitration rules, which have been widely used. Other projects involve the drafting of laws to be used by countries, e.g., the model law on Electronic Funds Transfer.

Two other organisations complementary to UNCITRAL who strive to unify international law are, The Hague Conference on Private International Law and the International Institute for the Unification of Private Law (UNIDROT). The United Nations Industrial Development Organisation (UNIDO) works with UNCTAD to assist in the industrial development of less developed countries. Other organisations or setups of importance are the IMF, the World Bank, the GATT and the WTO.

UN Trusteeship: The UN trusteeship system is on the verge of coming to an end, although the Trusteeship Council still meets and receives reports from the US as the administrating authority of the sole remaining trust territory, the Pacific Islands of which the future of Palau has remained unresolved.

Law on the use of outer space: The UN Committee on the Peaceful Uses of Outer Space (COPUOS) and its legal sub-committee have

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continued to be the focus for the elaboration of new principles of international space law, such as those related to remote sensing, to the avoidance of injury caused by the multitude of objects in outer space and to communication by artificial satellites.

The bombing of Libyan territory by the US military aircraft in April 1986 as a form of reprisal for alleged terrorist activities directed against American citizens raised controversial issues as to the scope of the right of self-defence under international law and as to the applicability of the doctrine of due 'proportionality' of retaliatory action, assuming such action were otherwise legitimate under the provisions of the UN Charter.

International Court of Justice: The International Court of Justice or ICJ (also known as the World Court) was formed in 1945 with its statute attached to the UN charter. Its predecessor called the Permanent Court of Justice was established in 1920 as part of the League of the UN General Assembly and the Security Council for a term of nine years. Its headquarters is situated in The Hague, Netherlands.

Only states can be parties before the Court. The enforcement powers of the Court rely in large part on good faith compliance of the parties.

OECD: The Organisation for European Economic Cooperation (OEEC) born out of General Marshall's plan to help in the recovery of Europe after world war II was formed in 1948 by the Western European Nations with the US and Canada as associate members. The Organisation for Economic Cooperation and Development (OECD) replaced the OEEC in 1961 and added the US, Canada and Japan as full members. The goals remained the same, but included coordinating efforts to aid less-developed countries.

In 1976 the OECD issued a Declaration on "International Investment and Multinational Enterprises" and "Guidelines for Multinational Enterprises". The purpose of the Declaration was to establish the principle of 'national treatment' for corporations. The guidelines alert MNCs to take into account the policies and objectives of the country within which they are operating. Other principles include disclosure of information, competition policy, taxation, employment, industrial relations, support of trade unions, nondiscrimination and reasonable terms for transferring technology. However the OECD documents are not binding and the developed and developing nations disagree about their interpretation.

International Chamber of Commerce: The ICC is a worldwide organisation that draws its members from all sectors of the business community. The basic purposes are (i) permanently represent business visa-

vis the major intergovernmental institutions and conferences (ii) harmonise, codify and standardise international practices (iii) provide practical services for its members and for the international business

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community (iv) provide a link between countries with different economic systems or a meeting place for sectors of economic activity with different interests.

ICC developed the 'Uniform Customs and Practice for Documentary Credits', which are used in financing and 'Incoterms' the uniform definitions used in trade. The ICC has also created a forum for the settlement of disputes, the International Court of Arbitration. The ICC serves as a liaison with the UN and its agencies to help advocate the views of the private sector.

International Codes of Conduct: Codes of conduct for corporations have been in existence for years but without widespread support. Both the UN affiliated Centre for Transnational Corporations and the OECD have promulgated codes of conduct for corporations in host countries in an attempt to set ethical standards of behaviour. Two other codes dealing with the environment are the CERES Principles (formerly the Valdez Principles) and Responsible Care, a chemical industry self-generated code. The Valdez Principles were amended in 1992 and renamed as Coalition for Environmentally Responsible Economies (CERES) Principles.

Doing business internationally requires an understanding of international (public and private) law, national law and organisations. A businessman must be able to assess astutely the environment and formulate an effective business plan.

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10. REGIONAL INTEGRATION

EU

NAFTA

APEC

LAFTA

ASEAN

Arab league

G-8, G-15, G-77

SAARC

NATO

One of the most interesting developments in recent international relations is the trend towards regionalism. Various pressures in addition to threat of war has drawn nations to stand together. In the context of international relations, a region is invariably an area embracing the territories of three or more states. These states are bound together by ties of common interests as well as of geography. They are not necessarily contiguous or even in the same continent. For example, the North Atlantic Treaty is an association of nations on both sides of the Atlantic.

As per the United Nations Charter, the term "regional arrangements" is defined as "organisations of a permanent nature, grouping in a given geographical area, several countries which by reason of their proximity, commonality of interests or cultural, linguistic, historical or spiritual affinities, make themselves jointly responsible for the peaceful settlement of any disputes which may arise between them and for the maintenance of peace and security in their region, as well as for the safeguarding of their interests and the development of their economic and cultural relations".

Several regional arrangements may exist within a given area, as in the case of Western Europe. Such arrangements do not have to include all the states within the area. A state may be excluded for political or ideological reasons (example, Spain) or it may choose to stay out because of fear of international entanglement and possible violation of neutral status (example, Switzerland).

The rapid spread of regionalism is surely one of the most important recent developments in the global trade system. Nearly every developing country is in, or is discussing, a regional integration arrangement. Many are also seeking advice on whether to join one or on how one might best be organized. Under preferential trade arrangements (PTAs), unlike global multilateral trade liberalisation, there are few universally accepted rules of

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conduct that are applicable to all such arrangements. Nevertheless, research and operational work in this area in many regions of the world has generated a wealth of information and experience that can provide economists and policy markers broad guidelines in their dealings with regional integration issues.

Economic integration covers several kinds of arrangements by which two or more countries agree to draw their economies closer together. One of the major developments in the world economy since World War II is the growth of regional groupings. The European Community (EC) is the most famous and successful of these, but it is only one of many. Regional groupings are agreements between nations in the same region to cooperate in various economic matters. There may also be political ties between the same nations, but it is the economic aspect, which has been of greater concern. Regionalism, or the tendency towards economic cooperation within regions, is an attempt by nations to attain goals they cannot achieve in isolation.

Some of the major regional groupings arc: ANCOM (Andean Common Market), ASEAN (Association of South-east Asian Nations), CACM (Central American Common Market), ECOWAS (Economic Community of West African States), EC (European Community), EFTA (European Free Trade Area), LAIA (Latin American Integration Association —Replaced LAFTA)

There are costs to a nation in joining regional grouping, the chief one being that it must give up some of the sovereignty in economic matters. Nations do this only because they hope the benefits will be greater than the costs.

The major benefit sought through economic integration is faster economic growth. By joining together, member nations get larger resources, larger markets, and economies of scale for their industries. Another objective of regional groupings is the counter-vailing power.

The reduction of trade barriers in the group provides dynamism to the member economies by increasing competition. Sluggish national firms or monopolies lose their protective walls and are forced to change in a more competitive direction.

Furthermore, the group of countries together may be able to afford an industry too large for any one member country to support. Thus industrialization can be aided by regional integration. All this could mean greater wealth, progress and self-sufficiency for the region.

Levels of integration: Various forms and degrees of economic integration are possible. Regional integration arrangements may take

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different forms depending on the degree of integration between countries. The five main types of regional arrangements are free trade area, customs union, common market, economic union and political union.

A free trade area is a grouping of countries to bring about free trade between them. The free trade area abolishes all restrictions on trade among the members, but such member is left free to determine its own commercial policy with non-members. Two or more states eliminate internal barriers to trade-such as tariffs and border restrictions while keeping their own external tariffs against non-member states.

The customs union is a more advanced level of economic integration than that of the free trade area. It not only eliminates all restrictions on trade among the members, but also adopts a uniform commercial policy against non-members. Customs union is formed, when the member states agree to a common external tariff. The rational for the creation of a customs union is to prevent that all the goods coming from abroad to the free trade area come through the country with the lowest tariffs.

Common market is created when countries agree to remove the barriers to the movement of capital and labour. The removal of internal trading barriers would expand the size of the market available to agriculture, industry and services; thus these sectors would want to expand their operations to other members of the customs union. These would increase investment in those countries as well as the demand for the removal of barriers to the movement of capital and labour.

Economic union occurs when countries agree to coordinate their economic policies such as interest rates, stable exchange rates, common policies on inflation and ultimately a single currency. When citizens move freely among other member states of the common market, the pressure grows for coordinated policies on education, retraining, unemployment benefits, pensions, health care and other services. This in turn would increase the demand for coordinated economic policies and thus the creation of an economic union.

Political union occurs when countries agree to common policies in almost every sector, including foreign and defence policy. The demands for economic integration might lead to growing political integration as the governments of the member states work together more closely. Pressure then would grow to create a political union.

Reasons for widespread regional integration

(i) Motivation: Economic integration is motivated by: (a) The desire to increase economic growth that arises from the advantages of economies of scale, (b) The benefit from regional specialization and

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'learning by doing' and attracting foreign investment, (c) The desires to lock in domestic policy reforms at a regional level and thus enhance the credibility and sustainability of economic reforms, (d) The opportunity cost of remaining outside a trading block, (e) The belief that regionalism might broaden domestic regional markets as a precursor to exposing regional industries to the most competitive world market, (f) The promotion of regional cohesion and security.

(ii) As a strategy: Regional integration has become of prime importance in the economic agenda. It has influenced most of the countries in the world and has become an unavoidable element in most economic decisions. In fact, most of the countries throughout the world have attempted to integrate with other ones. According to a list compiled by the International Monetary Fund in 1994, there were sixty-eight of these agreements, which covered the five continents and covered almost the entire alphabet from the ASEAN Free Trade Area (AFTA) to the West African Economic and Monetary Union (WAEMU).

The new impetus towards integration:

Among the many factors that explain the increase in regional integration arrangements, there are four main developments that seem to have come together in the late 198Q's to account for the movement towards regionalism: the influence of Europe, the policy change in the US regarding trade agreements, the collapse of the Soviet Union, and the new liberal policies in most developing countries.

(i)The influence of Europe. The conclusion in the mid 1980's of negotiations to expand the European Communities (EC) and the completion of the movement towards a Single European Market for goods, services, labour and capital, led to fears that the EU might become a 'Fortress Europe'. Concerns arose in the rest of the world that the EC might become less open to trade with outsiders as well as less interested in pursuing multilateral trade liberalisation. Thus, the response of the world was either to request EC membership if they were Europeans, or to form blocks of their own in order not to find themselves in a disadvantageous access to key trading partners.

(ii)The influence of the US. The US frustration with the lack of multilateral progress coincided with a renewed Canadian interest in a free trade arrangement with its larger neighbour. Consequently, in 1989 both countries signed the Canada-US Free Trade Agreement (CUSFTA), which later became NAFTA with Mexico's membership in 1994. The long-term policy shift in American policy culminated in the signing of an agreement by the thirty-four countries in the Western Hemisphere to form a free trade area of the Americas (FTAA) by 2005.

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(iii)The collapse of the USSR. With the disintegration of the Soviet Empire came the transformation in Central and Eastern Europe from planned to market economies. The eagerness of the EC to form agreements with the new countries increased the concern in the rest of the world that the entire European continent might acquire a more inward focus at the expense of multilateral trade liberalisation.

(iv)The new liberal policies in most developing countries. The spread of democratic regimes in most developing countries resulted in the convergence of political interests that led to the pursuit of similar economic development policies, mainly of regional arrangements. The greater consensus regarding economic strategies has involved the abandonment of import-substitution policies in favour of market liberalising ones as a prerequisite of successful regional integration. The Latin American case is the most obvious example of failure of import-substitution and the need to adopt an outward orientation.

Characteristics of the new regionalism. The most significant characteristics of the new impetus of regional integration schemes are:

(i) The new blocks reflect the ideas of economic liberalisation and market deregulation. The world economy has become increasingly interdependent after the Cold War, as a result of rapid technological diffusion and trade liberalisation by most countries. Many developing countries are liberalising trade unilaterally as a component of reforms in macroeconomic, trade and industrial policies. Such reforms are an attempt to raise productivity and at the same time cope with international competition. Thus, the new regionalism is being established within a multilateral trading framework

(ii) The new integration groups are outward-looking and view intra-regional and inter-regional trades as a reason for growth. The new regional agreements are in a sense a response to the increasing competition under a global economy, and for some is a first step to allow countries to benefit from the process of globalisation.

(iii) The new arrangements represent attempts to benefit from the gains from trade creation, economies of scale, product differentiation, efficiency gains and policy coordination that arise from regional trade agreements.

(iv) The new arrangements also emphasise the importance of foreign investment in regional integration as well as a genuine drive towards trade liberalisation with the ultimate goal of creating free trade areas (FTAs). Unlike old arrangements, which normally did not go beyond limited preferential arrangements, FTAs are a means of attracting foreign direct investment (FDI) and achieving global competitiveness in trade.

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(v) Most of the new regional groups present the common characteristic of being members in different regional groups. Thus, the US is a member of both NAFTA and APEC. The reason for this multiple membership is to secure access to different regional markets, especially where regional blocks show protectionists tendencies against non-members. A second benefit of multiple membership in regional groups is to provide trade diversification and investment linkages in order to reduce their dependence on major trading partners. Finally, multiple membership might be a way to bring regionalism in line with multilateralism. Multilateralism is an international cooperative arrangement defined as an "institutional form that coordinates relations among three or more states on the basis of generalised principles of

conduct". Multilateralism may occur in a variety of institutional settings including international organizations, international regimes, and international orders, such as the open trading system of the late nineteenth century or in the era of the global economy of the late twentieth century.

For the fist time, regional integration is taking place between North and South. APEC, NAFTA and the Enterprise for the Americas Initiative (EAI) between the US and the South American countries, provide an example of various forms of bilateral/multilateral trading arrangements.

Protectionism against free trade: Governments today recognise that protectionism is not a choice. Although few countries practice free trade, most economists agree that free trade is a desirable policy. Integration provides policy makers with a strategy to secure access to a wider market and reinforce growth in order to attain a higher level of national welfare.

As a result of the increasing number of regional arrangements in recent years, there is a growing compulsion for those left out to either form agreements of their own or join existing ones for fear of being left out of the benefits of trade. Although the degree of success in integration has varied between regions, economic integration nonetheless has remained an attractive economic strategy in both the developed and the developing world.

Political sovereignty and economic integration: The economic interdependence among nations has increased sharply in the past 50 years. As a result of this international economic interdependence a tension has resulted between national political sovereignty and increased cross-border economic integration. The world is organized in nation-states and sovereign governments, increasing economic integration among nations erodes differences among national economies and undermines the autonomy of national governments. As economic integration increases, governments experience greater difficulties in trying to control the events within their borders.

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Pros and cons of regionalism:

Favourable:

(i) Regional integration, by reducing tariff and non-tariff barriers is likely to facilitate the process of trade liberalisation

(ii) The enlarged size of the regional markets and greater economies of scale within blocks are likely to result in greater competitiveness of the partners, which should eventually lead to the opening of their markets to goods from outside the arrangement.

(iii) By gradually introducing free trade or trade liberalization at a regional level, trading blocks could be considered the initial steps towards global liberalisation of trade. Such liberalisation may initially be easier when a small number of countries is involved

(iv) Regional agreements have reinforced existing tendencies. The most successful cases of regional integration have occurred among 'natural trading partners' where, even in the absence of formal trading arrangements the level of trade would have been considerable.

(v) By promoting natural trading tendencies, these schemes are likely to become building blocks since they encourage other potential trading partners to liberalise in order to gain access to the trading arrangements.

(vi) Trade agreements between developed and developing countries provide incentives for the latter to reform their domestic policies and to liberalise their trade and investment rules

Unfavourable:

(i) Regionalism might pose a threat to the global trading system especially if regional blocks create tariff walls around them. Growing protectionism, such as anti-dumping practices, especially by European and North American agreements against imports from developing countries has prompted the latter to create their own retaliatory protectionist blocks.

(ii) Regionalism is regarded as a defensive reaction to the new economic and political trends as well as a possible alternative to multilateralism

(iii) There is the possibility of rivalry among the major blocks of the EU, NAFTA, and APEC, which raises the potential for trade conflicts rather than the easing of global trade negotiations.

(iv) These powerful trading blocks have sizable and growing markets, which may lead them not to comply with the rules of the multilateral trading system

(v) Those who benefit from trade diversion (Portugal and Spain in the EU, for instance) may be inclined to oppose an open multilateral trading

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system. Trade diversion is the effect of a customs union in changing the flows of goods and services between countries with increasing volumes going to other members of the union. Trade diversion occurs when joining of an integration arrangement leads to the replacement of low-cost imports from outside the zone with higher-cost goods from member nations. In this case, the effect of the economic arrangement on economic welfare is negative.

Trends in regionalism

Opportunities: Over the last 10 years there has been a surge in regional trading agreements. Most of the countries in the world have attempted to integrate with other ones. In the Uruguay Round, negotiated between 1986 and 1993, more than one hundred governments agreed to new rules for more open trade in goods and services. They also established the World Trade Organization (WTO) with enhanced enforcement power. A majority of countries involved in regional agreements are simultaneously involved in global liberalisation arrangements. About 90 per cent of all the contracting parties in the General Agreement on Tariffs and Trade (GATT) are signatories to such arrangements. Moreover, the founders of GATT recognised the importance of economic integration between countries.

Thus, over the past decade, international economic liberalisation has been pursued through both multilateral and regional agreements. As the impetus towards competitive liberalisation accelerated over the last decade or so, however, the regional approach has increasingly come to dominate the process. The regional option is less time consuming.

It is less complicated to work out agreeable arrangements with a few neighbours than with over 100 countries in the WTO. Regional groups are willing to liberalise further than global agreements since they are often motivated by priority national security concerns.

Threats: In spite of the fact that regionalism and global liberalisation can mutually reinforce each other, the emergence of regional blocs can also conflict with multilateralism. Rivalry among the three major trading blocs of the EU, NAFTA and APEC raises the potential for trade conflicts rather than facilitating global trade negotiations. These powerful trading blocks have big and growing markets that do not make them obliged to respect rules of multilateralism or facilitate their enforcement. Those who benefit from trade diversion may be inclined to oppose an open multilateral system.

The EU is the block most likely to withdraw support for multilateralism since its membership is expanding rapidly and

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intraregional trade is growing more than trade with countries outside the arrangement. The principle of non-discrimination and open competition under GATT is being undermined with the multitude of preferential arrangements that the EU has with other regions.

The Asian block could give Japan control over the region's market. Japan could manage regional specialisation in such a way as to inhibit free entry of firms and products from outside.

The US activities in the Western Hemisphere also raise concerns for protectionism. There is growing concern that the major pro-free trade nation is moving away from multilateralism. Trade and budget deficits in the US have forced the US to yield to domestic pressures to protect certain sectors from external competition. Threats of trade wars between US-Japan and US-China have been common and barely averted. These potential conflicts represent a threat to multilateralism.

Appraisal: In seeking liberalisation, countries can turn either to their respective geographic region or the global system as a whole. Trade expansion can occur when countries join a block or equally without any such regional integration such as was the case of East Asia where the rapid growth of trade among the countries in the region has grown without government-induced membership of any regional block. Regional agreements pose fewer obstacles to the achievement of liberalisation and thus constitute the second best choice for liberalisation.

On the one hand, by eliminating barriers among its members, integration schemes can create trade and improve efficiency by shifting production from a high-cost domestic producer to a lower-cost trading

partner. On the other hand, regional agreements give members market access on preferential terms and thus can lead to trade diversion, by expanding the production of less efficient members and reducing the production of more efficient outsiders

Trade blocks can lead to global free trade faster, more fully and with easier adjustment than the multilateral process. There is a risk that integration schemes may turn inward, either for political or short-term economic needs, and thus may restrict the trade of third countries.

Trading blocks create new opportunities for trade. Trading blocks lead to more trade creation than trade diversion. Trading blocks provide momentum for non-discriminatory trade liberalisation efforts. Trading blocks are open to new members. Multilateral trading arrangements are capable of accommodating and disciplining regional trade agreements

The formation of regional blocks needs to make possible more effective negotiations for achieving the benefits of complete free trade.

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Global trade liberalisation is easier through a step-wise process whereby a small number of regional blocks can negotiate and relate to each other more effectively than a large number of individual countries. The EU's experience shows that it is easier to make trade concessions along with other partners in a customs union or a free trade area than unilaterally.

Almost all countries in the world are and will be involved in a certain type of integration arrangement and some in more than one. At the same time, the process of globalisation is imminent. Both processes are parallel and widespread. There is a danger that regional groups turn into protectionist blocks that inhibit global liberalisation. There is a possibility that gradual trade liberalisation at the regional level leads to complete liberalisation at a global level. Whether regional trade agreement lead to more or less liberalisation depends on whether they are accompanied by continued multilateral liberalisation or instead they substitute for it.

Thus, when regional arrangements adopt rules that do not conflict with those of multilateral arrangements, these blocks constitute the easiest way towards the achievement of free trade.

European Union:

Member (15): Austria, Belgium, Denmark, Finland, France, Germany, Greece, Luxembourg, Ireland, Italy, Netherlands, Portugal, Spain, Sweden, and United Kingdom.

After the World War II, there developed a strong revulsion against national rivalries in Europe. Support for European reconstruction and plans for unity came from the United States in the Marshall Plan. From 1948 to 1952 the US gave about 200 billion USD to help Europe get reestablished. This aid was administered by a new organisation formed for that purpose, the Organisation for European Economic Cooperation (OEEC). In the 1950s restrictions on intra-OEEC trade were being dismantled and the European countries grew accustomed to cooperation on trade and economic matters.

A first step towards greater cooperation and integration was the establishment of the European Coal and Steel Community (ECSC) in 1952, creating a common market in coal, steel and iron ore among Belgium, France, Germany, Italy, the Netherlands and Luxembourg.

The next step was the signing of the Treaty of Rome in 1957 by the same six nations of the ECSC. The Rome Treaty set up the European Community often called the Common Market, in 1958.

The third member of the European Community, the European Atomic Energy Community (EURATOM) was also formed in 1958. Its six

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members pledged common development of their nuclear energy resources by coordinating their nuclear R&D programmes.

Organisation for the European Economic Cooperation (OEEC): It is an elaborate regional arrangement in Western Europe. It was created by the Convention for European Economic Cooperation signed in Paris on April 16,1948.

The functions of OEEC were, to promote consultation between the countries concerned, to consider measures and create the machinery necessary for European economic cooperation especially in matters of trade, international payments and movement of labour.

OEEC headquarters in Paris had an intricate organisation. Its central organ, the Council, was composed of representatives of all member countries, normally cabinet ministers or their deputes. Responsible to the Council, was a Board of Management, which supervised the activities of such important operating units as the European Payments Union, The European Monetary Agreement and the European Productivity Agency.

An Executive Committee consisting of the representatives of seven member countries, elected annually, assisted the Council. The Secretariat was headed by a Secretary- General. The Council had a Customs Union Study Group and many technical and special committees.

Organisation for Economic Cooperation and Development (OECD): In 1961, the OECD replaced OEEC with the same members of OEEC, plus Canada and the United states as regular members. OEEC was predominantly concerned with european recovery and intra-european problems. OECD had specified three main functions; (i) to achieve sustainable economic growth, employment and raising the standard of living in member countries, (ii) to contribute to sound economic development in member nations, (iii) to work for expansion of world trade. OECD has as its aim to work for close cooperation among the states of Western Europe, Canada and the U.S., and to promote cooperative economic assistance by the members of the Atlantic community to the underdeveloped countries of the non-western world.

All the member states are represented on the OECD Council by permanent delegations. The organisation has a large secretariat headed by a secretary- general and two major committees, one concerned with development assistance to underdeveloped areas, the other with the reduction of barriers to trade and the flow of capital among member states and between these states and non-member countries.

* Noteworthy achievements: Some noteworthy achievements of the EC are as mentioned below.

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(i) Customs Union: The goal of having a customs union as envisaged in the Rome Treaty, under which all restrictions on trade among the six member countries were removed and a common system of tariffs

and quotas against all third countries was established.

(ii) Common agricultural policy: Common agricultural policy among the six member nations was another major achievement. Agricultural trade always receives strong protection from national governments. The EC has pursued protectionist policies in certain sectors such as textile, steel and especially agriculture. The EC policy in agriculture provides a clear example that the harmonisation of non-market policies can result in a highly protectionist regime. The Common Agricultural Policy (CAP) has generated excessive world market prices as well as huge stocks. There is also some controversy as to whether Europe as a whole has followed more protectionist export policies as a block than if each country would have acted independently.

(iii) Common market: A common market is more than a 'customs union. It requires the free movement of labour, capital and enterprise as well as the free movement of goods. The EC has reached quite .a degree of freedom for factor movement among member states, though it is far from having complete freedom.

(iv) Expansion of EC: In 1973 Britain, Denmark and Ireland were admitted. Greece joined in 1981, Spain and Portugal in 1986, bringing the total membership to 12 nations.

A different kind of expansion occurred with the Lome Convention of 1975. At this time, EC eliminated most trade barriers on imports from 46 developing nations in Africa, the Caribbean and the Pacific region that was former colonies of EC countries. These 46 countries became associated states of the EC enjoying preferential access to its large market. Later Lome Conventions raised the number of associated states to 66, expanding further the economic influence of the EC.

The economic influence of the EC expanded with the other developed countries of Western Europe also. In 1972, when EFTA (European Free Trade Association) members Britain, Denmark are Ireland were joining the EC, it agreed to establish a free-trade area with the remaining EFTA members namely, Iceland, Norway, Sweden, Finland, Austria and Switzerland. This free trade agreement covers only industrial goods and not agricultural products. Europe's industrial trading relationships with the rest of the world have grown at the same time that its internal trade has flourished. Thus, the formation of the European Community and its deepening process has resulted in considerable pressures on other members to join the Community. Ireland and Denmark joined because

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they feared the trade diversion of their agricultural exports after the UK joined in 1973. In 1995, Sweden, Finland and Austria joined the Union because of their dependency on the Community's market, they could not afford to remain out when the market was strengthened. Other countries, such as Greece, Spain and Portugal sought mainly political and economic benefits in joining the Union. Apart from seeking inclusion in the European market and fiscal transfers to the agricultural sector, the three Mediterranean countries joined to secure democracy and stability.

(v) European Monetary System (EMS): In 1979 the EC, created the EMS in order to develop closer monetary cooperation and monetary stability in Europe. Although Britain did not join the EMS, the system worked reasonably well in reducing inflation and exchange rate volatility among the other member nations.

(vi) Institutional Development: The EC operates through four main institutions, (a) The Council of Ministers is the ultimate decision making body. Its members are the foreign ministers of each member country. With the exception of the budget, the Council makes all the final decisions, (b) The Commission has 17 members representing not their home country, but rather, special aspects of the EC economy. The Council of Ministers drafts legislation for proposal to the commission and overseas implementation of EC policies. It has a staff of over 10,000 in Brussels, (c) Voters in the member countries directly elect the European Parliament. It serves as a watchdog on EC expenditures and evaluates other decisions of the Council, (d) The European Court of Justice is the official interpretation or application of the Treaty of Rome, the constitution of the EC. Its role is increasing with greater integration, and the European Court serves frequently as a court of appeals for national courts on EC issues.

(vii) The EC as an Economic Entity: The EC forms a market almost as large as the U.S., but with a population one-third larger. The EC member countries benefit by the large volume of a trade among themselves.

Barriers for an Effective Single European Market:

The barriers are physical, technical and fiscal namely, (i) Border controls, (ii) Divergent standards, testing and certification procedures, different technical regulations and conflicting business laws, (iii) Protected public procurement and (iv) Difference in taxation, VAT and excise taxes.

Border Controls: Removing border controls alone could increase profit margins by 25 per cent. Such controls, require 56 hours for a London -Italy truck route (excluding the channel crossing) while a route of similar length within England requires only 36 hours. The EC issued a report (the Lord Cockfield report) outlining 300 measures that would create an

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efficient single Europe. These measures focus on removing the barriers to intra-EC trade and establishing a common Europe-wide approach to merges and acquisitions, patent law, product-labeling rules, vocational training and other issues.

Though borders cannot be eliminated, the EC advocates using a single administrative document (SAD) to reduce red tape in goods crossing borders. Further, a new single EC-wide tariff would be applied to goods with a harmonised system for description and coding of traded goods so as to reduce delays. Restrictions in trade movements will also be eliminated so as to ensure increase in truck capacity in the EC.

Differences in Technical Regulations and Standards: It prevents firms from achieving economies of scale and sometimes results in narrow product lines. To overcome this barrier, the countries should have harmonisation and should reconcile their differences wherever possible and adopt similar national standards.

Government Protectionism in Public Procurement: In 1987, in the area of telecommunications there were seven different competing digital switching systems of which five were developed by national telephone companies. As a result, 1987 estimated cost per telephone line in the EC was 225 USD to 500 USD compared to 100 USD in the U.S. So it was recommended that to have removal of exemptions for industries such as energy, transportation telecommunications, utilities so that they are open to competition to firms from other countries.

Service industries also can gain from single Europe currently, financial services, banking, insurance and the securities industries are all affected by different national regulations.

Tax policy in EC member countries: Tax as revenue for the Govt., tax policies on capital gains, taxes on consumption (by use of value-added tax) will all have to be more unified if business within the union

area is to be without tax confusions. Moreover, over-time countries with higher tax rates will be forced to lower their taxes to avoid business units being moved to other countries or lose business to lower tax locations.

The various obstacles to the realisation of a single Europe have to be overcome. If the ambitious goals of a single Europe are fully realised a major growth market will be available for global firms.

Agreements Involving the European Union

Since the early years of its establishment, the European Union has concluded a large number of trade agreements with many developing

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countries, either individually or as a group. Virtually all North African, Middle Eastern and Mediterranean countries have some kind of bilateral agreement with the EU. Below, a few of the most important actual or proposed agreements involving the European Union, are briefly reviewed.

EU-Mediterranean Initiative

The new European Union's Mediterranean strategy was launched in the early 1990s. At its Lisbon meeting in 1992. the European Council called for an overall evaluation of the EU's strategy in the region aimed at deepening and "reciprocalizing" the traditionally strong economic ties between Europe and individual countries in the region. This new initiative culminated in the 1995 Barcelona Declaration spelling out the new EU Mediterranean strategy.

The most important feature of the current agreements that distinguishes them form the earlier ones is their reciprocity requirement in matters of trade liberalisation. Although the earlier agreements required the MR countries to liberalise their trade with the EU, no timetable was specified and none of the former de facto liberalised its trade preferentially with Europe. The EU continued its policy (already in existence since the early 1970s) of granting free access to virtually all manufactured products exported by these countries and some preferential access for their agricultural exports. The new Association agreements, on the other hand, set a well-defined time frame (12-15 years) and intermediate steps leading to a free trade area (customs union in the case of Turkey) between each of the MR countries and the EU for non-agricultural products.

So far, the agreements with Morocco, Israel, and Tunisia have already been signed and entered into force. Similarly, the Customs Union agreement with Turkey has now become fully binding. Negotiations with another three Mediterranean countries (Egypt, Jordan, and Lebanon) are at an advance stage and are expected to be concluded shortly. Given the very large share of the EU in total trade of the MR countries, the association agreement with the EU will have a significant impact on the overall shape of their external trade and protection policies.

Of all the Agreement thus far signed, the one with Turkey, however, is expected to have the most far-reaching implications as it requires the removal of all trade barriers by Turkey not only against the EU partners but also all other European nations that have a free trade agreement with the EU. It also implies the adoption by Turkey of EU's common external tariff -which is considerably below the present average level of protection in Turkey- as well as providing the same preferences to Lome and GSP signatory countries.

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The Proposed FTA with South Africa

One initiative of the EU, unprecedented in sub-Saharan Africa, is a proposed FTA with the Republic of South Africa. The proposal was born out of South Africa's desire to obtain full Lome' status and the EU's reluctance to grant it. Negotiations for the proposed FTA began in 1995 and by January 1998 had gone through their 16th round. According to the EU proposal, the FTA would require the contracting parties to eliminate their tariffs on intra-block imports within a period of ten to twelve years, with two important exceptions: a) the EU would preserve its full tariff (10-25%) on certain agricultural products which -according to the Commission's estimates — amount to some 4 percent of EU's imports from South Africa; b) the latter liberalises its barriers more gradually and maintains protection for certain industries that are considered sensitive either in South Africa itself or in other SACU members. The proposed FTA, would exercise a significant impact on South Africa's trade policy and trade flows, given that EU constitutes its single main commercial partner (30% of exports, 44% of imports and 50% of FDI).

The Proposed FTA with MERCOSUR

Latin America has traditionally been a recipient of EU's technical and financial aid for regional initiatives. Support to MERCOSUR is the most recent regional intervention of the EC in Latin America. Until recently, much of the support for this grouping was political and high profile, and/or limited to funding of training and technical assistance in priority areas of regional integration. The EU is now in the process of further strengthening its relations with MERCOSUR via the establishment of an inter-regional agreement for trade and economic cooperation that foresees a deepening of the current political dialogue, an expansion of EU cooperation with the region to strategic areas of common interest, a consultation

mechanism on trade issues and the preparation of reciprocal trade liberalisation, leading to the establishment of a free trade area in the future. The proposed FTA would have a significant impact on MERCOSUR'S trade flows and overall trade barriers, given that the EU is its biggest trading partner accounting for about a third of extra-MERCOSUR imports and exports. Moreover, and very importantly, an FTA with the European Union would tend to mitigate the potential for trade diversion of MERCOSUR itself, as well as of any future preferential trade arrangements between MERCOSUR and other partners in Latin and North America, such as the newly-launched Free Trade Area of the Americas (FTAA)

Lome' Convention

Lome convention provides assistance and trade preferences to former colonies of the European Union. There are 70 ACP (African, Caribbean and Pacific) participants to the Lome agreement.

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The original Lome agreement dates back to 1975. It granted unilateral and non-reciprocal trade preferences to former colonies and developed an aid system based on project aid. An export earning stabilisation fund was established first for some agricultural commodities (STABEX) and in 1980 for some mineral products (SYSMIN). Finally, the convention established a Center for Industrial development.

The 1980 and 1985 conventions did not have major changes except for the establishment of SYSMIN. The 1990 convention, Lome IV, features some changes. The agreement was to last 10 years, with a midterm review in 1995. Structural adjustment grants were introduced. All European Development funds resources were channeled in the form of grants (except for capital risk). Finally, supply (rather than trade) policies gained attention.

The Proposed Enlargement of the EU to the Countries of Eastern and Central Europe: One of the most significant initiatives of the EU, both politically and economically, is its planned enlargement to ten Central and Eastern European countries (CEECs), namely, Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. A Union made up of 26 Member States (including Cyprus) would constitute a considerable change, since previous enlargements have involved three new Member States at most (in 1973 and 1995). The accession of the new members will greatly enhance the area and the population of the EU creating a market of 500 million consumers and thus a huge market where goods, services and factors can move freely. However, there are potential problems represented by the disparity between CEECs and present EU's average per capita income, unemployment, efficiency of institutions and the like. For instance, with an overall per capita GDP estimated at 32% of the Community average, the ten CEECs lag far behind the four least favoured

countries of the present EU, which together stand at 74% of the Community average. Major differences also separate the applicant countries themselves with per capita income that range from 18% to 59% of the average for the EU of 15.

In July 1997, the European Commission published "Agenda 2000", a document examining the economic and political issues that arise from the enlargement of the EU to the CEECs. The Commission's analysis as well as assessments by other independent researchers point to profound and potentially strongly positive impact of the enlargement, both on the EU incumbents and the new members.

North American Free Trade Agreement (NAFTA)

Members: Canada, Mexico and United States.

Date of entry into effect: January 1, 1994

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The North American Free Trade Agreement (NAFTA) between Canada, Mexico, and the US officially entered into effect on January 1, 1994, successfully concluding negotiations that had begun in the early 1990s. The agreement liberalises barriers to trade and investment between the three partners, while leaving their external barriers vis-a-vis third countries under the jurisdiction of each member state. Subsequent to the signing of the NAFTA, two supplementary agreements in the area of environment and labor standards have also been negotiated.

NAFTA provides for phased reduction of tariff barriers and tariffication of non-tariff barriers, relaxation of investment restrictions and harmonisation of standards between the three countries over a period of ten to fifteen years. For agricultural products NAFTA has separate agreements for US-Mexico and Canada-Mexico trade. Trade in agricultural products between US and Canada is governed by the provisions contained in the Canada-US free trade agreement. NAFTA also contains special provisions for a number of critical products/sectors such as autos, textiles and apparel and petrochemicals.

The Agreement progressively eliminates almost all U.S. - Mexico tariffs over a ten-year period and also phases out Mexico-Canada tariffs at the same time. Such barriers to trade as import licensing requirements and customs user fees are eliminated. NAFTA establishes the principle of "national treatment" to ensure that NAFTA countries will treat NAFTA-origin products in the same manner as

similar domestic products. Service providers of the member nations will receive equal treatment. To protect foreign investors in the free trade area, NAFTA has established five principles: (1) nondiscriminatory treatment, (2) freedom from performance requirements, (3) free transference of funds related to an investment, (4) expropriation only in conformity with international law, and (5) the right to seek international arbitration for violation of the Agreement's protections.

The NAFTA trilateral agreement details out the following: National treatment and market access(special provisions for the automotive sector and textiles and apparel sector). Rules of origin, Customs procedures, Energy, Agriculture(market access, sanitary and phytosanitary measures), Emergency action. Technical barriers to trade, Government procurement, Investment, Cross border trade in services, Telecommunications, Financial services, Competition policy, monopolies and state enterprises, Intellectual property, Publication, notification and administration of laws, Review and dispute settlement in antidumping and countervailing duty, Dispute settlement procedures

U.S.-Canada Trade: Canada's locus of economic activity has always been along the U.S. border, which stretches some four thousand miles. It is

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not too surprising that the natural axis of trade has always been from north to south rather than from east to west. The U.S.-Canada Free Trade Agreement (CFTA), having taken effect on January 1, 1989, provides further stimulus for cross-border trade and investment.

Canada is the largest single market for U.S. exports as well as the largest manufactures market of the United States. In addition the CFTA has opened the Canadian market to American services. As a result, U.S. exports of services to Canada reached $18 billion in 1991, representing an increase of 98 per cent over 1987.

This relationship is about shared values and common ideals for democracy, human rights, free markets and peaceful development. Trade and economics are at the centre of the Canada-U.S. partnership. Two way trade is now over a billion dollars a day. More than 80 per cent of all Canadian exports go to the U.S.A. and nearly a quarter of U.S. exports come to Canada. The U.S. is the prime export market for merchandise trade for all Canadian provinces, while Canada is the prime destination for 33 states. To bring down and to deal with any conflicts that may arise, rules-based structures have been designed to

manage issues through NAFTA and /or the WTO. Both countries are committed to the Free Trade Agreement of the Americas (FTAA).

U.S.-Mexico Trade: The United States is Mexico's most important trading partner, absorbing about two-thirds of total Mexican exports worldwide. On the other hand, Mexico is the third largest U.S. trading partner, ranking after Canada and Japan. Approximately 70 per cent of all of Mexico's import come from the United States, and fifteen cents of every additional dollar of Mexican GDP is spent on American goods and services. To modernise its infrastructure and plant facilities, Mexico is purchasing most of the durable goods and industrial materials from the United States. Not surprisingly, Mexico is the fastest growing major U.S. export market. By far, Mexico is the largest U.S. trading partner in Latin America, accounting for about one-half of U.S. exports to and imports from the region. However, U.S. foreign direct investment in Mexico is significantly less than U.S. foreign direct investment in its other major trading partners.

As far as Mexico is concerned, the main reasons for her interest in signing an FTA with the US are argued to be its desire to secure free and preferential access to the vast market of her principal trading partner; the favorable impact of the agreement on attracting foreign investment; and her desire to lock-in the trade liberalising policies which had been carried out since mid-1980s, including Mexico's accession to the GATT in 1986.

NAFTA appears to have had a significant effect on Mexico's trade with

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her regional partners, most especially the US. Between 1965 and 1990, Canada and US together accounted for roughly two-thirds of Mexico's total (as well as non-fuel) imports and exports. During the 1990s, however, NAFTA's share in Mexico's (total and non-fuel) imports and exports increased by almost 10 percentage points, to 87 percent and 76 percent, respectively, in 1995. Mexico's exports to NAFTA began increasing already in the second half of the 1980s, but this was most likely due to trade liberalisation in Mexico that led to an increase in exports (and imports) as well as to the fact that as Mexican exports increased they more intensely directed towards the vast and relatively more open markets of the Northern American countries. Another spate of growth in Mexico's exports to the US/Canada markets occurred in 1992, namely two years prior to signing of NAFTA, presumably in anticipation of NAFTA and the cross-border investment it might have generated from US/Canadian firms.

Equally important changes are also noticeable in Mexico's share of the US market: US (non-fuel) imports from Mexico increased from 4 per cent of its total imports in 1985 to 6 per cent in 1990 and 8 per cent in 1995; US (non-fuel) exports to Mexico also increased from 6 per cent to 8 per cent of its total exports over the same period of time. By contrast, US-Canada and Mexico-Canada bilateral trade flows did not manifest any particular trend, retaining their traditional value of roughly 20 per cent and 1 per cent, respectively.

Points for future consideration: The North America Free Trade Agreement (NAFTA), unlike the EU did not reflect the intention of its members to eventually move to a political union. Nor did its member countries seek to form a common market with a single external trade policy and full mobility of labor. NAFTA does not provide for harmonisation of competition policies or in including common rules for dumping or subsides or for changing labour and environmental agreements in each country. The agreement does not provide for international oversight of enforcement.

NAFTA aims at removing all border barriers to trade as well as liberalising foreign investment and trade in services. The agreement allows for accession by other countries provided that current members approve. Some suggest that those who join NAFTA will experience more trade diversion than trade creation. The most important negative effects of this agreement can arise from the lack of agreements on competition policies and subsidies as well as from strict implementation of the rules of origin. The first would not allow elimination of administered protection through antidumping provisions. The second discriminates against outsiders and thus inhibits the flow of all trade across North American borders. NAFTA's rules of origin are seen as problems because they are likely to increase

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trade diversion, make further accession into the agreement harder since they are designed with certain trading partners in mind, and are likely to lead to extensive and expensive customs procedures.

NAFTA's accomplishment in bringing about free trade between a developing country and two highly developed economies is considerable. It has also set in motion a process that is expanding with considerable gravitation force in the Western Hemisphere. Other Latin American countries could join NAFTA. Like in the case of the EU, whether the arrangement has led to more or less global liberalisation depends on the policies that have been implemented. Protectionism tendencies have been increasing. Asian Tigers fear that a major amount of US investment might be diverted to Latin America.

Free Trade Area of the Americas (FTAA)

Negotiating Countries: Canada, United States, all Latin American Countries besides Cuba

Year of launching: December 1994

Building on an earlier initiative by President Bush to create a Western Hemispheric free trade area (the so-called Enterprise for the Americas Initiative), the FTAA was launched at the First Summit of Americas, held in Miami in December 1994. The summit brought together 34 Hemispheric Heads of State who agreed to create a free trade area encompassing the entire continent (Cuba is excluded for political reasons) and to complete negotiations for the agreement by 2005. Since the Miami Summit, four more summits at the level of trade ministers (in March 1998 in San Jose, Costa Rica) and a second Summit of the Heads of State (Chile, April 1998) have taken place which have embraced and expanded the original idea of a continent-wide free trade area. Negotiations towards the achievement of the FTAA goals formally began at the April 1988 Summit in Santiago, Chile. The new plan of action is an ambitious program that goes beyond the removal of tariff and non-tariff barriers on goods trade to encompass other areas such as a common investment regime, government procurement and competition policy.

The plan of action calls, among others, for the FTAA negotiations to be concluded no later than 2005, with concrete progress in the form of agreement on specific business facilitation measures, to be reached by the year 2000. To this end a complex web of negotiating committees with full agendas have been established to forward the process. The process, however, is expected to take longer to complete due to the denial of the Fast Tract Authority to the US president by the Congress.

When and if completed, the FTAA will be an extremely significant regional trading block comprising 34 developed and developing

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countries. The formation of such a block is especially significant for the LAC countries. The principal benefits of the proposed FTAA for LAC countries is expected to arise from: ensuring barrier-free access to the US and Canadian markets; reducing the costs of being left out of NAFTA; enhanced credibility of the various liberalising reforms undertaken since the beginning of the 1990s in the majority of LAC countries, and hence, a possible boost in investors confidence and in FDI. To the extent that the LAC countries proceed to lower further their barriers to trade with third countries, they can reduce the harmful trade diverting effects of the FTAA. The final balance of the net benefits of FTAA for each

participant will depend heavily on its actual design and on the trade policies that will be pursued by the country vis-a-vis the rest of the world.

Asia Pacific Economic Cooperation (APEC)

Members (21):Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Taiwan, Thailand, the United States, Vietnam.

Year founded: January 1989

The Asia-Pacific Economic Cooperation (APEC) provides a useful alternative to the EU as a way to pursue regional economic integration. APEC represents an interesting case since it is not a formal trade agreement but a "community" formed by a diverse group of nations from three continents with the common interest of promoting trade and investment.

The Asian countries have been distrustful of regional arrangements as a means to promote regionalism. The small countries in the area see regional agreements as increasing the possibility of domination by a single power. Whereas, the fear of exclusion of strong powers in the region prevents the small countries from forming their own arrangements.

Contrary to other regions, the cost of exclusion from regional agreements has not proven a powerful incentive for the establishment of formal schemes in the region. Since the small economies in the region are rather independent of the relatively open Japanese economy, neither access to the Japanese market nor Japanese protection creates an incentive for the formation of a regional agreement. Since most of the Asian economies still enjoy considerable protection, the adjustment cost and policy changes needed for the creation of a formal regional agreement would be more harmful than beneficial.

The idea of creating a multilateral forum to enhance economic cooperation among asian and pacific economies was launched by

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Australian Prime Minister, Robert Hawke, in January 1989, and in November of the same year APEC held its first ministerial meeting in Canberra, Australia with the participation of twelve countries (Australia, Brunei, Canada, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and the United States). Between 1989 and 1994, six more countries (China, Hong Kong and Taiwan in 1991 and Mexico, Papua New Guinea and Chile in 1994) joined APEC, increasing membership to eighteen economies. Peru, Russia and Vietnam were later admitted to APEC.

Until 1994, notwithstanding the creation of an APEC Secretariat and an Eminent Persons Group (EPG), APEC remained a rather loose consultative forum. At their second APEC Leaders Meeting in November 1994 in Bogor, Indonesia, however, the 18 participating leaders declared their intention of turning APEC into a zone of free trade and investment by 2010 for APEC's developed economies, and by 2020 for its developing members. Unlike in other standard free trade blocks, however, the achievement of the Bogor targets has so far been based on (a) individual or national action plans rather than a rigid target applicable to all member states (the so-called principle of concerted unilateralism), and (b) concessions in terms of lowering of trade barriers have been extended to all other countries, whether or not they are APEC members (based on a particular interpretation of the so-called principle of open regionalism). Moreover, policies committed in APEC are voluntary and are not legally binding. While some scholars view these features of APEC as quite positive and likely to lead to significant progress towards targets, others view them as impediments to serious bargaining and liberalisation that are bound to destine APEC to become little more than a chat forum.

Whether set targets are achieved, would be of enormous significance for world trade and welfare. APEC represents the most significant and diverse group of countries ever assembled together. In 1995 its eighteen nations accounted for 55 per cent of world GDP, about one half of global world trade and 38 per cent of world population.

APEC Objectives: The member economies represent the rich diversity of the region as well as differing levels of economic development. Despite such differences there is a growing sense of common purpose and cooperation aimed at sustained regional and world growth. APEC has come a long way since 1989. It has built steadily on the efforts of the past and looks forward to further progress. The initial years of APEC were focused largely on exchanges of views and project-based initiatives. The concerns were simply to advance the process of Asia-Pacific Economic Cooperation and to promote a positive conclusion to the Uruguay Round of GATT negotiations. APEC has evolved with the needs of its members to

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be a forum of greater substance and higher purpose-it aims to build the Asia-Pacific community through achieving economic growth and equitable development through trade and economic cooperation.

At Blake Island near Seattle the APEC Economic Leaders met for the first time for informal discussions in November 1993. They envisioned a community of Asia-Pacific economies based on the spirit of openness and partnership; of cooperative efforts to solve the challenges of change; of free exchange of goods, services and investment; of broadly based economic growth and higher living and educational standards; and, of sustainable growth that respects the natural environment. In subsequent annual meetings, APEC Ministers and Leaders further refined the vision and launched mechanisms to translate it into action.

In 1994 in Bogor, Indonesia the vision of an open trading system became the very ambitious goal of free and open trade and investment in the Asia-Pacific by 2010 for developed member economies and 2020 for developing ones. In Osaka in 1995, APEC Leaders adopted the Osaka Action Agenda, which firmly established the three pillars of APEC activities: trade and investment liberalisation, business facilitation and economic and technical cooperation. The Manila Action Plan for APEC (MAPA), adopted by the Economic Leaders in November 1996, compiled members' initial individual action plans to achieve the objectives outlined in Bogor.

APEC Leaders also instructed that high attention be given to the following six areas of economic and technical cooperation: developing human capital; fostering safe and efficient capital markets; strengthening economic infrastructure; harnessing technologies of the future; promoting environmentally sustainable growth; and encouraging the growth of small and medium-sized enterprises.

In Vancouver in 1997 the APEC Economic Leaders recognized members' efforts to improve the commitments in their Individual Action Plans and reaffirmed their intention to update these annually. The Leaders endorsed their Ministers' agreement that action should be taken with respect to early voluntary sectoral liberalisation (EVSL) in 15 sectors, with nine to be advanced throughout 1998 and implementation to begin in 1999. The Leaders welcomed the progress of APEC fora in involving business, academics and other experts, women and youth and encouraged them to continue these efforts. The Leaders endorsed the Vancouver Framework for Enhanced Public-Private Partnership for Infrastructure Development, as infrastructure is inextricably linked to the questions of financial stability that APEC addressed that year.

In Kuala Lumpur in 1998, the APEC Leaders reaffirmed their confidence in the strong economic fundamentals and prospects for recovery for the

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economies of the Asia-Pacific. They agreed to pursue a cooperative growth strategy to end the financial crisis. They pledged efforts to strengthen social safety nets, financial systems, trade and investment flows, the scientific and technological base, human resources development, economic infrastructure, and business and commercial links so as to provide the base and set the pace for sustained growth into the 21st century. Leaders also welcomed Ministers' decision to seek an EVSL agreement with non-APEC members at the World Trade Organisation. The Leaders adopted the Kuala Lumpur Action Program on Skills Development with the objective of contributing towards sustainable growth and equitable development while reducing economic disparities and improving the social well-being of the people, through skills upgrading/improvement.

APEC organisational setup: Ministerial and senior officials meetings.

APEC Chair, which rotates annually among members, is responsible for hosting the annual ministerial meeting of foreign and economic ministers. At the 1989 Canberra Ministerial Meeting, it was agreed that it would be appropriate that every alternate ministerial meeting be held in an ASEAN economy. Senior Officials Meetings (SOM) are held regularly prior to every ministerial meeting. APEC senior officials make recommendations to the Ministers and carry out their decisions. They oversee and coordinate, with approval from Ministers, the budgets and work programs of the APEC fora. APEC member economies have hosted a number of other ministerial meetings for Ministers of education, energy, environment and sustainable development, finance, human resources development, regional science and technology cooperation, small and medium enterprises, telecommunications and information industry, trade, and transportation. APEC operates by consensus. In. 1991, members committed themselves to conducting their activities and work programs on the basis of open dialogue with equal respect for the views of all participants.

Advisory Groups: The various advisory groups are, APEC Business Advisory Council (BAG), Committee on trade and Investment (CTI), Economic Committee (EC), Budget and Management Committee (BMC) Policy Level Group on Small and Medium Enterprises (PLGSME), Energy Working Group (EWG), Fisheries Working Group (FWG), Human Resources Development Working Group (HRDWG), Industrial Science and Technology Working Group (ISTWG), Marine Resource Conservation Working Group (MRC), Telecommunications Working Group (TEL), Tourism Working Group (TWO), Trade Promotion Working Group (WGTP), Transportation Working Group (TPT-WG), Agricultural Technical Cooperation Experts Group (ATCEG).

APEC and liberalisation: Since its creation in 1989, APEC has emphasised its member's commitment to "free and open trade and

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investment in the region". APEC was created under the framework of 'open regionalism', a term in sharp contrast with the inward-looking regionalism that many fear might prevail in the majority of trading blocks-such as the EU and NAFTA.

APEC's members are committed to continue reducing barriers to nonmember countries as they move towards free trade in the region. Some of its members have proposed to extend their APEC liberalisation to nonmembers unconditionally, since APEC has no intention to become a customs union with a common external trade policy.

Trade regionalisation and the simultaneous adoption of export-oriented strategies has resulted in positive spillovers in the region since exporters provide markets for neighboring suppliers of inputs. The production process also denotes a high degree of internationalisation. Japan provides essential capital goods, Hong Kong, Taiwan, and Singapore contribute finance and marketing. Thailand, China, and Indonesia concentrate on labour-intensive operations. This complementarity has been increased by the trade and investment links existing between various neighbouring provinces. Asian regional arrangements have being successful in spite of government intervention. For some, significant government involvement and trade restrictions have helped more than hindered the success of these countries regarding trade creation.

APEC could counteract protectionist tendencies by the other two blocks, the EU and NAFTA and be the main leader in global trade liberalisation. Most countries in the region actively support a multilateral trading system. Despite their diversity, and the different degree of intervention and protection, the Asian economies share the support for the multilateral trading system that begun with GATT. Begun as an informal dialogue group, APEC has since become the primary regional vehicle for promoting open trade and practical economic cooperation. Its goal is to advance Asia-Pacific economic dynamism and sense of community. Despite the financial instability of 1997-98, the Asia-Pacific remains one of the fastest growing regions in the world. It is a major contributor to global prosperity and stability. Today, APEC includes all the major economies of the region and the most dynamic, fastest growing economies in the world. APEC's 21 member economies had a combined Gross Domestic Product of over US$16 trillion in 1998 and 42 per cent of global trade. Brunei Darussalam is the APEC Chair for the year 2000.

Brunei priorities in 2000 : The emerging signs of economic recovery in the region present APEC with a greater prospect of working towards preserving and strengthening market opening in the region as well as sustaining economic recovery. For APEC 2000, Brunei Darussalam will

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map the direction with the objective of delivering on the various agreements to the people and the community APEC aims to serve. The priorities are: Continued efforts to advance APEC's agenda on trade and investment liberalisation and facilitation. A focus on the development of human resources with a particular emphasis on capacity-building. A focus on the development of small and medium enterprises (SMEs), continuing to take into account valuable input from the business community and looking into ways of enhancing APEC's relevance to businesses. With the increasing emergence of knowledge-based economies, a strengthening of work in the areas of information and communication technology, including growing problems of "digital divide" in electronic commerce and information technology infrastructure. The action plans are for: Financial Recovery, Management Reforms and Business/Private Sector Involvement. As Chair, Brunei Darussalam will continue to consult with member economies to consolidate the APEC agenda next year to ensure that the deliverables be more meaningful and beneficial to all.

US-Israel Bilateral Free Trade Agreement

Signatory countries: Israel and United States. Year of entry into effect: April 1985

The agreement to establish a free trade area between Israel and the US, signed in April of 1985, was the first such agreement between a developed and an industrialising country that envisaged full, reciprocal treatment of imports by both partners, albeit with some concessions to Israel.

The FTA treaty between Israel and the US divided imports by both countries into three lists, A, B and C. Goods in List A were subject to a preferential tariff as of September 1985 to be reduced to 40 per cent of its value as of 1st January 1987 and eliminated altogether by 1st January 1989. Goods in list B were subject to a margin of preference over the MFN duty with the margin increasing annually by 10 percentage points until complete elimination of all duties by January 1995. Finally, for goods in list C, no preference vis-a-vis the MFN rates was contemplated until January 1990 when, with common accord, a preferential tariff would be established. The preferential tariff would then decrease annually until its complete elimination by 1st January 1995

As far as the treatment of goods originating in Israel is concerned, two points are noteworthy. First, upon consultation with and agreement by the Joint Committee, Article 10 granted Israel permission to impose extra protection for its infant industries against imports from the US. The scope of infant industry protection was, however, limited by restricting it to new industries that did not exist at the time of the signing of the agreement and

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by limiting its duration to twenty-four months only. Moreover, its application at any time was restricted to at most 10 per cent of total imports from the US.

The second noteworthy point about the agreement's application to Israel was that until January 1, 1989, any duty applied by Israel to goods in Lists A and B originating in the US could not be less than the duty imposed by the former on goods originating in the European Community. This provision de facto precluded any concessions to the US vis-a-vis Israel's most important trading partners in Europe.

These two provisions go some way to explain the uneven effect of the agreement on Israel's exports to the US and her imports from the latter: bilateral trade data indicate a significant increase in the share of Israel's exports to the US already in 1985, while the share of US in Israel's non-fuel imports not only does not increase, but shows a slight decline after 1985. Israel's exports to U.S., which until 1980 had averaged around 17 percent of her total exports, increase to above 30 per cent in 1985-89 and remain at that level during the 1990s. The trade intensity index for Israel (which is based on exports) also increases confirming the increasing importance of the US market for Israeli exports. Israel's (non-fuel) imports from the US, on the other hand, manifest a decreasing trend since the mid-1980s, falling from 26 per cent in 1980-84 to 20 per cent in 1990-95. The parallel treatment accorded to the EC by Israel in terms of tariff concessions as well as the possibility given to Israel to protect its infant industries plus the exclusion of agriculture and goods in List C, probably neutralised the incentive of Israel to import more from the US at the expense of domestic producers and/or other exporting countries.

Because the stipulated complete liberalisation of non-agricultural trade was not to take effect until January 1, 1995, its impact is too recent to be reflected in the existing data. Be that as it may be, the sharp increase in the share of Israel's exports destined to the US market just around the time of the stipulation of the agreement indicates that the US-Israel FTA has been an effective agreement.

South-South Preferential Trade Agreements-Latin America

Attempts at regional integration and the idea of an eventual continent-wide unified economic block date back to before the war. However, it was not until the 1960s when the first regional groupings were created. Despite the efforts towards unity and integration, with few exceptions, these initial groupings had a limited success at achieving their objectives. Attempts at regional integration in Latin America were renewed with vigor towards the end of the 1980s, after many countries underwent a period of structural adjustment and reform. According to some estimates, between 1990 and 1994 alone, twenty-six bilateral and multilateral trade

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agreements were signed among Latin American countries. Many authors refer to these initiatives as "open regionalism," or "open blocks" to distinguish them from the past experience of "closed blocks." The term loosely indicates a preferential trade arrangement that is conducive rather than contrary to integration with the world as whole in so far as (a) external barriers against third countries' imports are relatively low and do not increase (or even decline in some cases) compared to that prevailing in member countries prior to the formation of the block: (b) regional preferences are meant to promote exports and ready the terrain for more effective competition outside the region rather than protect import-substituting activities. Other characteristics of "open regionalism" are argued to be reliance on market forces rather than centralised industrial planning and relatively little tolerance for "special protection needs" of member countries.

It is widely believed that most of the new and resurrected versions of older Latin American regional initiatives have not only been quite successful at re-orienting the region's trade towards itself, but also they hold the promise of being more sustainable and cohesive than in the past. This is due both to the more liberal trade stance of the majority of Latin American countries and the growing importance of manufacturing trade, and hence, increased intra-industry trade opportunities in the continent. To the extent that regional integration schemes that are based on intra-industry specialisation and trade are associated with lower dislocation costs of factors of production than schemes based on inter-industry specialisation and trade, the changes that have taken place in Latin American countries' productive and trade structures in the past three decades are now believed to be much more conducive to a lasting and cohesive regional integration than it was the case during the first wave of such initiatives in the 1960s. Below the major Latin American RTAs are briefly reviewed.

Central American Common Market (CACM)

Member states: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. Panama is not formally a member but has limited bilateral preferential agreements with individual members of CACM.

Year founded: 1960

The objective of CACM was to establish a common market with a common external tariff, to promote unhindered trade and investment within the group and to foster industrial development of member countries through a regional import substitution strategy. Trade barriers to intra-regional trade were supposed to be dismantled within five years. However, after an initial phase during which impediments to regional trade were removed on a few, mostly non-competing products, internal friction over

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the distribution of benefits left further liberalisation targets largely unmet. Nonetheless, the formation of the common market is believed to have had a significant initial impact on intra-group trade. Intra-CACM total trade (imports plus exports) grew more than five-fold, from 1.8 per cent of their combined GDP in 1957-60 to 10 per cent 1966-70. During the same period total trade with the world, as a whole remained basically unchanged at 33 per cent of GDP, pointing to a substantial trade diversion. However, after this initial increase fostered by the first wave of intra-group trade liberalisation, no further deepening was achieved and members' trade with each other remained more or less constant as a share of total until the end of 1970s, and then began to fall sharply after the early 1980s, when internal stabilisation and structural adjustment in the wake of the debt crisis took a much harder toll on intra-CACM trade than on total trade. During 1985-89, intra-CACM (non-fuel) import and export shares stood at 12 per cent and 15 per cent, respectively, some 10 percentage points below their level in the early 1980s. A similar pattern is observable in the group's trade intensity index, although throughout the period considered the index is several times higher than in any other group, either in LAC or elsewhere.

In the early 1990s, under more stable political conditions and with more open economic policies in the member countries, a series of initiatives were adopted to revive CACM as a more open and liberal trading block. By the end of 1992, CACM adopted a common external tariff of 5, 10, 15 and 20 per cent, covering 97 per cent of all products with a few exception granted for a limited number of years, and provisions were adopted to harmonise other instruments of economic policy. This renewed effort at integration has resulted in a dramatic growth in intra-CACM trade and trade intensity from the low levels of the post-debt crisis period.

The Andean Pact

Member states: Bolivia, Colombia, Ecuador, Peru and Venezuela. Year founded: 1969

The Andean pact was established in 1969. Like the other preferential trade groupings being formed around that time in Latin America and elsewhere among developing countries, the Andean countries' main objective in creating the group was to enlarge the small domestic markets of member countries and thus promote industrial development via regional rather than domestic import substitution. The growth of industry in member countries was to be achieved in two ways: a) a common industrial policy consisting of industrial planning at regional level; b) trade liberalisation among member states. A parallel objective of the group was to achieve an "equitable" distribution of cost of benefits of the integration process

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through micro-management of the industrial policy (industrial planning) at regional level and special treatment of less developed members (Bolivia and Ecuador). The latter were granted, for example, the right to liberalise their regional imports less rapidly and less fully than the others, and they were chosen to host certain industrial activities.

The combination of industrial planning and the preferential treatment of the less-developed member countries, however, introduced from the outset so many exceptions and exemption into the regional liberalisation program and caused so much resentment in the other members that the Pact had only a small impact on the trade orientation of its members. Indeed, between 1969 and 1978, i.e. in the ten years following the formation of the group, intra-Andean import trade as share of their total imports fluctuated between 2 and 2.5 per cent. The creation of the Andean Group exercised a bigger impact on their intra-export trade, as the industrial planning generated trade flows among the members that did not exist before, especially in manufacturing products. Intra-group export trade in manufacturing grew to an all time high of 32 per cent of total manufacturing exports in 1983, tripling from its early 1970s' level.

In 1989, with the declaration of Ica, the Andean Group initiated a process of accelerating integration that culminated in the creation of a free trade area in January 1991 between Bolivia, Colombia and Venezuela with Ecuador and Peru joining the area in July 1992. This time around, the member countries totally eliminated tariff and NTBs on internal trade; did away with the preferential regime of the less-developed members; and all but abandoned the common industrial policy of the past. They also replaced the old Andean Investment code with a new one that granted national treatment to foreign investors. Finally, in November 1994 they approved a CET with 4 rates and limited variability (5-20 per cent) with the maximum rate set to be lowered to 15 per cent in the future. Bolivia negotiated to keep

its own, lower tariff rates (5 and 10 per cent). These changes in the internal arrangements of the Andean Pact appear to have exerted a very strong impact on the level and intensity of their internal trade.

Latin American Free Trade Area (LAFTA). Changed name to Latin American Integration Association or LAIA in 1980

Member states: Argentina, Bolivia. Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela

Year founded: 1960

LAFTA was founded in 1960 by Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela, with the aim of promoting the member countries' industrial growth behind

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regional protective barriers. In 1980 its name changed to the Latin American Integration Association or LAIA. Although aggregate data suggest that LAIA's internal trade has been on a marked rise in the 1990s, it should be pointed out that since all members of LAIA already belong to another grouping (ANDEAN, G-3 and MERCOSUR) all of which are sub-grouping of LAIA, the increase in intra-LAIA trade since 1990 is attributable to the formation and/or revival of these other, smaller groups within LAIA than to LAIA itself. This conclusion is supported by a more careful analysis of the data which show that once the impact of other smaller blocks is taken into account, LAIA has had no positive effect on member's internal trade with each other.

Among developing regions, Latin America achieved political independence relatively early (19th century). The economic development of Latin American societies was strongly influenced by their colonial past and by the type of primary products that were available for export, as it was through these that they entered the world system of production specialisation in the second half of the last century. The peripheral position of those Latin American countries that exported mining, extractive or temperate or tropical zone agricultural products to the developed countries was not conducive to interdependence among their economies in the spheres of trade and investment. It is well known, furthermore, that during the first half of the 20th century each of the large and medium-sized economies of Latin America

responded to major international crises (first world war, 1930s depression, second world war) by developing an industrialization process that was oriented towards their own domestic market, and their major metropolitan areas in particular. This process, which began with the intention of making good the shortage of manufacturing imports from the central countries affected by these international crises, was subsequently consolidated by means of systems of stimulation and protection, adding up to what is known as import substitution industrialisation. Again, the initial stage of this process was not conducive to economic interdependence among the countries of Latin America, whose trade with one another remained at low levels.

At the beginning of the 1960s two integration agreements were signed with the objective of constructing free trade areas as a first step towards further-reaching forms of integration. Thus there arose the Latin American Free Trade Association (LAFTA) and the Central American Common Market (CACM). LAFTA included the ten independent countries of South America plus Mexico, and CACM the five countries of the Central American isthmus.

In terms of geographical, demographic and economic "size", LAFTA represented (and still represents) around 85% of all of Latin America and

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the Caribbean, the remainder being accounted for by the Central American countries that were members of CACM and by the Spanish, French and English-speaking Caribbean countries, some of which would later form the Caribbean Community (CARICOM).

In the case of CACM. tariff reductions were swift and wide-ranging, giving rise to a substantial increase in reciprocal trade which, however, quickly stagnated (measured as a percentage of total trade), due mainly to the limited range of products that the member countries had available for export.

In the case of LAFTA, the negotiating mechanism was more cautious and gradual. Its large and medium-sized members had built up national industries on the basis of protectionist criteria, which were still widely adhered to. The industrial structures of the major countries overlapped to a great degree, and the limited size of national markets reduced the scope for specialisation and economies of scale. The limitations thus imposed by domestic market-oriented development were highlighted in a number of studies produced at the time by the Economic Commission for Latin America (ECLAC), a leading advocate of the integration process at this stage.

The negotiating procedures applied in LAFTA, however, tended to stifle much of the initiative. The products included in the lists for negotiation were not always among the most important in the trade between the countries, and any product not included in these lists continued to be subject to tariffs. In the event, protectionist practices prevailed over integrationist intentions, and the increase in reciprocal trade attributable to the trade liberalisation that ensued turned out to be quite modest.

In addition, the Andean countries considered that they were not receiving sufficiently fair treatment (in the distribution of opportunities to industrialise) from the "big" countries and, without breaking away from LAFTA, they decided to sign the Cartagena Agreement, which produced the Andean Group (AG) in 1969. During the ten years that followed, trade within LAFTA (measured as a proportion of its total trade) continued to grow at very moderate rates, and the same happened within the AG. After a strong initial spurt, exports between the countries of CACM also stagnated as a percentage of total trade. By the beginning of 1980, exports between the countries of Latin America and the Caribbean (LAC), expressed as a percentage of the total, had risen from 8.8% in 1960 to 16.4%. This was meagre progress after twenty years of efforts towards integration.

The protected development strategy based on import substitution industrialisation began to lose credibility in the 1970s. On the one hand a

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number of large and medium-sized countries in South America experienced spells of rampant inflation. Subsequently, there was a large inflow of "Eurodollars" from the strengthened world "petroleum cartel", which were offered by private commercial banks at negative real interest rates. This stage coincided with a period of recession with inflation ("stagflation") in the United States and other major developed countries, which produced a kind of subsidy for countries in receipt of credits. These cheap and abundant "Eurodollars" lifted exchange rates, opening the way for trade "liberalisation" that began to weaken uncompetitive Latin American industries.

At the beginning of the 1980s, the main thrust of economic policy, in Great Britain first and in the United States, was to control inflation in the developed countries by applying policies which entailed rising real interest rates internationally. The world recession of this period meant tumbling prices for primary products, including petroleum. In Latin America, the economic bonanza abruptly ended, and the difficult recessive adjustment of the beginning of that decade commenced. The acute shortage of currency (dollars) resulting from the reorientation of external credits towards developed countries, combined

with the fall in real prices for the primary products exported by the region, led to the region experiencing the most severe interruption in its growth since the crisis of the 1930s.

The need to generate trade surpluses in order to finance the heavy costs of debt servicing led to imports between the countries of the region being cut back sharply, with all the negative repercussions that this obviously had for the corresponding exports. By the mid-1980s, exports between these countries as a percentage of total trade had returned to levels scarcely higher than those seen in the 1960s, at the time the integration process began. At the beginning of that same decade LAFTA was replaced by the Latin American Integration Association (LAIA), a much more flexible agreement that left room for what are called "partial scope" arrangements between two or more members, with considerable freedom in drawing up the clauses of these. This liberal framework was to prove very workable under the new conditions for Latin American integration which came into being in the 1990s.

Caribbean Community and Common Market (CARICOM)

Member states: Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Monserrat, St. Christopher-Nevis, St. Lucia, St. Vincent and Grenadines, Trinidad and Tobago

Year founded: July 1973

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CARICOM's objective was to foster economic cooperation and integrate the economies of the participating states through the removal of trade barriers. However, given the limited potential for economic integration among such economically small nations with similar production and trade patterns, intra-group trade ratios are small. Although in the 1990s, there is some increase in internal trade shares (especially export trade) and the trade intensity index the numbers seem to reverse the trend in 1995. Therefore, CARICOM is not considered as an effective integration scheme.

Association of Caribbean States (ACS)

Member states: Thirty-seven Caribbean Basin and Central American states, including those belonging to CARICOM, Colombia. Mexico and Venezuela.

Year founded: July 1994

ASC was launched by CARICOM in 1992 with the objective to strengthen its link with the other countries in the Caribbean Basin and Central America. The objective of ACS is principally to foster functional cooperation among its members rather than promote free trade, although free trade agreements among one or more subsets of member states is acknowledged, even encouraged.

Common Market of the South (MERCOSUR)

Member states: Argentina, Brazil, Paraguay and Uruguay. Chile and Bolivia became an associate member of MERCOSUR in October and December 1996, respectively.

Year founded: March 1991

MERCOSUR emerged from a process of sectoral integration between Argentina and Brazil. With the addition of Bolivia and Chile (which have entered an FTA agreement with MERCOSUR since 1996), it is the biggest regional group in LAC with a total population of more than 200 million and a combined GDP of over $1000 billion.

MERCOSUR is a customs union between the four founding members where internal trade is largely free of any duties and the external protection averages about 13 per cent. The agreement with Chile and Bolivia allows the two countries to retain their own external protection level and structure, which are generally more liberal than MERCOSUR's (a uniform 11 per cent versus an average of 13 per cent in the latter).

Since its creation, all MERCOSUR countries have seen a surge in the share of their internal trade that bears witness to the influence of the preferential arrangement. The increase in intra-group trade is especially

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evident for exports: intra-MERCOSUR export trade doubled during 1990-95 compared to the previous 5-year period. Between 1990 and 1995, Argentina and Brazil doubled and tripled, respectively, their share of exports to the MERCOSUR market. Even in the case of the two smaller members, namely Paraguay and Uruguay, who traditionally conducted a large share of their trade with their large neighbours, there

is a considerable increase in the share of their exports destined to partners markets over the same period of time.

Group of Three (G3)

Member countries: Colombia, Mexico and Venezuela Year founded: June 1994

The G3 Treaty provided for an immediate elimination of tariffs on some items and a ten-year transition for others, with the exclusion of agriculture. Mexico's tariff elimination on exports of the other two partners is to proceed more quickly and Venezuela is granted two extra years for the dismantlement of its tariffs on textiles. It should be noted that Colombia and Venezuela had already instituted a FTA among them and had agreed on a common external tariff in 1992.

Asia, Middle East and North Africa

Unlike Latin America and Africa, there are relatively few trade integration schemes in Asia, non of which appear to have had a great deal of impact on trade orientation of its members. Even in the case of the two major schemes in Asia —the Association of South East Asian Nations (ASEAN) and the Gulf Cooperation Council (GCC)— the initial reason behind the formation of the groups was more related to objectives other than intra-group trade promotion, even though in the course of time there has been a systematic move towards deeper economic integration. The Economic Cooperation Council, the South Asian Association for Regional Cooperation, the Arab Common Market and the Maghreb Union, are more cooperation agreements than preferential trade arrangements.

Association of South East Asian Nations(ASEAN)

ASEAN was formed by the governments of Indonesia, Malaysia, Philippines, Singapore and Thailand through the Bangkok Declaration, which was signed by the Foreign Ministers of ASEAN countries on 8th Aug. 1967. Brunei Darussalam joined on 8 Jan. 1984, Vietnam on 28 July 1995, Laos and Myanmar on 23 July 1997 and Combodia on 30 April 1999. Head quarters-Jakarta, Indonesia

Its aim is to accelerate economic growth, social progress and cultural development in the region, to promote regional peace and stability in the

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relationship among countries in the region and adherence to the principles of the UN Charter.

History and Evolution of ASEAN: When the Founding Fathers of ASEAN from Indonesia, Malaysia, the Philippines, Singapore and Thailand established the Association in 1967, they held out a vision of all countries in Southeast Asia cooperating actively towards peace, stability, progress and prosperity in the region. It was a bold vision because at that time the region was still badly divided by ideological conflict and war. Internal problems and economic hardship forced countries in the region to waste a great deal of their scarce resources in defence and to depend on external powers for security and aid. Territorial disputes and racial tensions caused recurring irritation and aggravated distrust between neighbours and prolonged fragmentation of Southeast Asia.

The Sabah dispute between Malaysia and the Philippines led to the early demise in 1962 of the Association of Southeast Asia, which these two countries formed with Thailand just one year earlier. Diplomatic ties between Kuala Lumpur and Manila were severed between 1962-1966. Consequently, President Macapagal's idea of a Malphilindo grouping was stillborn. Then there was the confrontation between Indonesia and Malaysia; the separation of Singapore from Malaysia in August 1965, the escalating war in Vietnam and the Cultural Revolution in China where Chinese leaders openly had a policy to export revolutions to Southeast Asia.

Against all odds, ASEAN was found to provide a framework and mechanism for regional cooperation. In the ASEAN Declaration unveiled in Bangkok on August 1967, the Founding Fathers spelled out the first three aims and purposes of ASEAN.

l."To accelerate the economic growth, social progress and cultural development in the region through joint endeavors in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community of South-East Asian Nations.

2. To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries of the region and adherence to the principles of the United Nations Charter.

3. To promote active collaboration and mutual assistance on matters of common interest in the economic, social, cultural, technical, scientific and administrative fields".

The ASEAN Declaration made clear that "the Association is open for participation to all States in the South-East Asian Region subscribing to the aforementioned aims, principles, and purposes". It further stated that

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"the association represents the collective will of the nations of South-East Asia to bind themselves together in friendship and cooperation and through joint efforts and sacrifices, secure for their peoples the blessings of peace, freedom and prosperity".

Expanding membership: During the late 1960s and early 1970s, Cambodia, Laos and South Vietnam attended some of the ASEAN Ministerial Meetings as Observers. Only in 1984 did the ASEAN membership begin to expand with the admission of Brunei Darussalam on 7 January of that year, one week after the country gained independence from the British. The admission of Vietnam was in July 1995 as its seventh member. Laos and Vietnam became Observers in ASEAN after their accession in 1992 to ASEAN's Treaty of Amity and Cooperation in Southeast Asia. Cambodia was accorded Observer status after Cambodia acceded to the Treaty of Amity and Cooperation in Southeast Asia in January 1995. Myanmar acceded to the Treaty in July 1995 and was accorded Observer status at the 29th AMM in July 1996 in Jakarta. On 15 December, the Heads of the 10 Southeast Asian countries signed the Treaty on the Southeast Asia Nuclear Weapon-Free Zone. Combodia, Laos and Myanmar (the CLM countries) submitted their respective applications for ASEAN membership in 1996.

ASEAN was created to foster peaceful national development of its member states through cooperation. In its early years therefore ASEAN was not a preferential trade arrangement (PTA) . It was only in 1977 that a limited PTA was first adopted by ASEAN member states. However, even then the arrangements was quite narrow in scope and coverage. By 1980 it covered an estimated 2 per cent of intra-ASEAN trade, and only 5 per cent by 1985. Several reasons, including the product-by-product nature of negotiations, the non-genuine offers of preferences, high domestic content requirement, the possibility of having long lists of exclusions, and the limited nature of preferences themselves explain the negligible impact of the PTA scheme.

In 1991, the idea of an ASEAN free-trade area (AFTA) was proposed by the Thai Prime Minister and subsequently adopted in January 1992 during the fourth ASEAN Summit meeting in Singapore. The original goal of AFTA was ultimately to reduce tariff rates on intra-ASEAN trade to between zero and 5

per cent within 15 years beginning in January 1993, through the adoption of a common effective preferential tariff (CEPT) scheme. The scheme divided goods into two categories: the fast-track goods whose tariffs would be reduced to 0-5 per cent within 7 or 10 years (depending on whether the initial tariff was below or above 20 per cent) and the normal-track goods on which tariffs would be reduced more slowly and in two stages. Later, during the ASEAN summit meetings of

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1993 and 1994 the planned tariff liberalisation was accelerated and other changes were adopted whereby 11,000 tariff items (about 20 per cent of total tariff lines) were to have the reduced tariff by January 1994, fast -track items were to be liberalised by the year 2000 and normal-track tariff reductions would be achieved by the year 2003 instead of 2008. Vietnam, which joined ASEAN in 1995 and AFTA in 1996, was granted a ten-year implementation period ending in 2006. ASEAN countries' internal export and import trade shares in 1995 stood at about 23 and 16 percent, respectively. Although these shares have increased since AFTA's creation, it is hardly a result attributable to ASEAN's free trade arrangement since the intensity of intra-ASEAN trade actually declines over the same period.

The Gulf Cooperation Council (GCC)

Member states: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE),

Year foundeed: May 1981

GCC was created in 1981, institutionalising a long history of informal cooperation that had long existed among the six member countries. Although political changes in the region played an important role in accelerating the formation of GCC, the idea of a formal regional grouping predated the political developments. The rules governing economic integration of GCC partners were spelt out in the so-called Unified Economic Agreement (EA), signed in June 1982. The agreement foresaw the creation of a customs union with a common external tariff and free trade for all goods originating in GCC members. The first phase of the EA — removal of tariffs on intra-GCC imports — proved relatively easy to implement, especially as the general level of protection in all GCC countries at the time was very low. The second objective, the establishment of a CET of 4-20 per cent, proved more difficult to realise as all countries in different manners showed reluctance to forego their sovereignty in deciding the level and/or the structure of their external protection. The downturn in the price of oil in the 1980s and the need for further revenues pushed the objective of a CET even further in its realisation. Recently, there have been fresh attempts at defining a deadline for the adoption of a CET as this is supposed to facilitate negotiations with the EU for the creation of a free trade area or customs union between the two

entities. The GCC's interest in such a union derives from its desire to open the European markets to its petrochemical exports. The free trade agreement among the GCC countries has not exercised much impact on the relative share of their mutual, overall trade due to (a) the similarity in the structure of production and trade of the member states; (b) the

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generally low level of protection against third countries. However, for non-fuel exports GCC's internal market is an important market for local exporters. Aside from Saudi Arabia, which exports very little to other GCC partners, and UAE for which reliable data are unavailable, the remaining four countries sell one-third to one-half of their non-fuel exports locally.

Sub-Saharan Africa (SSA)

Together with Latin America, SSA has the highest number of regional groupings in the developing world, with often overlapping membership and objectives that vary from limited cooperation in specific areas to full fledged economic integration. Some of the regional grouping in SSA date back to the colonial era. However, most of the integration schemes were adopted after independence during the late 1960s and 1970s. In many instances, the groupings comprised countries which had shared colonial ties to the same foreign power because the colonial ties had created a host of common institutions, a common official language, and a common currency. In other instances, the regional groupings, notably the larger ones, were more in line with the geographic proximity of the member countries. Despite the proliferation of regional groupings in Africa, it appears from the growth of intra-regional trade shares that in most instances they have achieved little by the way of promoting regional trade integration. Data indicate that on average no regional grouping in SSA has been successful at elevating intra-regional trade beyond a negligible portion of Africa's total trade, although trade with partners may be important for individual countries. The data also show that until the beginning of the 1990s the internal trade shares of almost every African grouping either remained constant or actually decreased to below their level prior to the formation of the groups. During the 1990's, there has been a slight increase in the level, and a much bigger increase in the intensity, of intra-African trade. This result, however, is almost entirely attributable to the huge decline in the share of Africa in total world trade in the past thirty years, a trend which continued unabated during the 1990s. Below the most important regional groupings in SSA are discussed.

Economic Community of Western African States (ECOWAS)

Member states: Benin, Burkina Faso, Cape Verde, Cote d'lvoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leon, and Togo.

Year founded: 1975

ECOWAS is the most populous and economically, as well as culturally, the most diversified of SSA groupings. The original idea of a community

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embracing all of West Africa goes back to 1963. However, the negotiations that led directly to the formation of ECOWAS began only after the end of Nigeria's civil war in early 1970s. The ECOWAS Treaty envisaged the creation of a common market among member countries with a phased reduction of tariffs and non-tariff barriers on products of community origin until their complete elimination by 1989; the establishment of a common external tariff; fiscal and monetary harmonisation; and close cooperation in all areas of economic activity. However, the lack of currency convertibility for countries outside the French franc zone, marked differences in the level of economic development of the member states within ECOWAS and the generally protective and import-substituting trade regimes followed by most member countries considerably slowed the process of integration. Thus, despite its declared objective of creating an economic community, ECOWAS has to date failed to achieve free trade in goods, let alone in factor services.

Coinmunaute Economique de l' Afrique de l'Ouest(CEAO)/Union Economique et Monaitaire Ouest-Africaine (UEMOA)

Member states: Benin, Burkina Faso, Cote d'Ivoire, Mali, Mauritania, Niger, Senegal. Guninea Bissau joined the group in May 1997.

Year founded: 1973, changed name to UEMOA in 1994.

CEAO/UEMOA represents the third and the fourth attempts, respectively, by West African States that belonged to the former federation of French Western Africa to maintain the arrangements for monetary and economic cooperation which were established during the colonial era. All its members except for Mauritania belong to the French Franc Zone and use a common currency, the CFA franc. CEAO's objective was to create a customs union among the partners and to promote "equitable and balanced" economic growth of all its members. To achieve the latter objective. CEAO Treaty envisaged a made-to-measure structure of tariff and tax preferences on intra-CEAO trade in industrial products to suit the

"protection needs" of various member states. This created a distorted structure of effective protection that did not conform to any economic criterion and prevented effective market integration to take root. Facilitated by the devaluation of the CFA franc in January 1994, there have been fresh attempts at re-launching the process of integration amongst the franc zone countries of Western Africa by expanding the scope of the monetary union of the seven partners to goods and services markets. The new initiative, UEMOA, is supposed to set the pace for a new form of integration that is outward oriented, does away with the past deficiencies and import-substituting philosophy of CEAO, and prods the member countries towards the adoption of a more liberal and less distorted trade and tax regimes.

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Union Douaniere et Economique de l'Afrique Centrale (UDEAC) relabeled in 1994 as Comunaute Economique et Monetaire d'Afrique Centrale (CEMAC)

Member states:. Cameroon, Central African Republic (CAR), Chad, Congo, Gabon, Equatorial Guinea (member since 1985)

Year founded: 1966

The French Central African countries share a long history of cooperation and common institutions beginning with the creation of French Equatorial Africa in 1910. UDEAC was formally founded in 1966 by the Treaty of Brazzaville. UDEAC countries also belong to the French Franc Zone with the CFA franc as their common currency. The original Treaty of Brazzaville envisaged a customs and monetary union with the complete removal of internal tariffs and non-tariff trade barriers among the member countries and the establishment of a common external tariff and common customs administration for trade with the rest of the world. However, the Treaty was extensively revised in 1974, de facto abolishing the CET and restricting the intra-union trade in manufactured goods to those produced by firms enjoying the privileges of the Taxe Unique (TU) system. The TU regime in UDEAC aimed at tailoring the structure of tariff preferences on internal trade to the desire of the participants to protect their limited industrial capacity, resulting in an extremely distorted and complex structure of domestic and trade taxes that bore no relation to any economic logic. In the early 1990s UDEAC countries launched a process of renewal of the Union with the aim of replacing the existing structures -of exceedingly complex and distorted external and internal indirect taxes with a simplified and transparent one. The reform package included, among other things (a) the adoption of a common external tariff in lieu of the previously existing three separate taxes on imports with a simple rate structure comprising four rates (5, 10, 20 and 30 per cent); (b) the abolition of TU (or its domestic variant, TIP in Cameroon) in July 1994 and its replacement with a generalised system of preferences for intra-UDEAC trade, with the preferential tariff initially set at 20 per cent of the MFN tariff but programmed to fall to zero by January 1998; (c) the

replacement of separate indirect sales taxes on imports and domestic output with a unified, quasi-value added tax applicable at the same rate to all sales irrespective of origin. These and other reforms have resulted in a considerable decrease in the level and variability of nominal and effective protection across all industries in Cameroon, where the reforms have been implemented to a greater degree than in the rest of member countries. To what extent these reform will stimulate further economic and trade integration of the member states with each other, remains to be seen.

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Preferential Trade Area for Eastern and Southern African States (PTA)/ Common Market for Eastern and Southern Africa (COMESA).

Member states: Angola, Burundi, Comoro, Djibuti, Ethiopia, Kenya, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Sudan, Swaziland, Uganda, Tanzania, Zambia and Zimbabwe.

Year founded: 1981

PTA was formally borne by the Treaty of Lusaka in 1981. By the early 1990s, PTA's membership extended to eighteen countries in the region. The Treaty of Lusaka envisaged an ambitious program of internal trade liberalisation; the development of industry, agriculture, human resources and communications within and between member countries; and ultimately the creation of an economic community in the sub-region. Initial action concentrated on trade promotion through tariff preferences and the establishment of the PTA Clearing House to minimize the use of scarce foreign exchange for internal transactions. Despite the good intentions and the establishment of the Clearing House, the PTA did little to expand trade among its members. In the 1990s intra-PTA export and import trade shares were around 5-6 per cent, lower than their level in the mid seventies, i.e. prior to PTA formation. Dissatisfaction with PTA's progress and the new wave of regionalism in the continent led PTA members to draw up a new treaty establishing COMESA in December 1993, which effectively replaced the PTA in December 1994. The objective of COMESA is once again to create a free trade zone that would evolve into a customs union with a CET by the year 2004 and into a common market thereafter.

Southern African Development Coordination Conference (SADCC) I Southern African Development Community (SADC)

Member states: Angola, Botswana, Lesotho, Malawi, Mauritius (since 1995), Mozambique, Namibia, South Africa (since 1994), Tanzania, Zambia, Zimbabwe, and Swaziland

Year founded: April 1980/1992

SADCC was originally created to reduce the dependence of the region on South Africa and to seek foreign financial support for development projects that could not economically be undertaken by any one of its member countries individually. The political changes in South Africa and the disappearance of the destabilisation policy of the Apartheid era, however, brought about a gradual change in the philosophy of SADCC. Thus, from a political alliance, SADCC (now called Southern African Development Community or SADC) became yet another preferential trade grouping in the region. SADC's objective is to create a common market

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with completely free trade in goods and services and free factors movement among the partners, although no precise time table for internal liberalisation is set. Recognising the limitations of past market-based integration in Africa with its tendency to favour a few relatively more diversified economies, it was a deliberate decision by SADC secretariat to limit the scope of and avoid a precise agenda for internal market liberalisation. In effect, to date, very little internal trade liberalisation has been achieved and there exists some confusion as to the real function and scope of trade integration that SADC can achieve over and above the other three rival regional groups, namely CBI, COMESA and SACU.

Southern African Customs Union (SACU)

Member states: Botswana, Lesotho, Namibia, South Africa and Swaziland

Year founded: 1910

SACU is the oldest, and by most accounts the most effective. integration scheme in Africa. Its goods and factors markets are well integrated. Trade in goods and services (other than agriculture) within the Union is totally free of barriers, but imports from the rest of the world face a common external tariff and a common excise tax the proceeds of which flow into a consolidated revenue fund. The revenues are then shared by the Union partners according to a complicated revenue-sharing formula. Because South Africa is the dominant economy within the Union whose external trade policies determine those of the entire Union, the revenue sharing formula grants the BLNS states more revenues from the fund than strictly justified by their total share in the Union's external trade as a means of compensating the latter for their loss of sovereignty in matters of trade policy. All SACU members but Botswana are also

members of the Rand Monetary Area with the central Bank of South Africa acting as the central Bank of the Area as a whole. Since the end of the Apartheid era, there has been an ongoing debate as to whether SACU would or should survive in its current format. At least two factors contribute to the uncertainty surrounding SACU's future. The first element of uncertainty is the conflict posed by the coexistence of SACU and SADC, both of which include South Africa, especially if the latter were to become an effective preferential regional trade scheme (a de facto enlarged SACU) with South Africa at is core. The second and related factor of uncertainty, is represented by the ability and/ or willingness of South Africa to continue its compensation program to the current or any future members of an enlarged SACU as well as the willingness of the other members to stay in SACU in the absence of such payments. On the one hand, although South Africa's trade with Southern African partners (excluding SACU) is small, around 5 per cent of her total exports, this trade represents 30 per cent of South Africa's manufactured exports. Moreover, some recent estimates indicate that the prices of South Africa's manufactured goods

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sold in the region may be as much as 15-25 per cent higher than the fob prices of comparable goods. It is thus unlikely that in the absence of a generous compensation, the current SACU members will be willing to continue their open market policy towards South Africa, or other countries in the region may enter into a serious free trade agreement with her. On the other hand, South Africa is under increasing fiscal pressure to curb her fiscal compensation to SACU members, let alone to extend them to others. The future of SACU/SADC, will depend on the resolution of these conflicting interests.

Cross Border Initiative (CBI)

Signatory countries: Burundi, Comoro, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe

Year founded: 1990

The idea of CBI was borne at the Masstricht Conference on Africa in 1990 and is sponsored by all major multilateral organizations, including the IMF, the World Bank and the EU. The Initiative calls for a "road map" to trade reform whereby the signatory countries move towards a "harmonised" external tariff ranging from 5 to 25 per cent with an average of 15 percent, which is considerably lower, both in level and variability, than the existing external protection in member states. The reduction in external protection is supposed to be completed by 1998, the same date set for the removal of all barriers to internal trade. The idea is that the simultaneous reduction of external protection and intra-group trade

liberalisation would minimize the trade diverting impact of tariff preferences and provide an incentive for the more protectionist countries to liberalise their trade regimes.

Bilateral trade agreements in Southern Africa : Other than the major groupings thus far considered, there exists a number of bilateral trade agreements, mainly between the Republic of South Africa on the one hand and several of the regional countries on the other. Among the regional bilateral agreements involving South Africa, the main ones are those with Zimbabwe, Malawi, and Mozambique. The agreement between South Africa and Zimbabwe dates back to 1964, a year after the dissolution of the Federation of Rhodesia and Nyasaland and a year before Rhodesia's unilateral declaration of independence from Britain. The agreement is a very complicated document that applies to a positive list, which, over time, has become a smaller proportion of total bilateral trade. It allows for duty-free trade in unprocessed food and a range of rebates on selected manufactured items. Because the agreement is so complicated, it is difficult to assess its impact on bilateral trade flow. Zimbabwe conducts a

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very large share of its trade with South Africa, much more than the economic size of South Africa would justify. The latter is indeed Zimbabwe's most important trading partner. However, one can hardly attribute this outcome solely to the existence of the limited trade agreement between the two. Long-standing economic, entrepreneurial and cultural ties between the two countries, the unique circumstance of both having been under economic sanctions for a protracted period of time, geographic proximity and the relatively large size of the manufacturing sector in both are probably equally if not more important in explaining the very large share of South Africa in Zimbabwe's trade. South Africa's agreements with Malawi and Mozambique involve unilateral tariff concessions by South Africa on some imports from the latter. Finally, there are two free trade agreements between Zimbabwe and Botswana and Zimbabwe and Namibia. The interest of Zimbabwe in these agreements is to compete more effectively with South African producers who through SACU have unimpeded access to the latter's markets.

The Arab League

The Arab States of Algeria, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Mauritania, Egypt, Somalia, Djibouti, Palestine L.O.,Comoros, Saudi Arabia, the Sudan, Syria, Tunisia, the United Arab Republic, Oman, Qatar, Bahrain and Yemen are members of the non-western regional arrangement, namely, the Arab League. It was formed in 1945, with the active assistance of Britain. It is the outcome of a national awakening of the Arabs, following the fall of the Ottoman Empire in the First World War. It was formally instituted on March22, 1945. Its primary objectives as stated in the Pact of the League, are (i) the

strengthening of the relations between the members states, (ii) the coordination of their policies in order to achieve cooperation among them and (iii) to safeguard their independence and sovereignty. The pact specifically referred to cooperation among the member states in economic and financial affairs, communications, cultural affairs, nationality and related matters, social affairs and health problems.

Administrative setup: The chief administrative section of the Arab League is the 'Majlis' the council, composed of representatives of all member states. Decisions of the council on security matters are not binding unless they are unanimous. The League cannot enforce decisions that involve the independence, sovereignty or territorial integrity of a member state. A state, which does not stand according to the pact, may be excluded by the unanimous vote of all other member states.

The Arab League consists of a Council, a Secretary General, a few permanent committees and 22 specialised agencies. The League considers

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itself a regional organisation within the framework of the UN at which its Secretary General is an observer.

The headquarters of the League are at Cairo. The League has concluded formal agreements and informal agreements with most of the specialised agencies of the U.N. It also maintains information centres in several countries including four in the United States.

Personnel from all the members of the League compose the Secretariat. Here and in almost all other aspects of the organisation and work, Egyptians dominate the League. The major divisions of the Secretariat are the political, legal, social, cultural, press and publicity, administrative and financial departments. The League has set up committees in almost all of these departments.

Accomplishments and Work Directions: (i) In 1946 the League concluded a "Cultural Treaty" according to which a cultural committee with a permanent bureau and local branches in member states, and a Cultural Department at the Secretariat came into being. Various institutes were also established in order to implement in many ways the objectives of the Cultural Treaty.

(ii) In 1953 the League established the Institute of Advanced Arab Studies, which has developed into centre for training specialists in Arab affairs.

(iii) In 1957, the League setup, the Arab Financial Institution for Economic Development (the Arab Bank) and a permanent Council for Economic Unity to coordinate economic financial and social plans of the Arab states.

(iv) A draft statute of an Arab Court of Justice has been drawn out, but the members of the League are not highly interested in establishing such a court, which would help to implement the provisions of the pact relating to the pacific settlement of disputes between Arab states.

(v) A Collective Security pact was drafted in 1950, and with Iraq's ratification in 1952, the pact entered into force. Officially named as Treaty of Joint Defence and Economic Cooperation it provides for a Joint Defence Council under the control of the League Council, assisted by a Permanent Military Commission. But, by and large, joint defence has not been maintained as expected, because of difficulties inherent in creating and equipping an army under the command of the Permanent Military Commission.

Moreover the implementation of joint defence was affected by the actions of Iraq (one of the member states). Iraq entered into security

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commitments with non-League slates. It joined with Turkey in a treaty in 1955 and with Iran, Pakistan, Turkey and the United Kingdom in the Baghdad pact in November of the same year. After the revolution in Iraq in 1958, the new regime withdrew from all non-Arab defence arrangements, but also stood somewhat aloof from the Arab League.

The 1950 Treaty also provided for an Economic Council. In 1961 this council drafted an Economic Unity Pact, a plan for an Arab Common Market. To implement this pact, which came into effect in 1964. the five states which had signed the economic agreement - Iraq, Jordan, Kuwait, Syria and the United Arab Republic - set an Economic Unity Council. Kuwait was withdrawn from this in 1965 and the Economic Unity Council became a permanent operation.

Since its formation the Arab League has concentrated largely on political matters, and especially on questions relating to Palestine. The Arab League has played quite an impressive role during its existence. It played a creditable role in the liberation of Lebanon as well as in the Anglo-Yemeni dispute. The Anglo-Egyptian Agreement of July 1954, between England and Egypt was also largely due to its efforts. In the liberation of Libya also it had a commendable role. It exerted pressure on France to liberate her colonies. However, the League failed to tackle the Palestine question properly, although it succeeded in defeating Israel in 1973.

In the social, economic and cultural sphere the Arab League played a significant role. A number of agreements regarding economic cooperation were concluded amongst the states, which provided for preferential trade system among the Arab states. In the cultural sphere a treaty was concluded which provided for the creation of cultural committee which meet once a year. A permanent Bureau and Cultural Department for mutual cultural cooperation was also set up.

However, despite these accomplishments, it has to be admitted that the Arab League has not been able to accomplish the most important objective viz., unification of the Arab World. Too Loose an organization, too much dominated by the UAR, too sharply divided by political and personal rivalries, too much to a hostile coalition against Israel, the Arab League has not been a strong regional arrangement. Nevertheless, it is a symbol of national revival in the Arab world, and it holds a trend towards a large political grouping in a strategically critical area. By such means as block voting and active participation in the United Nations and in the Asian-Africa Group in the UN. It has emphasised the determination of the Arab States to remain free from foreign control and to consider certain common problems on the regional basis.

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G-8:

Members: Canada, France, Germany, Italy, Japan, United Kingdom, the US, Russia.

Establishment: Sep.22, 1985

G7 is organisation of seven major industrial democracies that meet periodically to discuss world economics and other issues. Russia joined it latter. In 1998, the name was changed to G8.

Since 1975, the heads of state of the major industrial democracies have been meeting annually to deal with the major economic and political issues facing their domestic societies and the international community as a whole.

The six countries at the first summit, held at Rambouillet, France in November 1975, were France. Germany, Italy, Britain, United States and Japan. They were joined by Canada at the San Juan, Puerto Rico Summit at 1976 and by the European Community at the London Summit of 1977.

Membership in the G-7 has been more or less fixed, although 15 developing countries leaders met with the G-7 leaders on the eve of the 1989 Paris Summit, and the USSR and then Russia have had a post-summit dialogue with the G-7 since 1991. Starting with 1994 Naples Summit, the G-7 and Russia have met as the P 8 ("Political 8"), following each G-7 Summit.

The Denver Summit of the Eight was a milestone, marking full Russian participation in all but financial and certain economic discussions; and the 1998 Birmingham Summit had full Russian participation, giving birth to the G-8.

The G-7 / G-8 Summit has consistently dealt with macroeconomic management, international trade and relations with developing countries. Discussions on East-West economic relations, energy and terrorism have also been recurrently undertaken. The Summit agenda in recent times has expanded to include non-economic issues like employment, information highway, transnational issues such as environment, crime and drugs, and a variety of political-security issues ranging from human rights, regional security to arms control.

To deal about these various' issues, in addition to the annual Summits, G-7/G-8 has developed a network of supporting ministerial forums. To mention a few ministerial forums, the Quadrilateral trade ministers in 1986, Minister of the environment in 1992, Employment ministers in 1994 and on terrorism in 1995.

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G-7/G-8 ministers have also met on an adhoc basis to deal with pressing issues, for example, on assistance to Russia in 1993, on .Ukraine in October 1994, at Winnipeg, on global information security in Feb. 1995, at Brussels, on crime in 1997 and on energy in 1998.

Various Summits held by G-7/G-8:

15-17 November 1975, Rambouillet, France

27 - 28 June 1976, San Juan Puerto Rico, U.S.A.

7 - 8, May 1977, London (London-I), U.K.

16 - 17, July 1978, Bonn (Bonn-I), West Germany

28 - 29, June 1979, Tokyo (Tokyo-I), Japan

22 - 23, June 1980, Venice (Venice I), Italy

20 - 21, July 1981, Ottawa (Mont'ebello), Canada

4 - 6, June 1982, Versailles, France

28 - 30 May 1983, Williamsburg, Viginia, U.S.A.

7 - 9, June 1984, London (London-II), U.K.

2 -4, May 1985, Bonn (Bonn-II), West Germany

4 - 6 May 1986, Tokyo (Tokyo-II), Japan

8 - 10, June 1987, Venice (Venice-II), Italy

19 - 21, June 1988, Toronto, Canada

14 - 16, July 1989, Paris (Summit of the article), France

9-11, July 1990, Houston, Texas, U.S.A.

15 - 17, July 1991, London (London-Ill), U.K.

6 - 8, July 1992, Munich, Germany

7 - 9, July 1993, Tokyo (Tokyo-Ill), Japan 8-10, July 1994, Naples, Italy

15 - 17, June 1995, Halifax, Canada

19-20, April 1996, Moscow (Nuclear Safety and security Summit), Russia

27 - 29, June 1996, Lyon, France

20 - 22, June 1997, Denver (Summit of the Eight), U.S.A:

15 - 17, May 1998, Birmingham G-8 Summit, U.K.

18-20, June 1999, Koln, Germany

21-23, July 2000, Okinawa, Japan

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In addition to these ministerial meeting, the G-7 leaders have from time to time created task forces or working groups to focus intensively on certain issues of concern; for example, a task force on drug-related money laundering, a nuclear safely working group, and a senior experts group on transactional organised crime.

The Summit members comply modestly with the decisions and consensus generated by and codified at their annual Summit. Compliance is particularly high in regard to agreements on international trade and energy, and on the part of Britain, Canada and Germany.

Summit decisions often create and build international regimes to deal with new international challenges, and catalyse, revitalise and reform existing international institutions. In recognition of its centrality in the process of global governance, the Summit since its inception has attracted the attention of the world.

G-20

Globalisation is the key word of modern times. There are the expectations, opportunities and prosperity on the one hand, but on the other, due to the close interdependencies of the markets, developments in one remote area of the world affects other directly, for the better or for worse. In order to meet their global challenge, a new important instrument has been established with the foundation of the "G-20" group. This initiative was launched under the German Presidency of 1999's "G7/G8" group summit in Cologne, on June 18, 1999.

The member countries of the informal G-20 group are the most important countries in terms of world economy and politics. Beside the countries commonly known as G-8, other major nations (India being one among them) have been invited to join the group. The group nations together represents nearly 2/3 of the world population and more that! 85% of the world's national product.

The Finance Minister and Central Bank Governors of the member countries held their inaugural meeting on Dec. 15&16, 1999 at the German capital, Berlin. Efforts were on the lines to provide a new mechanism for informal dialogue in the framework of the Bretton Woods institutional system, to broaden the discussions on key economic and financial issues among significant economies and to promote cooperation to achieve stable and sustainable world growth for the benefit of all.

Formation: G-20, the forum of finance ministers and central bank governors was formally created at the September 25, 1999 meeting of the G7 finance ministers. It was created "as a new mechanism for informal

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dialogue in the framework of the Bretton Woods institutional system, to broaden the dialogue on key economic and financial policy issues among systematically significant economies and to promote cooperation to achieve stable and sustainable world growth that benefits all."

Various views on G20 formation: The French, supported by the Italians, were opposed to the very creation of the G20, for fear that it would undermine the authority of the IMF, which their compatriot Michel Camdessus headed, and the new International and Monetary Financial Committee (IMFC) which they preferred. The U.S.A. and Japan were very much in favour of the new body. Britain, while supportive, was somewhat reserved, for fear that G20 might undercut in practice the prominence of the new IMFC, which Britain's finance minister George Brown was chosen to initially chair. Canada was supportive, in part because it wished to see a broader consultative structure that was more formalized, linked to other institutions and less controlled by the USA.

Institutional Characteristics: Its mandate is to "promote discussion and study and review policy issues among industrialized countries and emerging markets with a view to promoting international financial stability."

The new group of 20 is primarily for the purpose of crisis prevention i.e., to tackle the financial crisis and global financial issues. It plans to setup a permanent body to handle global financial problems.

It is a new international forum consisting of finance ministers and central bank governors representing 18 countries, the European Union and the Bretton Woods Institutions. Its initial 18 country members

consisted, in addition to the G7, Argentina, Australia, Brazil, China, India, Mexico, Russia, Saudi Arabia, South Korea and Turkey. The G20 is a forum for informal dialogue among a group of countries representing both developed and emerging economies from every region of the globe, Its purpose is to ensure broader participation in discussions on international financial affairs among countries whose size or strategic importance gives them a particularly crucial role in the global economy.

The G20 is chaired for its first two years by Canadian Finance Minister Paul Martin. Canada would host the second meeting in 2000, the first being at Berlin, Germany, in December 1999. The chair would rotate among participants with two-year terms, with the initial chairs being chosen from among the G7 countries. Its meetings will be linked to those of the G7 meetings at the start of each year. It is enabled to call on the resources of the IMF, World Bank and outside experts. It is also enabled to form working parties to examine and make recommendations on issues related to its mandate.

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The G20 was created as a deliberative rather than decisional body, but designed to encourage "the formation of consensus" on international issues. Its focus is on translating the benefits of globalisation into higher incomes and better opportunities everywhere, including working people around the world. There is virtually no major aspect of the global economy or international financial system that will be outside of the group's purview.

It would operate within the framework of the Bretton Woods institutions, involve their representatives (including the Chair of the Interim and Development Committees) and the EU fully in it's substantive discussions, in order to ensure that its work is "well integrated". It would "help co-ordinate the activities of other international groups and organisations, such as the Financial Stability Forum, facilitate deliberations in the new International and Monetary Financial Committee, and potentially develop common positions on complex issues...to expedite decision making in other fora."

The First Berlin Meet:The finance ministers and central bank governors of the member countries held their inaugural meeting on Dec.15&16,1999 at the German capital Berlin. Efforts were on the lines to, provide a new mechanism for informal dialogue in the framework of the Bretton Woods institutional system, to broaden the discussions on key economic and financial issues among significant economies and to promote cooperation to achieve stable and sustainable world growth for the benefit of all.

In the arena of international financial institutions: Trade and finance are two important areas for any country. A country's financial sector is the major channel through which borrowing and lending takes place .A poorly regulated or managed financial sector, or one with insufficient capital for the risks taken, can increase a country's vulnerability to financial crisis.

Improved financial sector regulation and supervision can help ensure that financial institutions take adequate steps to manage risks. Appropriate financial sector policies can also help establish deep and liquid domestic capital markets, which reduce incentives for excessive external borrowing. In general, improved financial sector regulation and supervision can help prevent crises by making national economies less vulnerable to adverse developments at home and abroad.

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Improved financial sector surveillance has been taken up by the IMF and the World Bank. The IMF is preparing Financial System Stability Assessments for some selected countries. The G7 finance ministers and central bank governors have established the Financial Stability Forum To promote international financial stability through enhanced information exchange and international cooperation in financial market supervision and surveillance.

As global financial institutions, the IMF and the World Bank have had significant role in the financial sector of the world countries. A new forum added to this , which is a group of finance ministers and central bank governors of the member countries is the G20.

India in G20: Gaining membership in G20 for India shows that, (i) India is recognised as one of the most important countries in the world, a global player. This is not because of its size , but its economic strength and efforts especially in the field of computers and new tecchnology (ii)India will be closely involved in the important dialogue on the crucial issues of the world economy (iii) It will have an important share in shaping the new financial structure of the world (iv) India will have access to a platform to show its progresses reforms and its successes.

Future Concerns: Some see the G20 only as part of the "G7-isation"of the world. In their view, the G20 was born to legitimise G7 initiatives to the wider world, by securing a broader consensus for G7 generated ideas. The G20's eleven non G7 members are thus destined to affect issues merely on the margin, to be informed of G7 initiatives, and to be given some semblance of participation. The G20

underscores the fact that the G7 does not want to leave the reform of the international financial system to the IMF or World Bank, where developing countries have an institutionalised role.

G-77

Establishment: The Group of 77 (G-77) was established on June 1964 by seventy-seven developing countries signatories of the "Joint Declaration of the Seventy- Seven Countries" issued at the end of the first session of the United Nations Conference on Trade and Development (UNCTAD) in Geneva. Beginning with the first Ministerial Meeting of the Group of 77 in Algiers in 1967 which adopted the Charter of Algiers, a permanent institutional structure to be gradually developed which led to the creation of chapters of the Group of 77, namely, Rome (FAO), Vienna (UNIDO), Paris (UNESCO), Nairobi (UNEP) and the Group of 24 in Washington, D.C. (IMF and World Bank).

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The Meet of G-24 at Washington - April 2000

The joint Communique at the end of the 63rd meeting, The Ministers of the G-24 have emphasised the need for balanced approach for further integration of developing countries into the global trading system.

The Ministers have said that the World Bank, IMF and the regional development banks have an important role to play in capacity building and infrastructure development.

G-24 has expressed serious concern over the insufficiency of bilateral contributions from donor countries to "Heavily Indebted Poor Countries Initiative Trust Fund" that would finance the shares of debt relief from the World Bank and other multilaterals.

The G-24 Meet also addressed the mechanism of funding for the HIPC initiative.

The Ministers expressed serious concern about proposals for the reform of the BWI (Bretton-Woods Institutions) in ways that would deprive access to either the IMF or the World Bank Group's resources for any group of members, especially the poorest. Hindu dated 17.04.2000

Although the membership of the G-77 has increased to 133 countries, the original name was retained because of its historic significance.

Aims: As the largest Third World coalition in the United Nations, the Group of 77 provides the means for the developing world to articulate and promote its collective economic interests and enhance its joint negotiating capacity on all major international economic issues in the United Nations system, and promote economic and technical cooperation among developing countries (ECDC/TCDC).

Structure: The organisation and modalities of work of the G-77 in the various Chapters have certain minimal features in common such as a similarity in membership, decision-making and certain operating methods. The Group's work in each Chapter is coordinated by a chairman who acts as its spokesman. The chairmanship rotates on a regional basis (between Africa, Asia and Latin America and the Caribbean) and is held for one year in all the Chapters. Currently the Federal Republic of Nigeria holds the Chairmanship of the Group of 77 in New York for the year 2000. The Ministerial Meeting is the supreme decision-making body of the Group of 77. They are convened annually at the beginning of the regular sessions of the General Assembly of the United Nations in New York and periodically in preperation of UNCATD sessions and the General Conferences of UNIDO and UNESCO. Special Ministerial Meetings are also called as needed such as on the occasion of the

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Group's 25th anniversary (Caracas, June 1989) and 30th anniversary (New York, June 1994). In April 2000 the Group of 77 met for the first time at the level of heads of state or government and thus elevated the decision-making within the Group of 77 to the highest political level.

The Intergovernmental Follow-up and Coordination Committee on Economic Cooperation among developing Countries (IFCC) is a plenary body consisting of senior officials which meets once every two years to review the state of implementation of the Caracas Programme of Action (CPA) adopted by the Group of 77 in 1981. The IFCC was last convened in Manila in 1996. Subsidiary structures created to support the CPA include, among others, the Core of Assistants to the Chairman of the Group of 77, the Committee of Experts of the Perez-Guerroero Trust Fund (PGTF) for ECDC/TCDC, the General Conference and Steering Committee of Chambers of Commerce and Industry of the Group of 77, Action Committees, and National Focal Points for ECDC.

Finance: The activities of the Group of 77 are financed through contributions by Member States and other developing countries.

Activities:

Produces joint declarations, action programmes and agreements on specific topics such as Algiers Charter 1967; Lima Declaration 1971; Manila Declaration 1976, Arusha Programme for Self-Reliance and Framework for Negotiations 1979; Caracas Programme of Action on ECDC 1981; Cairo Declaration on ECDC 1986; Havana Declaration 1987; Agreement on a Global System of Trade Preferences among Developing Countries (GSTP) 1988; Caracas Declaration 1989, Tehran declaration 1991; 30th Anniversary Ministerial Declaration 1994; Ministerial Statement on "An Agenda for Development" 1994; The San Jose Declaration and Plan of Action on South-South Trade, Investment and Finance 1997; and the Bali Declamation and Plan of Action on Regional and Subregional Economic Cooperation of the Developing Countries (1998).

Makes statements, sponsors and negotiates resolutions and decisions at global conferences and other meetings held under the aegis of the United Nations dealing with international economic cooperation and development.

Sponsors projects on ECDC/TCDC in developing countries through funding from the Perez-Guerroero Trust Fund.

G-77 Havana Summit 12th to 14th April 2000: G-77 is regarded as the voice of the developing world. G-77 has yet to reach collective thinking on the strategies needed to enhance the economic clout of the

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developing countries or to promote a pattern of mutual economic cooperation based on complementarities.

There is a significant divide among the G-77 countries on a wide range of issues which constitute the contentions agenda before the WTO. The developing countries have to strive to work out their strategies for main streaming with the global economic order without abandoning the major task of poverty alleviation through employment generation and social safety nets.

The Nigerian President Mr. Olusegun Obasanjo was the Chairman of the Group of 77 summit at Havana. The Group has grown to include 133 countries since its founding in 1964. The summit saw the group expand from a UN lobbying block into a more formal organisation meant to negotiate with groups of wealthy nations.

The Havana Action Programme adopted at the summit identifies four critical areas of common interest: globalisation, knowledge and technology, South-South Co-operation and North South Co-operation.

G-15:

Purpose: The G-15, a group of 17 developing countries from Asia, Africa and Latin America, was set up to foster cooperation and provide input for other international groups, such as the World Trade Organisation and the Group of Seven rich industrialized nations.

G-15 works towards emphasising the need for both the developed and the developing world to have a voice in the process of reforming the international financial system. It also submitts proposals to reform the International Monetary Fund, which many members have criticized for proposing inappropriate recipes to the troubled economies of Asia and Latin America.

The countries do not see eye to eye on all trade, development and finance issues, but the leaders want to setup cooperation and speak with a single voice at other international gatherings. Within the Asian and African representations, there is sometimes a feeling that within their region there is less than full, unqualified commitment.

They are of the view that unbridled movement of money across borders had impoverished Asia's once-proud tiger economies and put their very independence at risk. And the group concentrates its work on correcting these affairs.

Current Composition :The G-15 is comprised of Algeria, Argentina, Brazil, Chile, Egypt, India, Indonesia, Jamaica, Kenya, Nigeria, Malaysia, Mexico, Peru, Senegal, Sri Lanka, Venezuela and Zimbabwe. The G-15

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countries include both open economies such as Mexico and Argentina and those which, like Malaysia, are seeking to control capital flows.

SAARC

The South Asian Association for regional Cooperation (SAARC) involving seven countries, namely, India, Bangladesh, Pakistan, Nepal, Bhutan, Sri Lanka and Maldives, was formally launched in December 1985. The fundamental goal of SAARC is to accelerate economic and social development through optimum utilisation of their human and material resources.

According to Article I of the Charter of the SAARC, the objectives of the Association are:

(1) to promote the welfare of the people of South Asia and to improve their quality of life;

(2) to accelerate economic growth, social progress and cultural development in the region and to provide all individuals the opportunity to live in dignity and to realise their full potentials;

(3) to promote and strengthen collective self-reliance among the countries of south Asia;

(4) to contribute to mutual trust, understanding and appreciation of one another's problems;

(5) to promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields;

(6) to strengthen cooperation with other developing countries;

(7) to strengthen cooperation among themselves in international forums on matters of common interests; and -

(8) to cooperate with international and regional organisations with similar aims and purposes.

Article II of the Charter lays down the following principles:

(1) Cooperation within the framework of the Association shall be based on respect for the principles of sovereign equality. Territorial integrity, political independence, non-interference in the internal affairs of other States and mutual benefit.

(2) Such cooperation shall not be a substitute for bilateral and multilateral cooperation but shall complement them.

(3) Such cooperation shall not be inconsistent with bilateral and multilateral obligations.

India holds about two-thirds of the total population of the Association. On the other extreme is the tiny country of Maldives with a land area of

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298 sq. kms. Bhutan also is a comparatively small country. While Sri Lanka is an island and Maldives an archipelago, Nepal and Bhutan are land-locked countries for whom the easiest entry to the sea routes is through the ports of India and Bangladesh. Despite the growing importance of the services and industrial sectors in these countries, the majority of the population still derives its livelihood from agriculture.

Increased intra-regional trade is a major means of promoting regional economic cooperation. In South Asia, however, such trade, at present, is at a low level. Intra- regional exports and imports of these countries have generally formed less than 10 per cent of world trade of each country, expect for Nepal's trade which is especially high because of its trade with India. For India, trade with the region, which because if its size, remains a small percentage (two or three per cent) of the total.

Some of the member countries are major exporters of certain commodities and therefore, major competitors in the international market. For example, jute exports by India and Bangladesh and tea exports by Sri Lanka and India. SAARC should help avoid unhealthy competition in such areas and to help formulate joint strategies to get a better deal, particularly for the primary commodities in the international market. Cooperation may also provide better scope for offshore or third country trading.

The member countries of SAARC have many common features and problems which are characteristic of the developing countries. There are a number of areas, which offer scope for development through mutual help and cooperation. Some such areas have already been identified and some follow-up has been made by making organisational arrangements to forge greater cooperation and interdependence among the people of the region in meteorology, health, civil aviation, shipping, agriculture, communication and renewable sources of energy.

It is pointed out that there is great scope for cooperation for water resource development. Nepal can sell to India enormous hydro electric power and hence Nepal has highly lucrative opportunities for the generation of hydel power. The position of Bangladesh in terms of hydrographic leverage with India is very similar. In return, so is India's leverage with these two countries because India is the only feasible and substantial buyer of the cooperation they can offer for the optimum utilisation of the waters flowing through them.

The second Summit of the SAARC held at Bangalore in November 1986 decided to set up its Secretariat at Kathmandu, Nepal. There are, however, a number of important problems, which affect the relationship among these countries. India has both the advantages and disadvantages

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of all other members being her neighbours. The size of India, large as it is, geographically separates some of the members. The dominant position of India, by virtue of her resource endowments and impressive developments in a number of fields, though should be considered as assets, is not always well taken by some of the members. Border disputes, ethnic issues and differences in political outlooks and affiliations cause mutual mistrust among the members and there are no signs of substantial improvement of the situation in the near future. The members are very well aware of the implications of these problems. The 1983 Delhi Declaration of the SAARC foreign ministers was categorical about keeping all bilateral and contentious issues and political matters out of the SAARC ambit, at least during its formative stage.

Indo-Srilankan Free Trade : The Indo-Srilankan Free Trade Agreement, signed on Dec.28, 1998 has come into force from March 1, 2000. This pact paves the way for a phased reduction in tariffs to the zero duty level for freetrade. India will complete this process in three years and Srilanka in eight years. Inspite of long and close links, bilateral trade has not reached its potential. Tea and rubber are major worriers. Tea is not on the negative list for India but a quota regime has been worked out. Srilanka can export a maximum of 15-million kg of tea per annum. In the case of rubber, natural rubber will be on the negative list, but some of the finished products are not.

The two governments are convinced that it is a first step towards evolving a South Asian Free Trade Area (SAFTA) within the next few years. SAFTA is facing a lot of problems, basically because of the persisting tensions between India and Pakistan.

SAARC countries must work on bilateral agreements to promote regional free trade in preparation for globalisation. India-Srilanka cooperation should go beyond trade. Indian industry should look at investment opportunities there to tap the potential and skills in Srilanka. Joint ventures can be setup. Joint marketing in third countries must be encouraged, particularly in tea and tourism. Promotion of tea cartels must be taken up. More than the government, the private sector must take initiative and build on the congenial opportunities that now prevail.

A vision for SAARC: The stunted growth of SAARC is due in large measure to the negative security and political perceptions shared by its elites of one another. In the views of Shri. Eric Gonsalves, former Secretary in the External Affairs Ministry, India-Pakistan tensions continues to bedevil the organisation. Whether the emergence of the two countries as overt nuclear powers and their subsequent dialogue provide ground for hope remains to be proved. The South Asian nations could gain more by

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cooperating on cross-border security issues and intelligence than by continuing to undermine one another's stability. The report of the Group of Eminent Persons (GEP) recommendation is to establish an Economic Union by 2020.

It is important that infrastructure development, human resource development and population control go hand-in-hand with the proposed economic integration. Experiences in other groupings provide useful insights. The overall policy will have to be decided in the political domain. The tremendous job of harmonising attitudes must not be underestimated. But once the framework has been determined,

implementation must not become a plaything of domestic politics. Regional institutions almost never came into existence on a wave of enthusiasm. In almost every case, their proponents had to wage an uphill battle for acceptance at the political and public levels. Already the growing bilateral trade and investment within the region is providing gains to ever-larger groups.

Politicians too will shift gear once they perceive that advantage lies in constructive rather than antagonistic attitudes. Their vision must encompass a region free of all barriers to movement of people, ideas and economic interchange. Kashmir should be the subject of innovative political experiments and not of conflict. Harnessing natural resources such as river waters should not be constrained by doctrines about large and small dams, etc. In short, civil society must remain in the lead. Thus the India-Sri Lanka Free Trade Agreement, the agreements for economic cooperation projects among the North-Eastern members and the emerging projects for energy cooperation in the North-West must be given every encouragement to help in building region wide arrangements in due course.

SAARC is just over 10 years old. It has accumulated experience, expertise and has before it an ambitious plan for the next two decades. The governments and people of the member-states have to internalise this vision and raise their aspirations. They may succeed only to some extent. But once the momentum is established there is no reason why they should not eventually compete with the rest of the world.

India and the SAARC : With many of the regional groupings and trade blocks assuming critical importance and playing an influential role in shaping the agenda of the WTO, it is imperative for the South Asian nations to make a success of the SAARC. Their influence in the world will depend on how well they can synergise their energy and evolve common positions on issues of common or global concern.

The full potential cannot be realised that until the core sectors of development are brought within its ambit. The leaders of the member

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nations need to put regional objectives ahead of national concerns.

The continuing Indo-Pakistan conflict, leading to a situation of "neither war nor peace" has stymie dregional cooperation. It was because of these disputes and differences that the SAARC Charter forbids member-states from bringing up bilateral problems to the regional forum.

Despite the adoption of regional instruments like the Convention on Narcotic Drugs and another to contain terrorism, the preoccupation of the drag on regional cooperation.

The political environment will have a real say on the shape and scope of regional cooperation. It boils down to the tensions between India and Pakistan-the two largest members. Since national Security concern dominate the scene, the smaller countries are keen to normalise relations on the one hand, and look for some external suort to meet any challenges that may arise.

The SAARC does not intend following the EU pattern pf monetary union nor it is working towards a single market or community. ASEAN as a regional cooperation unit is a better model for SAARC, but it is 32 years old and has gone through its quota of problems in evolution.

Two provisions in the SAARC Charter are impending progress-one relating to 'Unanimity of decision' and the other to exclude "contentious and bilateral issues". But the point is, the SAARC has survived and grown because these issues have been kept out of its agenda. The point being made now is that a stage has been reached when the SAARC must at least informally deal with contentious or even bilateral issues if they are a threat to regional cooperation.

The success of SAARC depends primarily on India and how it manages its disputes with Pakistan. Unless regional cooperation and free trade fluorish, South Asia may find itself isolated and marginalised in the era of globalisation.

North Atlantic Treaty Organisation (NATO)

Members: Belgium, Canada, Czech Republic, Denmark, France, Germany, Greece, Hungary, Iceland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Spain, Turkey, United Kingdom, United States.

The North Atlantic Treaty was signed in Washington on 4 April 1949, creating an alliance of 12 independent nations committed to each other's defence. Four more European nations later acceded to

the Treaty between 1952 and 1982. On 12 March 1999, the Czech Republic, Hungary and Poland were welcomed into the Alliance, which now numbers 19 members.

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The North Atlantic Treaty has continued to guarantee the security of its member countries. Today, following the end of the Cold War and of the division of Europe, the Alliance has been restructured to enable it to contribute more effectively to the development of cooperative security structures for the whole of Europe. It has also transformed its political and military structures in order to adapt them to peacekeeping and crisis management tasks undertaken in cooperation with countries, which are not members of the Alliance, and with other international organisations.

The fundamental role: The fundamental role of NATO is to safeguard the freedom and security of its member countries. It is one of the foundations on which the stability and security of the Euro-Atlantic area depends and it serves as an essential forum for transatlantic consultations on matters affecting the vital security interests of all its members. Its first task is to deter and defend against any threat of aggression against any of them.

In order to improve security and stability in the area, the North Atlantic Alliance also plays a key role in the field of crisis management, by contributing to effective conflict prevention and, in the event of a crisis, by taking appropriate action to resolve the crisis when there is consensus among the member countries to do so. In addition, the Alliance promotes partnership and cooperation with other countries in the Euro-Atlantic area, aimed at increasing openness, mutual confidence and the capacity for joint action.

Since the signing of the 1995 Dayton Peace Agreement on Bosnia and Herzegovina, one of NATO's biggest challenges has been to help to implement the agreement, first by establishing and leading a multinational, military Implementation Force, known as IFOR, and subsequently by dispatching a similar Stabilisation Force (SFOR) to help to build the basis for future peace in the region. It has effectively prevented renewed fighting and created a successful precedent for coordinated multinational efforts, involving NATO and non-NATO countries, to bring hope and realistic prospects for peaceful future development to the people of Bosnia and Herzegovina.

Today the Alliance is also working to reverse ethnic cleansing in Kosovo, enabling the hundreds of thousands of Kosovar refugees who fled from repression during the spring of 1999 to return safely to

their homeland. The role of the NATO-led multinational force in Kosovo is to create a secure environment in which all the people of Kosovo, regardless of their ethnic origins can live in peace; to help them to rebuild their lives and homes; and to rebuild the structures of a peaceful and democratic society which are essential if there is to be a lasting political solution to the conflict.

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Common values: NATO's essential purpose is to ensure the freedom and security of its members by political and military means, in accordance with the principles of the United Nations Charter. It is dedicated to protecting democracy, human rights and the rule of law. The best means of safeguarding these shared values is to bring about a just and lasting peaceful order in Europe as a whole. NATO has worked since its inception to achieve this goal. Since 1989 and the end of the artificial division of Europe which prevailed during the Cold War, enormous progress has been made but the task is not over. This central objective remains unchanged.

NATO's third dimension: The fundamental roles of NATO have always been concerned with security cooperation between member countries and in more recent years, with partner countries, in the political and defence fields. These have therefore been regarded as the first and second "dimensions" of the Alliance. For many years, however, NATO has also actively pursued cooperation in relation to civil emergency planning and scientific and environmental cooperation. Together these can be regarded as the 'Third Dimension" of the Alliance.

Responding to civil emergencies: The relevance of the Alliance in today's world is thus as great as it has ever been and the tasks with which it is entrusted today is of no less critical importance than those it faced when it was created over fifty years ago.

NATO Allies and Partner countries have developed cooperative measures and activities to enable them to share their civil resources in order to cope with emergencies. Using the Alliance's civil emergency planning arrangements as a basis, the Partnership for Peace programme has opened the way for joint activities in planning and preparing for humanitarian and search and rescue operations.

Early in 1998, based on a proposal by Russia, a Euro-Atlantic Disaster Response Unit was created. This unit, located in Brussels, has already been instrumental in coordinating relief to Ukraine following the serious flooding which occurred in Western Ukraine in November 1998; in providing assistance to humanitarian agencies in the Balkans in the wake of the exodus of refugees from Kosovo in 1998 and

1999; and in coordinating requests for assistance and responses from EAPC countries following the major earthquake which struck Turkey in August 1999.

Scientific and economic cooperation:The concept of cooperative security includes a broad range of global concerns, which transcend national boundaries. These include maintaining a strong scientific base, preserving the physical environment, managing natural resources and preserving health. NATO addresses these issues through programmes, which support scientific cooperation in advancing the frontiers of science

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generally, as well as tackling specific scientific and environmental problems of concern to NATO countries and Partner countries alike.

Collective defence: The fundamental commitment of all members of the Alliance to each other's security is enshrined in Article 5 of the North Atlantic Treaty, which states that an attack against one member country is considered as an attack against all. The Alliance's integrated military structure and common defence planning procedures underpin this commitment to collective defence. They are at the heart of the Alliance's strength and credibility.

Peace and stability: During the Cold War, the Alliance's primary political and military concern was to ensure that it would be able to defend its members against the possible use of military force against them. Since the beginning of the 1990s, following the end of the Cold War, NATO has been able to take a wider view of security in which building up trust and developing cooperation with non-member countries plays an equally important role.

The enhancement of stability and security in today's Europe therefore involves other countries and other international organisations in new cooperative arrangements. The Alliance is contributing to the building of new structures for European security in which countries of the Euro-Atlantic region can participate both individually and jointly through their participation in international organisations.

Democracy and human rights: For many years the effectiveness of the North Atlantic Alliance was evident from its success in preventing war in Europe and from its role in helping to bring to an end the artificial divisions of Europe and the hostility and antagonism of the Cold War. Today, it extends security

further afield by developing cooperation beyond its traditional boundaries, and through its active role in crisis

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11. WORLD TRADE ORGANISATION

Genesis of WTO

Administrative setup

Key agreements

Impact and implications of the agreements on the Indian economy

Current status- Seattle Meet

Areas of concern for India

Future outlook for WTO

The origin of World Trade Organisation (WTO) lies in General Agreement on Tariffs and Trade (GATT) which was established in 1948 by 23 original founders, India being one of them. The 8th round of talks under GATT (1986 - 1994), known as the Uruguay Round, led to the birth of WTO in January 1, 1995. Till 1995, GATT covered only issues related to trade in goods. However in the Uruguay round, new agreements covering trade in services (GATS) and trade related aspects of intellectual property rights (TRIPS) were also negotiated. All these three major agreements along with their associated agreements fall under the WTO.

The WTO headquartered at Geneva, Switzerland has 134 countries as members including India. China, Russia, Saudi Arabia, Omen, etc. are not members of WTO. China is trying very hard to enter WTO by fulfilling the entry criteria.

As the only regulatory body of world trade, WTO's objective is to ensure freer, more transparent trading regime in the world. WTO is based on sound legal system and its agreements are ratified by the Parliaments of member countries. No one country controls WTO, the top decision makers are the designated Ministers of member countries.

Genesis of WTO

In July 1944, the Bretton Woods Conference decided to establish three international institutions namely, the International Bank of Reconstruction and Development (World Bank), the International Monetary Fund (IMF) and the International Trade Organisation. While the first two came into existence on Dec. 27, 1945, the International Trade Organisation could not be established owing to resistance from U.S. Senate. In its place, however, a protocol of provisional application was signed by 23 original members (India was one of the 23 members). The protocol brought in, the General Agreement on Tariff and Trade (GATT) on January 1, 1948 to bring order in international trade.

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The GATT has been the only multilateral body from 1948 to 1994 that provided rules for much of the world trade. The contracting parties (nations) of GATT continuously expanded the area and scope of the rules during the successive trade rounds.

The GATT Trade Rounds

Year Place/Name of Round Subjects covered No. of Nations

1947 Geneva Tariffs 23

1949 Annecy Tariffs 13

1951 Torquay Tariffs 38

1956 Geneva Tariffs 26

1960-61 Geneva-Dillon round Tariffs 26

1964-67 Geneva-Kennedy round Tariff&Anti dumping measures 62

1973-79 Geneva/Tokyo round Tariffs, Non-tariff measures,

framework of agreements 102

1986-94 Geneva/Uruguay round Tariffs, Non-tariff measures rules,

services, IPRS, dispute settlement,

Textiles, agriculture, Creation

of WTO 123 Under the GATT, 8 rounds were conducted from 1947 to 1994. The eighth round known as Uruguay round lasted for 8 years and had been the most comprehensive and the most contentious one.

Not only all the original articles of GATT were put up for review, but virtually every outstanding policy issue like trade in services, intellectual property, reform in trade in textiles and agriculture, were encomposed by the Uruguay round negotiations. The differences among the nations on various issues were so acute that the round failed several times during these 8 years. Mr. Arthur Dunkel, the then Director General of GATT, presented the first draft - "Final Act" which became the basis for the final agreement. Finally on April 15, 1994 the agreement was signed by the Ministers of almost all the participating countries representing their government at Marrakesh, Morocco. The agreement mandated creation of World Trade Organisation to administer the agreements on trade, services, intellectual property rights and the like.

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Guiding principles: The guiding principles of WTO are:

Non discrimination, which in practice means two things. First, Most Favoured Nation (MFN) Treatment. Any trade concession offered by one member of WTO to another member must be offered to all members. Second, National Treatment, imported goods should not be discriminated against domestic goods - same treatment to be accorded.

Predictable trading system - Foreign companies, investors and governments should be confident that trade barriers (including tariffs, non-tariff barriers and other measures) would not be raised arbitrarily; more and more tariff rates are to be 'bound' against subsequent increases.

Free trading system - with barriers coming down through negotiations.

More beneficial stipulations to less developed countries – by giving more time to adjust, greater flexibility and special privileges.

More competitive trading system - by cutting down unfair practices which are in the guise of export subsidies and dumping products at below cost.

Members: At the end of July 1996, 123 countries and territories were members of WTO. Another 30 governments were engaged in negotiating their terms of entry with other WTO members. As on November 99 there are 134 member countries.

Functions : The essential functions of WTO are:

Administering and implementing the multilateral (signed by all members) and plurilateral (signed by a group of members on specific issue) trade agreements which together make up WTO.

Acting as a forum for multilateral trade negotiations. Seeking to resolve trade disputes

Reviewing national trade policies

Co-operating with other international institutions involved in global economic policy making.

Administrative Setup:

The administrative framework is presented in the figure "Structure of WTO".

Highest authority — Ministerial conference: It is composed of representatives (designated ministers) of all the WTO member nations, and is the supreme decision making forum. The Ministers meet atleast

once in two years. The Ministerial conference can take decisions on "all matters" under any of the multilateral agreements.

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Second level - General Council: Day to day work is handled by the General Council. The General Council convenes also in two other forms: as the dispute settlement body to oversee the dispute settlement procedures as trade policy review body, which conducts regular reviews of WTO member's trade policies and practices.

Third level :The other bodies which report to the General Council are: the Council for Trade in Goods the Council for Trade in Services, and the Council for Trade Related Aspects of Intellectual Property Rights

Fourth level: Under these Councils there are various Committees, each responsible for administering specific agreements and preparing and adopting decisions for approval by the respective council. For example, the Council for Trade in Goods has 11 committees dealing with specific subjects such as agriculture, subsidies and the like.

Composition: All the WTO councils and committees are open to all members and in practice membership is virtually identical on all the ones considered important. All WTO members may participate in all councils except Appellate Body, Dispute Settlement Panels, Textiles Monitoring Body and plurilateral committees and councils. Plurilateral agreements are the agreements signed by a group of countries. There are binding only on the countries signatory to the agreements.

Voting: Unlike the IMF and the World Bank, which have weighted voting (related to countries relative contributions to the two organisations capital funds) the WTO is a "one country, one vote" organisation. Except for waivers and accessories, where mail ballots are used, voting very rarely occurs, since there is a strong preference among members to operate on the basis of consensus. Only where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting.

Human resources to carry out the Mandate: Three main categories of human resources available to carry out the WTO's mandate are: (i) the member country delegations in Geneva (ii) their support staff in national capitals, and (iii) the WTO Secretariat. A fourth category, which is gaining importance, involves cooperation with other intergovernmental organisations and non-governmental organisations.

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Key Agreements

The WTO agreements cover: Goods (main agreement GATT) e.g., all industrial products, consumer durables.

Services (main agreement GATS) e.g., Banking, Insurance, Consultancy.

Intellectual property (TRIPS) e.g., patents, copyrights, trademarks.

GATT and GATS have three sections structure, comprising of (i) general principles, (ii) associate agreements/annexes on specific sectors/ issues, (iii) commitments of member countries. The TRIPS agreement contains only general principles that are to be followed by members.

The two important principles that underline most agreements are: (i) Most Favoured Nation (MFN) clause such that, there is no discrimination among member countries and (ii) National Treatment clause which insists on equal treatment to imported arid domestic products.

Basic idea is that there should be "same rule for all". It aims to restrict governments from disturbing normal trade by way of subsidizing, dumping, discriminatory licensing policies, etc. which can bring down the business inside the country or outside the country. WTO allows exports to be relieved of all indirect taxes as excise, sales tax, etc. having cascading effect on cost of the product, but prohibits direct tax benefits as income tax waiver on export earnings.

General agreement on tariffs and trade (GATT)

It is based on four principles, namely (i) Most favoured Nation, (ii) National Treatment, (iii) Protection through tariffs only (so elimination of quotas, licenses, etc wherever existing) and (iv) Reduction in tariffs and other barriers to trade by negotiations (such reduced tariffs are bound against subsequent increases).

Associate agreements, generally sector/issue specific, like on agriculture, textiles, etc. (thirteen in number), 'Understandings on decisions', (four in number) and 'Understanding on rules and procedures governing the settlement of disputes' (three in number) form an integral part of GATT.

GATT covers trade in goods in all member countries. The two agreements, viz., Agreement on Textile and Clothing (ATC) and Agreement on Agriculture specifically are for two distinct sectors. Under the ATC, the restrictions imposed by developed countries on imports of

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textiles from developing countries are to be phased out by 2005. Under the agreement on agriculture, the high subsidies maintained by the countries, mainly developed countries have to be converted into tariffs.

General agreement on trade in services (GATS)

GATS operates on three levels, namely general principles, annexes on specific sectors and member country's commitments for market access.

The general obligations are (i) MFN principle, (ii) Transparency in regulations (requiring Governments to publish laws and regulations and to establish 'equity points' for information), (iii) mutual recognition of qualifications of service providers, (iv) rules governing business practices restraining competition and (v) liberalisation commitments.

The agreement covers all the services which are provided. WTO has divided services into 12 sectors further divided into 155 sub sectors. It has identified 4 modes of transaction of service trade (i) cross border supply (e.g., telephone calls), (ii) consumption abroad (e.g., tourism) (iii) setting up subsidiary or branch (e.g., foreign bank), (iv) individuals travelling abroad (e.g., software professionals) to impart service. Annexes deal with specific service sectors like, financial services, telecommunications, maritime transport and the like.

Agreements on trade related aspects of intellectual property rights (TRIPS)

The object of intellectual property is creation of human intellect. Basic principles are MFN and National Treatment. The five objectives it seeks to address are (i) application of basic principles, (ii) protection of IPRS, (iii) enforcement, (iv) dispute settlement and (v) provisions for transitional arrangements.

The agreement covers patents, copyrights, trade marks, industrial designs, lay out designs of integrated circuits, geographical indications and undisclosed information on trade secrets.

Most of the developing countries, including India, are required to amend the existing laws to bring them into conformity with TRIPS agreements within 5 years from January 1, 1995. Many countries do not have laws related to geographical indications, trade secrets, performers right under copyright laws etc. Hence governments have to bring out new legislations covering these areas.

Impact and implications of the Agreements for the Indian Economy

The various multilateral agreements, which have been agreed upon under the WTO, have given rise to various issues. The Indian

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Government has taken various measures to stand in accordance with the agreements signed to. Yet with Seattle meeting many new issues are being brought to the forefront. The tackling of these issues has great impact on the Indian policy decisions and has remarkable implications on the growth of business in the Indian economy.

General agreement on Tariff and Trade

The objective is to provide national treatment to all imports made. Its impact on Indian policy is that, India started its reforms during GATT negotiation period (1986-1994) itself and import duties have been brought down from 300 per cent to 50 per cent. Further there is commitment to remove all QRs by 2003, i.e., import restrictions/licenses are to be removed, such that free trade regime is developed. From the point of view of business houses, GATT's impact will be on all manufacturers, traders and service providers. Competition will intensify as more imported products find easy access.

Removal of QRs will further accelerate import of all products. Various business units have already felt the strong blow due to liberalisation. It is more so because external liberalisation has been speedily

done but internal adjustments of domestic industries have not been adequately done. Industries suffer from poor infrastructure, obsolete labour laws, lack of coordination among ministries and non-availability of economical, quality services in Banking, Insurance, Transport, etc. Awareness about WTO implications is shockingly low among small and medium entrepreneurs.

Hence, reassessment of comparative advantage is required in all the product categories. And, only those business, whether producing for domestic or for foreign markets, who have international vision will survive and grow.

1.1 Agreement on Implementation of Article VII of GATT (Valuation of Goods)

The objective is that, countries should follow agreement for valuation of imports so as to check arbitrary decisions of customs. Its impact on our policy is that, India has amended its laws in conformity with the agreement by notification 26 (NT)/24.04.95; The direct benefits of this agreement to business houses is that importers and exporters benefit from more transparent regime. Clear guidelines have been provided for computing value. While rejecting the value given by importer, customs should give reasons in writing.

1.2 Agreement on Preshipment Inspection (PSI)

The objective is to check arbitrary ways of PSI companies in valuation of goods (around 30 countries use them). This agreement has no impact

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on Indian Policy, since India does not use services of PSI companies. But, the business implication is that, Indian companies trading with countries using PSI companies are benefited.

1.3 Agreement on Technical Barriers to Trade (TBT)

Its objective is that countries should base their product standards around international standards and should establish 'enquiry points'. Its impact on Indian policy is that the Bureau of Indian Standards (BIS) has taken measures on the lines of the agreement and it serves as an enquiry point.

The business implications are that, Indian exporters of electrical machinery, consumer articles, pharmaceuticals, detergents, automobiles, household electric/electronic gadgets, insecticides, hazardous chemicals, fertilisers, toys etc., will benefit from the agreement as import of these products are subject to mandatory product standards. Enquiry points will help in accessing the information. The threat due to this agreement is that it also covers PPM (Process and Production Methods). This could be used for discriminating against Indian exports of agri/food/pharma products.

1.4 Agreement on Sanitary and Phyto Sanitary Measures (PSM)

This agreement aims that, international standards should be followed world wide. Hence, MFN rule countries can deny import from certain region/country due to fear of spread of pests/ disease. The policy specification in India is on par with International Standards. Its impact on business units will be that, companies exporting fresh/processed fruit/ vegetables, juices, meat, dairy products etc, should understand the mandatory standards. They should follow the developments taking place at various institutions like, FAO, Codex Alimantarius etc., which have serious implications for their businesses in agriculture, processed food and dairy products.

7.5 Agreement on Import licensing procedures

It aims to ensure transparency in issuance of import licenses and to subscribe time limit for licenses to be issued. To stand in accordance with this agreement, system has still to be improved and EDI is being developed to improve the prevailing systems.

1.6 Rules applicable on Exports

The objectives are (i) export products are to be relieved of indirect taxes (e.g. excise) (ii) prohibit direct tax waivers (e.g. income tax waivers on export earnings). The agreement allows duties on exports, in

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exceptional cases, if situations so demand. The agreements impact on Indian policy is that, the EXIM policy has been suitably modified through DEPB, Adv.Licence, S.I.L., Drawback etc., Yet IT waiver continues on export earnings. Its business implications is that the IT waiver on export earnings is temporary measure, India will have to scrap it by 2003. So could be the future of DEPB.

1.7 Agreement on subsidies and countervailing measures (SCM)

This agreement aims to prohibit export subsidies but allows permissible subsidies. It requires countries to phase them out by 2003 and to freeze their level and coverage during transitional period. Being signatory to the agreement the EXIM policy of India is following the GATT directives cautiously in introducing the duty exemption schemes and is modifying them to make them WTO compatible.

The business implications are that business houses should understand what is permissible and what is not e.g., subsidies given by governments to small businesses are usually permissible, or given for R&D or for adaptation to new environment requirements. Export subsidies on import sensitive products (textiles, leather products etc) can be maintained by importing countries. During the transition period (that is upto 2003) importing countries can countervail 'subsidies' by increasing duties.

1.8 Agreement on Safeguard Measures

It envisages allowing countries to take action against undue import surge injurious to domestic manufacturers during the transition period. In India, the Commerce Ministry has taken due action. Business implication is that, measures can be taken against imports causing injury to domestic manufacturers, during the transition period, initially for 4 years extending upto 10 years from 1st Jan.95.

1.9 Agreement on Anti-Dumping Measures (ADP)

The agreement allows measures to be taken against imported goods benefiting from unfair trade practices. In the Indian context, Directorate of Anti-Dumping has been established in Commerce Ministry. Anti dumping duties have already been imposed in more than 30 cases oh products ranging from chemicals to graphite electrodes, originating from countries like China, USA, Russia, Thailand, Korea, Japan, Brazil, Mexico, Indonesia, Italy, etc.

The business implication of the agreement is that, it is a most important provision for domestic manufacturers. Business units must be aware of this provision to safeguard their industry.

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1.10 Trade Related Investment Measures (TRIMS)

The agreement currently prohibits countries from imposing five types of investment conditions on investors. This agreement's impact on Indian policy/laws is that, it has direct impact on foreign investment permissions, on foreign exchange and on industrial policies. Of this agreement, business houses should take into account that currently five types of TRIMS are prohibited out of 24 already

identified. It allows export performance requirement, majority stakes for local etc. The issue has much to be discussed and settled during the WTO rounds.

1.11 Market access negotiations

Towards providing more market access, by Jan. 1, 2000, developed countries are to cut tariff to 40 per cent and developing countries to 30 per cent. Due to this agreement, in India the peak rate of duty is down from 300 per cent to 50 per cent and on finished goods from 150 per cent to 40 per cent. This agreement has great business implications. There will be massive increase in competition for domestic industries. The actual benefit for India will come from removal of QRs in developed countries rather than their tariff reduction.

1.11a) Agreement on Textiles&Clothing

The agreement focuses that, Quantitative Restrictions (QRs) and Multi Fibre Agreement (MFA) imposed by developed countries be phased out by 2005 in four phases. It has great impact on Indian Policy. The policy should be framed/modified so as to gear up textiles and garments sector to meet the challenge. This agreement has very great business implications in the Indian context. Quotas will be phased out and real benefits would accrue from 2002 onwards. Non tariff barriers (in the name of antidumping, consumer safety, eco-labeling etc) are fast replacing quotas. The level of competition will be manifold.

1.11b) Agreement on Agriculture

This agreement insists that subsidies be removed and converted into tariffs. It draws out minimum market access in closed markets. Its impact on Indian policy is that (i) No obligation for India to reduce subsidy given to farmers (AMS, aggregate measure of subsidy, calculations reveal it is taxed than subsidised) (ii) No commitment regarding market access, being under balance of payment cover (yet this has been disputed). This is yet another important agreement in the Indian context. Its business implication is that, it will expand the market for Indian Agricultural Products (closed markets like Japan will have to procure rice, minimum three per cent of home consumption). QRs imposed by India will have to be phased out, so competition will become very severe.

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1.12 Agreement on government procurement

Its aim is that, MFN and National Treatment be provided on the purchase of goods. India is not a party to the agreement. Yet the implications of the agreement will be that the rights of the GOI will come under severe pressure in the coming negotiations.

1.13 Agreement on State Trading Enterprises (STEs)

The objective is that STEs conduct their activities commercially. Its impact on Indian policy will be the restructuring of STEs like STC, MMTC for commercialisation of their activities. Its business implication is that in the coming negotiations the monopoly/canalising agency status will be brought down.

2 General Agreement on Trade in Services (GATS)

This agreement aims that (i) all services to come under GATS (12 services) (ii) require countries to ensure MFN principle, transparency, mutual recognition of qualifications etc (iii) list out liberalisation commitments of countries. Further negotiations are to be held in the coming years. Its impact on Indian policy is that, EXIM Policy (amended in 1999) incorporates service chapter for the first time, giving same status as merchandise. It has committed to open 10 sectors. Partial liberalisation in banking sector, Telecom sector and Insurance is being envisaged. Services constitute 40 per cent of our GDP.

The government has monopoly in all the major sectors (Banking, Insurance, Transport, etc). The business implications of this agreement will be that private parties/companies will welcome liberalisation in these sectors. There exists huge potential for export of services like accountancy, software, management, consultancy, legal services, feasibility studies.

3 Trade Related Intellectual Property Rights (TRIPS)

Objective of TRIPS is to provide protection to IPRs, such as patents, copyrights, trade marks, industrial designs, layout designs for integrated circuits, geographical indications and undisclosed information. It aims to provide National and MFN treatments. Developing countries are to implement the provisions of the agreement within 5 years and LDCs in 11 years. Its impact on Indian policy is that, immediate change is required in Patents Act (1970) Trade and Merchandise Marks Act (1958) Designs Act (1911) Copyright Act (1957). Should also change certain provisions of Contract Act (1872) Companies Act (1961) IT Act (1961) MRTP Act (1969) etc. In addition new acts are to be enacted. Business implication of the agreement is that, its impact will be on all businesses. Reverse

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engineering will be difficult with stricter IPR regime. India's own R&D institutions can reap benefits within India as well as abroad.

3.1 Patent

Its objective is that (i) patent to be given for process as well as for products. (ii) compulsory licensing on case to case basis. (iii) patent life to be 20 years (iv) micro-organisms to be patented and protection of plant varieties by patents or a suigeneris system or both.

3.2 Copy rights

Under this the definition and scope has been broadened. It now includes software, sound recordings, films, etc. The minimum protection given is for 50 years (25 years for photographic works). In the Indian context, the new amendment bill contains changes as per TRIPS. Among the business houses, it would benefit Indian software, music, film industry, authors and publishing companies.

3.3 Trade marks

Objective is to provide protection for seven years. In India, the new amendments bill is yet to be passed to cover TRIPS provisions. Business houses should exercise sufficient care in choosing names of companies or products.

3.4 Industrial designs and Layout designs

It covers new and original designs and layout decisions of integrated circuits. The minimum protection is 10 years. New amendment bill in India contains changes as per agreement. It has significant implication for Indian Designers as well as Garment / Textile Industry using protected designs and manufacturers of Integrated circuits.

3.5 Undisclosed information and Trade Secrets

They are not intellectual property, but are protected through contractual obligations. Its impact will be on know-how agreements, Contract Act, etc. The business implications is that, employees, consultants, licensees, sub contractors and the like are restrained from divulging confidential information. Provision on undisclosed test data submission of which is required by Government before grant of permission, stipulates adequate protection.

3.6 Geographical Indications

It aims to prohibit countries to permit trademarks containing misleading information on geographical origin of goods. In India no specific law has yet been drafted on geographical indications. Standing in

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accordance with this agreement, India will have to decide about taking up membership of Paris convention and other important treaties like Lisbon Treaty of GIs. Business implication of this agreement will be that (i) there will be major impact on agri-food products (ii) our not having law on GIs has led to controversies on Basmati, Darjeeling Tea, Alphanso Mangoes, etc.

Current status - The Seattle Meet

The WTO's third ministerial level meet held at Seattle from November 30 to December 2, 1999 had been conducted at a time when the organisation is going through a critical phase. A ministerial level meeting takes place once in two years. The WTO's first ministerial-level meet was held in Singapore in 1996 and the second in Geneva in 1998.

On the eve of the Seattle Meet : The agenda for trade talks at the Millennium Round was expected to be consented upon at the Seattle Meet. The Millennium Round will begin in 2000 and go on for three years although that duration is bound to be exceeded, as happened in the case of the Uruguay Round which lasted 8 years. There exists sharp divisions (vide Figure "Regional Agendas") between countries asking WTO to take up a larger and more controversial agenda (vide Figure "Expanding Agenda") for negotiation than in the past.

The scale of agenda stands to be on (1) Agricultural products (2) Services, (3) Tariffs and Industrial products (4) Implementation Issues (TRIPS, Textiles, Anti dumping duties and Subsidies) (5) New Issues (foreign investment, competition policies, transparency in government procurement, e-comnerce) (6) Non-trade Issues - linkage between trade and environment; lineage between trade and labour. Differing points of views and interests of various countries and regional groupings lompete to gain importance during the millennium rounds of talks.

There were three broad stands of thinking on the agenda (1) the interests of E.U. and few other industrialised countries (which want new issues like investnent rules, competition policy and

government procurement, besides industrial tariffs) (2) the interests of U.S. (e-commerce and transparency in government procurement) (3) interests of India and other developing countries (who want negotiations on the existing regulation on liberalisation of agriculture and service sector). U.S. and E.U have backed issues on labour and environment standards.

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Regional Agendas

U.S. E.U. Japan Cairns Group

(15 Members Group)

Industrial Tariffs Industrial Tariffs Industrial Tariffs Industrial Tariffs

Government Government -------- --------

Procurement Procurement

-------- -------- Agriculture Agriculture

---------- Trade and Investments Trade and Trade and InvestmentsInvestments

Trade and Trade and

Environment Environment -------- --------

Transparency Competition Policy TRIPS --------

Labour Trade facilitation Technical Barrels

Standards and labour standard to trade

E-commerce -------- -------- ----------

(CAIRNS Group: Canada, Brazil, Argentina, Uruguay, Australia, New Zealand, Philippines, Malaysia, Chile, Paraguay, Colombia, Indonesia, South Africa, Thailand, Fiji)

India's views were that there would be 'no compromises' in four areas namely labour, environment, investment and competition policy. The opinion is that WTO is meant only for trade related matter and issues like social clauses, labour standards and environment should be left to be dealt with at the concerned international forums, like ILO and other forums in the UN.

India and other developing nations like Pakistan, Indonesia and Egypt (the like minded group) wanted to make implementatim issues the core of post-seattle negotiations. The group wanted a more meaningful dismantling of barriers to its textile exports (the MFA)and a re-orientation of the existing provisions on patent, anti dumping, subsidies and better investment measures. They also insisted on a longer transition period for implementing the provisions of patents. They wanted o first address the problem of implementations before negotiating on new issues.

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The Expanding Agenda

Built in Agenda

Review of TRIPS

Review of TRIMS

Negotiations or Liberalising Agriculture

Negotiations or Liberalising Services - Trade

Adds-ons Insisted

Greater Trade facilitation

Multilateral Agreement or E-commerce

Commitment to reduce industrial tariffs

Multilateral Agreement of Govt. Procurement

Tricky Implementation Issues

Re-examination of the anti-dumping, Anti-subsidy Agreements

Review of the agreement on textiles and garments

Operationalising clauses on special treatment for Developing nations

New Battles

Labour Standards introduction

Environmental Standards introduction

Multilateral Investment Agreement

Competition Policy

Areas of concern for India:

The various existing and new issues to be tackled by India are presented in the figure "Key areas for concern"

Future outlook for WTO:

Resistance by NGO's to the Seattle Meet, The popular resistance is neither recent, fringe, nor generated by northern NGO's and unions AFL-CIO. Thousands of people around the world, including farmers, fisherfolk, women and other groups from developing countries have been protesting against the global trading regime for atleast a decade now.

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INDIA AND WTO

KEY AREAS OF CONCERN

AGREEMENTS

Existing Issues of Concern

GATT

On valuation of Goods

On Preshipment Inspection

Technical Barriers to Trade

On Sanitary and Phyto Sanitary measures

On Import Licensing Procedures

Rules on Exports

On Subsidies and Countervailing Measures

On Safeguard Measures

On Anti-dumping Measures

Trade Related Investment Measures

Market Access Negotiations

On Textiles and Clothing

On Agriculture

On Government procurement

On State Trading Enterprises

GATS

TRIPS

Patents

Copyrights

Trade Marks

Industrial Design&Layout Designs

Undisclosed information and Trade Secrets Geographical Indications

New Issues of Concern

Trade Issues

Foreign Investment

Competition Policies

Transperancy in Government procurements

e-commerce

Non Trade Issues

Trade and Environment

Trade and Labour

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Free trade is not an end in itself. People who stand in favour of WTO regime argue that despite its costs, free trade will eventually lift everyone's economic status. But it should be recognised that for such upliftment, strong government actions are necessary to convert the economic opportunities created by free trade into real improvements to the well being of all citizens. Free trade is not an end in itself, but a means to an end.

Points of resistance:

Environment : People for the Ethical Treatment of Animals and the Sea Turtle Restoration project say the WTO contributes to the death of thousands of sea turtles every year, because a WTO trade dispute panel ruled in favour of South-East Asian countries that challenged a U.S. law requiring turtle-excluding devices on shrimp boats selling shrimp to the U.S.

Labour : The AFL-CIO and Teamsters (voluntary agencies) say the WTO's push for free trade encourages developing countries to exploit a large pool of workers willing to accept sweatshop-working conditions.

Steel : WTO may do away with U.S. anti dumping laws that United Steelworkers of America, AFL-CIO and Teamsters say protect American jobs.

Agriculture : Farmers in many countries worry that WTO's goal of reducing nations tariffs on imported food will threaten farmer's livelihood. If food production is tied only to the lowest cost provider, then heavy food-importing nations are bothered about this state of affairs, which might develop.

Human rights : Labour and human rights activists say China is likely to continue human-rights abuses despite WTO membership, which the Clinton administration supports saying membership will boost China's" economy and bring it in line with Western standards.

Democracy : General public voice has been that, WTO trade pact can overrule laws enacted by members and they argue that disputes are settled behind closed doors with no input from outside groups.

Towards salvaging

"Historic" and "Fiasco" - both words have been used to describe the outcome of the 3rd Ministerial Meeting.

It is not the first conference of the Geneva-based trade body to end in a failure. Under the GATT in 1982 (Geneva), 1988 (Montreal) and 1990 (Brussels) negotiations were a complete breakdown. But breakdown of

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those meetings was not a fiasco, they only delayed an agreement which was finally concluded in 1993.

The Seattle meet bears close resemblance to the 1982 meet, which was also, a meet to decide on an agenda for trade negotiations. But 1982 meet paved way for the 1986 consensus at Punta del Este in Uruguay, whereas Seattle has ended in a complete shamble.

Yet Seattle is not the end of the road for WTO. While it is true that no country or group can claim victory for its position on global trade issues in Seattle, there can be little doubt that the dead lock at the ministerial conference spells greater hardship for the developing countries. Their expectation that the issue for non-implementation of the Marrakesh agreements by some of the rich countries, including those relating to non-tariff barriers and the rampant resort to anti-dumping would be sorted out, had hot materialised. Moreover the opportunity for getting the agreement on textiles and clothing renewed in favour of the developing countries has been lost. The willingness of India to consent to e-commerce and information advantages that the country enjoys in these areas has found no takers.

What Seattle has shown is that, the process of moving forward on a true multilateral open trading order can be furthered, neither through arm-twisting nor through subterfuge, but only through a transparent mode of "give and take", with the rich countries setting the example. Seattle is only a beginning towards turning the WTO into a more responsive and equitable organisation.

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12. INDIA'S FOREIGN POLICY

Opposition to colonialism and imperialism

Opposition to racial discrimination

Promotion of international peace

Panchsheel

Non alignment

Relevance of NAM

NAM's Cartagena Conference April 2000

India's foreign policy-50 years of achievement

The various nations of the world have to have peaceful coexistence. More the development in specialisatiion in production and growth in international trade, more is the interdependence between nations. This interdependence sometimes promotes cooperation and at other times, conflict. Therefore, nations formulate appropriate policies to adjust their relations with other nations to promote their national interests to the best possible extent. These constitute the foreign policies of nations.

Many factors influence the foreign policy, namely, geography, value judgements of the people of the nations, the degree of political consciousness among the general public, international conditions, and personal perceptions of those who formulate the foreign policy. The relative influence of these factors differs from nation to nation.

Foreign Policy of India

"Whatever policy we may lay down, the art of conducting the foreign affairs of a country lies in finding out what is most advantageous to the country. We may talk about international goodwill and mean what we say. We may talk about peace and freedom and earnestly mean what we say. But, in the ultimate analysis, a government functions for the good of the country it governs and no government dare do anything which in the short or long run is manifestly to the disadvantage of that country".

— Jawaharlal Nehru.

India's foreign policy started gaining importance with our nation's freedom in 1945. The then Prime Minister Sri Jawaharlal Nehru has been the architect of our policy of that time. His perceptions got highly depicted in our then policy. The geographical nearness of Soviet had also influenced our policy. She is one of our powerful neighbour, who could be friendly or be a thorn in the side. Before the occupation of western and northwestern part of Kashmir by Pakistan in October 1947, India and Soviet Union were separated by a narrow track of Afghan territory. This geographical

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proximity of Russia, among the other factors, had influenced Nehru in adopting the policy of non-alignment, i.e., (i) a policy of not taking sides in international politics (ii) of seeking the friendship of all countries and (iii) of judging issues on merit. Had we joined the Western block, we would have invited the animosity of the Soviet, which Nehru wanted to avoid. A nations historical experiences and contemporary international conditions usually shape the characteristics of its foreign policy.

Main features of India's foreign policy:

(i) Opposition to colonialism and imperialism.

(ii) Opposition to racial discrimination.

(iii) Promotion of international peace.

(iv) Panchsheel

(v) Non-alignment.

Opposition to colonialism and imperialism

Colonialism refers to the policies and methods by which an imperial power maintained or extended its control over territories or peoples. These days it is often considered synonymous with imperialism. After the second world war, many countries have got freedom from colonialism and there has been strong growth of nationalism, and imperialism has been taken to indicate exploitation or the attempt of any government to impose its policies on others.

The struggle against all imperialist designs anywhere in the world was a part of our nationalist struggle for freedom. Even when the French and the British tried to extend their power in the name of preservation of democracy during the war period of 1914-1918, India claimed that they were secret treaties embodying imperialist designs for the carving up of the Ottoman Empire.

In the spirit of its commitment, India has been active in all international forums to create international public opinion against imperialism.

The government has consistently championed to cause of the exploited nations against the colonial and imperial powers. It may be observed that India has not been merely raising slogans against colonialism and imperialism, she has actually followed this policy. For example, when the Dutch Government tried to re-establish her hold over Indonesia, India convened a meeting of Foreign Ministers at New Delhi and made an appeal to the Security Council. As a result the Independence of Indonesia was ultimately recognised. Likewise, India supported the independence demand of Libya and opposed the moves of South Africa to incorporate the territories of South-West Africa into her Union. She also advocated the cause of Tunisia and Algeria.

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Opposition to racial discrimination:

The father of the nation, Gandhiji's fight against racialism in South Africa is a world-known reality. The various Indian leaders were strongly against racialism. It was therefore natural for independent India's foreign policy to speak up against racial discrimination. Nehru had stated that "To have railway carriages, station retiring rooms, benches in parks etc., marked "For Europeans only" is a humiliating and

exasperating condition," he added that India would work for the recognition of racial equality.

India has not only condemned the policy of racial discrimination followed towards Indians in South Africa but also supported the cause of the Negroes in the United States and the black majority in Rhodesia against the white minority. India has been a strong advocate of her policy of racial equality. It was mainly due to efforts of India that U.N. General Assembly condemned the Union of South Africa for its policy of apartheid.

Promotion of international peace

Mahatma Gandhi's devotion to peace and his influence on our national liberation movement are well-known facts. Chapter IV of the Indian Constitution (Directive Principles of State Policy) Article 51 imposes upon the Government of India to work for international peace and security.

With the growing technological excellence in nuclear weapons, a war between great powers would destroy mankind if they turn to nuclear war as a last resort. So, atleast the instinct for survival calls for a policy aimed at promoting peace. Even small wars may hit our economic development programmes in view of the interdependence of nations today.

Nehru felt that by being non-aligned, nations could contribute their might to peace, and a non-aligned India was involved in many UN peacekeeping operations.

India was the Chairman of the Neutral Nations Repatriation Commission which supervised the exchange of war prisoners at the Korean war in 1953; her troops were part of the UN forces which were stationed along the ceasefire lines between the Israeli and Egyptian forces after Suez Crisis of 1956, and in similar U.N. peacekeeping operations in the Congo (Zaire) in 1960 and Cyprus in 1964.

Panchsheel:

Prevention of wars altogether is more important than letting wars break out and then trying to prevent them from escalating into major wars. Nehru believed that if nations would accept some code of conduct, wars can be prevented, hence, he was the joint author of the code (Panchsheel) which was evolved along with the Chinese leaders. Panchsheel was part of an agreement signed by China and India in Tibet on April 29, 1954.

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Co-operation and Co-existence has been another important principle of India's foreign policy. The idea of different systems existing side by side without clash is not new to India. This policy of co-existence is expressed in the Panchsheel or Five Principles of peaceful co-existence.

The five principles of the Panchseel are:

(1) Mutual respect for each other's territorial integrity and sovereignty.

(2) Mutual non-aggression.

(3) Mutual non-interference in each other's internal affairs.

(4) Equality and mutual benefit, and

(5) Peaceful co-existence.

Non-alignment

Non alignment is the pursuit of a foreign policy, which advocates freedom from commitment to any power block; it emphasises the independence of choice of action in external affairs. The policy of non-aligning with any block, but at the same time being friendly to everyone, so that it might be possible to exercise in international relations a moderating influence, came to be known as non-alignment.

On the eve of the end of second world war, the world stood divided into power blocks. The systematic attempts made by the contending power blocks to bring in the newly independent states into their sphere of influence merely strengthened the determination of the new states to preserve their independence and led to the crystallisation of non-aligned movement.

The lead in this direction was provided by India during the Korean crisis, India carefully maintained the middle course in the UN even at the risk of displeasing both sides. Her constructive approach and sincere efforts for strengthening peace found acceptance among a large number of member states. It was at this stage, that non-alignment gained a positive image. Burma was among the very first countries to adopt non-alignment. Indonesia, piqued by the British and American attitude towards Dutch, found non-alignment useful. In the initial stages, India, Burma and Indonesia formed the hard core of the non-aligned group - emerging as the "area of peace" and uncommitted nations of South East Asia.

Non alignment helped in, preservation of sovereignty and independence, attaining peaceful conditions for economic development, mobilisation of resources, protection of trade and commerce, and the desire to play a positive role in world politics. These aims and many other general reasons which commended non-alignment made many countries of Africa and Asia (in their national interest also) to join non-alignment.

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Classical colonialism has almost been eradicated, but new form of colonialism are arising. Neo-colonialism is much more dangerous than classical colonialism, because it is practiced by subtle, indirect and dubious methods which ultimately undermine freedom and sovereignty of the developing countries.

Non alignment has done much to draw the attention of the world, especially the developed nations to the inequalities of the existing international economic order. Noteworthy work has been done in this regard through UNIDO, UNCTAD, Group of 77 etc., but more remains to be done. The major battle of the movement today is not so much political and diplomatic but developmental and economic.

Relevance of non-alignment:

Foreign policy has always been the product of national consensus. Non-alignment continues to the sheet anchor of the official policy, inspite of reservations among sizeable sections in the country about its relevance.

The base core of India's foreign policy has been the doctrine of non-alignment. Questioning about upkeep of non-alignment and its contribution to our international relations brings out the following to the forefront.

The question is not only whether non-alignment has any relevance or validity for India or for any other country in the post-cold war era today, but also whether it served the nation, as it was believed it would in defending and promoting the national interest.

As a newly independent country, non-alignment was good for our morale, our ego, and our pride. It gave us atleast a feeling of following an independent foreign policy. People of the world genuinely believed that India was a leader of the third world.

Yet, did non-alignment at any stage during the cold war, enter the calculations of the policy frames in the capitals of the superpowers?

In the view of Mr.Gharekhan, former permanent representative of India to the UN, "Rather than sticking to non-alignment, what is more important is to develop our foreign policy in such a way to improve our economic development. The infrastructure development should be given high priority today. Liberalisation and deregulation could have been done in the 70s and 80s itself instead of which it was done only in the 90s. Rich would have become richer but the poor could not have become poorer than what they are today. A less confrontational, less rhetorical and more balanced position in foreign policy would have attracted more foreign investments and technology into the country".

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NAM did not bring any particular benefit, political or economic to India. India does not need any label to its foreign policy to achieve its goals. It need not hanker after leadership.

An economically strong India, which alone can become military strong, will earn respect and leadership. Pragmatism and not profession to some outdated concept must be the guiding principle of our diplomacy.

The 13th Ministerial Meet of NAM's Foreign Ministers at Cartagena (Colombia) - April 8th, 9th&10th, 2000

At the conference, which was attended by more than 50 foreign ministers from the 115 member countries, globalisation and humanitarian intervention had been listed as the two most important

challenges facing the movement. The Colombian President Mr.Andres Pastrana, said, the NAM should give priority attention to examining the question of reconciling "the defence of democracy and human rights, new needs for peace and international security, liberalisation of trade and investment with the principles of non-intervention, sovereignty of states and other values of international law".

India proposed two benchmarks for the NAM, taking its democracy theme and campaign against the scourge of terrorism a step further at the NAM foreign ministers meeting and indirectly stepping up pressure on the military regime of Gen.Pervez Musharraf in Pakistan on both counts.

Citing the action of the Oganisation of African Unity (OAU) which, much like the Commonwealth has decreed that no ruler who had usurped power would be allowed to attend its summits, the External Affairs Minister Mr. Jaswant Singh of India, said the NAM too should set similar democracy bench marks for its members.

Under the present membership, three countries would incur disqualification under this count: Ivory Coast, Myanmar (Former Burma) and Pakistan - all of which have seen their governments overthrown by military and they have time till next year to comply with the new requirement to retain their membership.

On Democracy: The summit has proclaimed a new political culture, wherein principles of democracy have been given prime importance. The declaration has been approved by the 13th Ministerial meeting of the NAM's foreign ministers. It must be approved by the summit of NAM, scheduled to convene in Dhaka in the summer of 2001, to become ready for implementation

On Terrorism: The meeting also adopted a strongly worded condemnation of the Taliban and its activities in Afghanistan. NAM meet

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strongly condemned the continuing use of Afghan territory, especially areas controlled by the Taliban for the sheltering and training of terrorists and planning of terrorist acts.

Both the approval of democracy norm and the condemnation of Taliban terrorism are deemed to be a triumph of sorts for Indian diplomacy.

Towards making NAM relevant - Comments on NAM Summit

The foreign ministers of NAM have lost a valuable opportunity in Cartagena to find a new direction and relevance for the 40 years old organisation.

Meeting at a time when the need for NAM was itself being questioned, the foreign ministers should have focused more on providing a political and economic orientation to the movement as developing countries face new challenges in a unipolar world.

The Colombian President set the right tone by identifying globalisation and humanitarian intervention by the UN as two of the most important challenges. Under the WTO regime and the process of globalisation many developing economies and least developed countries (LDCs) run the risk of being totally marginalised.

In the unipolar world with virtually little challenge to the dominance of the U.S. it was incumbent on the part of a premier grouping like NAM to emerge as a rallying point and help shape a multipolar world.

Unless the common interests of the developing countries are protected and the sovereignty of their decision making process in foreign policy is guaranteed, the threat of being engulfed by the dictates of the global powers looms large.

Dealing with burning issues such as global terrorism and nuclear disarmament or evolving a consensus on a common approach to the coming millennium summit of the U.N. was certainly more meaningful.

But given the increasing presence of the Western powers as observers in a NAM conference, it appears that their agenda of "spreading democracy" has been deftly smuggled into this forum. The criticism of the Taliban, though warranted, also bears Washington's stamp. The plight of the Afghan people demands international attention and the Taliban's brand of terrorism needs to be condemned, but it is the Osama Bin Laden factor that has influenced special attention in Cartagena.

Indian diplomacy cannot deem triumph in insisting on democracy. It is only taking India-Pakistan bilateral relationship to a point of no return. Instead of aiming at new dynamism and global focus, Indian foreign

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policy is turning to be on Pakistan-Centric mode. It is time for India to get on with its own agenda and realise its economic potential, instead of diluting its energies on isolating Pakistan. An unstable Pakistan with a shattered economy can be a greater threat to India.

Though it is correct to warn the military not to rule without a mandate and to restore democracy as soon as possible, to take it further and make democracy itself a norm of membership is not really relevant in the NAM context. This would only sour the atmosphere even more within the South Asia.

India's Foreign Policy - 50 Years of Achievement

The foundations of India's foreign policy were laid during the freedom movement when our leaders, even when fighting for independence, were engaged with the great causes of the time. The principles of India's foreign policy, that emerged then, have stood the test of time: a belief in friendly relations with all countries of the world, the resolution of conflicts by peaceful means, the sovereign equality of all states, independence of thought and action as manifested in the principles of non-alignment, and equity in the conduct of international relations.

Upkeep of NAM: Under the leadership of Jawaharlal Nehru, India was the founder member of the Non-aligned Movement, India has played an active role in strengthening the Movement and making it an effective voice in representing the collective aspirations and interests of the developing countries on such vital issues as development, peace and stability. India hosted the 7th NAM Summit in New Delhi in 1983. In recent years, after the end of the Cold War, our foreign policy has been focused on strengthening the Movement by redefining its priorities in keeping with the changing times.

Struggle against colonialism: India has also been in the forefront of the world community in the struggle against colonialism. Indeed, the Independence of India itself played the role of a catalyst in removing the vestiges of colonialism in other parts of the developing world, particularly in Africa. India was also the first country to raise the question of racial discrimination in South Africa in 1946. It was at India's

initiative that the AFRICA (Action for Resistance to Invasion, Colonialism and Apartheid) Fund was set up at the 8th NAM Summit in Harare in 1986. India was the Chairman of the AFRICA Fund Committee, which wound up in 1993.

Disarmament: A notable feature of Indian foreign policy has been its strong advocacy of general complete disarmament, with nuclear disarmament being accorded the highest priority. Towards this end, India has taken several initiatives within the United Nations and outside. In

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1988, India presented to the 3rd Session of the UN General Assembly devoted to Disarmament an Action Plan for ushering in a Nuclear Weapons Free and Non-Violent World Order. In order to highlight international concern about the unprecedented nuclear arms race, India was also a member of the Six-Nation Five-Continent Joint Initiative in the 1980s. But while India has, and will, remain committed to nuclear disarmament, to be achieved in a time-bound framework, it has consistently and in a principled manner opposed such discriminatory treaties as the Nuclear Non-Proliferation Treaty (NPT) and Comprehensive Nuclear Test Ban Treaty (CTBT) and has refused to give up its nuclear options until all countries in the world including nuclear weapon states embrace the idea of nuclear disarmament in a phased manner.

Collective security: As a founder member of the United Nations, India has been firmly committed to the purposes and principles of the United Nations and has made significant contributions to its various activities, including peace-keeping operations. India has been a participant in all its peace-keeping operations including those in Korea, Egypt and Congo in earlier years and in Somalia, Angola and Rwanda in recent years. India has also played an active role in the deliberations of the United Nations on the creation of a more equitable international economic order. It has been an active member of the Group of 77, and later the core group of the G-15 nations. Other issues, such as environmentally sustainable development and the promotion and protection of human rights, have also been an important focus, commensurate with national interests and security. The improvement of bilateral relations is an important component of any foreign policy, and India has succeeded in establishing a network of mutually beneficial relations with all countries of the world.

Relations with neighbours: In particular, the improvement of relations with our neighbours has always been one of the pillars of India's foreign policy. India played a historic and unique role in the liberation of Bangladesh, which emerged as a sovereign nation in 1971. Through the implementation of the 1964 and 1974 Agreements, the issues of the stateless people of Indian origin in Sri Lanka were resolved. In 1988, India helped preserve the integrity of Maldives by coming to the assistance of that country and

preventing an attempted take over by armed mercenaries. The Indian government has taken recent initiatives to further strengthen ties with our neighbours, which have won international appreciation. These initiatives are based on five clear principles: First, with neighbours like Bangladesh, Bhutan, Maldives, Nepal and Sri Lanka, India does not ask for reciprocity but gives all that it can in good faith and trust. Secondly, no South Asian country should allow its territory to be used against the interests of another country of the region. Thirdly, none will interfere in the internal affairs of another. Fourthly, all South

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Asian countries must respect each other's territorial integrity and sovereignty. And finally, they should settle all their disputes through peaceful bilateral negotiations.

These tenets have paid rich dividends. A landmark Treaty has been signed with Bangladesh on the sharing of waters of the Ganga. With Bhutan and Nepal, major projects of economic collaboration have been advanced. Our relations with Sri Lanka have shown steady improvement. With Pakistan. India has consistently pursued a policy seeking to improve relations under the framework of the Simla Agreement signed in 1972 which provided for the resolution of outstanding issues peacefully and bilaterally and for establishing durable peace in the Sub-continent. Bilateral discussions with Pakistan have resumed recently and India would continue efforts to have good neighbourly relations with Pakistan.

With China the aim of Indian foreign policy has been of developing a relationship of friendship, cooperation and good neighbourliness, exploiting the potential for favourable growth wherever it exists, even as we seek to find a fair, reasonable and mutually acceptable solution to the outstanding border issue. Towards this aim, a series of high level visits have been exchanged, bilateral trade and economic cooperation is growing, and an Agreement on Confidence Building Measures, as part of a wider dialogue on security, has been signed.

Regional cooperation: An important achievement of India's foreign policy has been the strengthening of regional cooperation. India is an active member of the South Asian Association for Regional Cooperation (SAARC) which was launched in December 1985. With India's full support, SAARC has recently taken significant steps in accelerating the pace of economic cooperation. The South Asian Preferential Trade Arrangement (SAPTA) became operational in December 1995. At the 9th SAARC summit in Male in May 1997, which was chaired by India, a historical decision has also been taken to strive for a South Asian Free Trade Association (SAFTA) latest by the year 2001. The emergence of the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) in March 1997, as a major instrument of cooperation in the large region, has also had the active support of India.

India's foreign policy has always regarded the concept of neighbourhood as one of widening concentric circles, around a central axis of historical and cultural commonalties. From this point of view, it has always given due priority to the development of relations with South East Asia. In 1947, India organized the Asian Relation Conference. It chaired the International Control Commission in 1954 and was a major player in the organization of the Bandung Conference in 1955. Today, India is implementing a 'Look East' policy which is underpinned by important economic considerations.

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Some significant steps in the pursuance of this policy have been taken with the admission of India as a full dialogue partner of ASEAN and a member of the ASEAN Regional Forum, 1996.

An attribute of a dynamic foreign policy is the ability to respond to changing developments. The emergence of the Central Asian Republics in the aftermath of the break up of the Soviet Union was one such recent development, and India, given the strategic and economic importance of this region, has been quick to strengthen its bilateral relations with each of these Republics. The shift in recent years by the countries of Central and East Europe to political pluralism and market-oriented structures has also seen India trying to build upon existing business and institutional linkages so as to further strengthen the traditional ties of friendship with the countries of this region.

Relations with the greater powers and other nations: India values its bilateral relations with the U.S. As democracies, both countries have many shared ideals. Relations have also continued to grow with the 15 countries of the European Union, and with Japan. These countries are important economic partners of India, especially in the wake of our economic reforms. However, in pursuing bilateral relations, we have sought to preserve the independence of our viewpoint and protect our national interests from the pressures of conformity.

Our relations with Russia have grown over the years to constitute an important foreign policy priority for both countries. There is recognition in both countries to the strategic dimension of our multifaceted ties. The considerable goodwill for India in Russia has been further cemented in recent years. Economic diplomacy has been a key component of India's foreign policy. Apart from long established Divisions in the Ministry to deal with economic issues, an Investment Publicity Unit (IPU) was specifically set up in 1990 with a view to disseminating economic information and coordinating the economic and commercial activities of Indian Missions abroad in the light of the recent economic reforms underway in the country. One aspect of economic diplomacy has been the promotion of South-South cooperation.

The Indian Economic and Technical Cooperation (ITEC) program was established in 1964. Today it extends to 110 countries in Asia, East Europe, Africa and Latin America. It facilitates the training of as many as 1000 foreign candidates in Indian institutions each year.

Overall view: The countries of the Gulf have a political and strategic importance for India. The region is a major market for Indian Exports. Three million Indians are employed in these countries. The strengthening of ties with this region, therefore, has been a priority of India's foreign policy.

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As many as 20 millions of people of Indian origin live and work abroad and constitute an important link with the mother country. An important role of India's foreign policy has been to ensure their welfare and well being within the framework of the laws of the country where they live.

The strength of any foreign policy depends also on the professional abilities of those who implement it, both at Headquarters and in the field. With a view to ensuring this, the Foreign Service Institute was established to undertake specialist training for entrants into the Indian Foreign Service, and to conduct several other specialist courses for Indian and foreign diplomats.

Recent events to be noted in the context of our foreign policy are :

•In 1999, India and Nepal renewed the Indo-Nepal Trade Treaty for a period of five years up to 2004.

•With regard to Bangladesh, a landmark treaty on sharing of the Ganga water at Farakka was signed by the Prime Minister of India and Bangladesh on December 10-12,1996.

•India's role in the transformation of SAARC into SAPTA a preferential trade block and the formation of Indian Ocean Rim Association for Regional Cooperation (IOR - ARC).

•Mr.Gujral as the Prime Minister, made Indian Security and national interests the prime focus of foreign policy. He took a firm position on the CTBT, rejecting it first and vetoing at Geneva later.

•Kargil War, relation with Pakistan is tense.

•Due to U.S. President Clinton's visit, an Indo-U.S. relation has become more stronger.

•Due to their own economic compulsions, world community started lifting sanctions against India which were imposed as an aftermath of India's nuclear test.

•In spite of differences on CTBT, NPT, WTO accord and permanent membership for India in the UN Security Council, India's relations with U.S, and other developed nations is improving.

•Some Criticisms on India's foreign policy have been

•Too much importance to idealism, even at the cost of national interests.

•Membership of NAM, has it been a truly supporting forum for India.

•India has completely neglected the vital principle of power in the conduct of international relations and laid more emphasis on peaceful settlement of international disputes.

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•Not reacting firmly and decisively enough against Pakistan, when Pakistan signed to defence agreements with the U.S. in 1954 and then joined CENTO - the U.S. led military alliance.

•Not being alert enough to the implications of the Sino-Pak nexus at the Bandung Conference in 1955

•Not developing the nuclear weapons capacity of India when China became a nuclear weapons power in 1964. U.S. had urged India to become nuclear weapons power in the early 60s. and ensured assistance, but India refused.

It is difficult to enumerate the achievements of a country's foreign policy in exactly quantifiable terms. With this a qualification, it would be a fair assessment to make that Indian foreign policy has sought to preserve, with conviction and consistency, the principles that were enunciated by the founding fathers of the Republic, both in the development of bilateral relations, and in international forums, where put views have won recognition and respect. A significant factor underlying this achievement has been the consensus, cutting across political divides, within the country, on what the basic aims and objectives of Indian foreign policy should be.

The foreign policy of any country must be related to its history, traditions and culture in order to provide a continuing basis for the formulation of its basic principles. India's overall approach as articulated by Pandit Nehru called for independence of judgement and self-reliance woven together with non-violence and peace - the values held high by Gandhiji. The basic principles of India's foreign policy need to be applied with care and vision to concrete problems in the radically changing global situation.

India's stand on relations with Pakistan, the nuclear policy and terrorism has to be updated because of fresh developments. These have added a new dimension to the challenges confronting the foreign policy establishment.

The time now for India is to give up its jehad to restructure the world order. The foreign policy challenge lies not in seeking to change the world but in learning to live with it. A modest foreign policy and an ambitious domestic developmental agenda with the former totally subservient to the latter, must be the guiding principle for India in the early decades of the new country.

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13. INDIA'S RELATIONS WITH HER NEIGHBOURS

Indo-Pakistan relations

Recent happenings

Sino-Indian relations

Sino-Indian relationship - towards togetherness

Indo-China economic ties-new dimensions

Perception about current threats from China

Foreign policies are rarely a total success. Once a state moves into the international scene with particular objectives, it encounters other states with their own objectives. More often than not, the interests of states clash necessitating compromises.

Indo-Pakistan relations:

Mohammed AH Jinnah, the founder of Pakistan, was a supporter of the rights of native rulers to decide the fate of their states. He gave them freedom to decide whether to join Pakistan or India.

Kashmir, according to the census of 1941, had a population of 4,002,000 of whom 77 per cent were Muslims and the rest were Hindus, Buddhists and Sikhs. The Hindu Maharajah of Kashmir, Hari Singh, wanted to be independent. But Pakistan subjected him to pressure, through economic blockade, wherein in those days all Kashmir's communications ran through the territories that became a part of Pakistan. This economic blockade pressure was followed by Pakistani tribal invasion on 22nd October 1947. So the Maharaja sought the help of India. On 26th October 1947 the Maharaja signed the Instrument of Accession and acceded to India. In December 1947, New Delhi appealed to UN Security Council. The UN arranged a cease-fire on 1st January 1949, leaving almost one-third of Kashmir under Pakistan's control.

The western powers, which were not for Nehru's non-alignment policy, adopted a pro-Pakistani attitude in the Security Council debates on the Kashmir issue.

Pakistan sought to strengthen herself by making a military alliance with the US in 1954. She also joined the western sponsored military alliance against the Soviet Union and China, South East Asia Treaty Organisation (SEATO) in 1954, and Baghdad pact (later known as Central Treaty Organisation - CENTO) in 1956. All these clearly show Pakistan

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aiming herself against India rather than against the communist powers. During this period India made an offer of 'no war pact' with Pakistan which was rejected. Thus India became suspicious of Pakistan's designs. In 1965 India refused to hold plebiscite in Kashmir in view of Pakistan's refusal to withdraw troops' from Kashmir and certain constitutional and practical changes that had taken place there. In 1965, following Kutch dispute, Pakistan sent organized groups of infiltrators across the cease-fire line, and later mounted large-scale attack in the Chhamb Juarian area. The Indian troops went into action and toiled the Pakistani designs, UN made efforts to secure cease-fire but failed. Ultimately, the dispute was resolved through the efforts of Soviet Union who arranged a meeting between the leaders of the two countries at Tashkent. By Tashkent declaration signed on January 10, 1966 the two countries agreed to withdraw their forces and settle their disputes through peaceful means. In subsequent years India made offer of "no war pact" and bilateral machinery to improve relations between the two countries. For some time cordiality prevailed. But after the hijacking of Indian plane to Lahore and its destruction, the relations between the two deteriorated. India retaliated by imposing restrictions on the flight of Pakistani aircraft over India.

Pakistan seemed to have realised that no other country would wage war on her behalf to wrest Kashmir from India. The successive governments in Pakistan since 1972 have been trying to improve relations

with India. In July 1972, the then Prime Minister of Pakistan Mr.Bhutto met the Indian Prime Minister in Simla, and agreed to settle all problems bilaterally by peaceful means. Diplomatic, air, commercial and communication links between the two countries have been restored since. The line of actual control in Kashmir was to be recognised as the international boundary line between India and Pakistan.

After Simla Pact it was expected that the relations between the two countries will become normal and Pakistan would accord recognition to Bangladesh. However, Pakistan has not taken any action in this direction. India and Bangladesh in the meanwhile, through a Joint Statement, offered. to release all the prisoners of war except 195 against whom trial was to be held by Bangladesh. Pakistan took the case regarding transfer of these 195 prisoners of war from Bangladesh to the International Court. India however challenged the competence of the court to deal with the case.

Two other important developments influenced Indo-Pak relations during seventies. On May 18, 1974 India successfully tested an underground nuclear devise at Pokhran in Rajasthan desert. Though India defended it as a Peaceful Nuclear Explosion (PNE), Pakistan strongly reacted to the Indian act.

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A second major development that affected India-Pak relations in the seventies was the Russian intervention in Afghanistan in Dec. 1979. This event altered both the regional security environment as well as Soviet American relations. America feared that by intervening in Afghanistan the Soviet Union was seeking an access to the oil-rich Persian Gulf. Pakistan feared having the super power Russia in Afghanistan i.e., on the other side of its border. Thus Soviet invasion of Afghanistan once again brought the US and Pakistan together. The US supplied massive arms to Pakistan including sophisticated supersonic F-16 airplanes. Pakistan was to supply the American arms to the Afghan patriots, the Mujahiddins who resisted the Russian troops in their soil.

India strongly protested against the American supply of arms to Pakistan. She argued that US had once again dragged South Asia into the cold war as she had done in the past. India argued that the kind of advanced aircraft that America had supplied to Pakistan was not really necessary to fight the Russians in Afghanistan.

Nineteen-eighties saw only more tensions in Indo-Pak relations. Old issues like Kashmir dispute were raked up, new claims on hitherto unoccupied territories like the Siachen Glacier were promoting

dissentment. This 'no man' land, where not even a blade of grass grows, the Siachan Glaciers became a disputed territory between India and Pakistan. Agreement was reached in 1989.

India and Pakistan are always eager to take political advantage of communal trouble. In 1983 when anti-government riots broke out in the Sind Province of Pakistan, the Pakistan government saw the Indian hand in their trouble. And Pakistan gave political and military support to the Sikh terrorists in Punjab. Similarly Pakistan gave more organised political and military training to the Kashmiri militants. In 1985 Zia-ul-Hug proposed a no war pact between the two countries. India in turn offered a treaty of peace, friendship and co-operation. But no agreement could be reached since neither country exhibited the political will and sense of accommodation needed for such purpose.

Even after the Simla Pact the relations between the two countries could not improve. During Janata rule special effort was made to improve relations with Pakistan and agreements were concluded for flow of information and visits between the two countries. Under Indira Gandhi also process'of normalisation continued and two countries set up a Joint Commission. This Commission worked out measures to promote greater cooperation in the field of trade, Science, industry, education, health and tourism. In December 1985, the leaders of the two countries agreed not to

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attack nuclear installations of each other. In 1986, they reached an agreement under which Pakistan lifted eight-year old embargo on private sector trade with India and the two countries agreed to double their trade. Despite these developments relations between the two were strained on account of induction of sophisticated weapons in Pakistan, and Pakistan's support to the Sikh terrorists. With the emergence of democracy in Pakistan under Benazir Bhutto it was expected that the relations between the two countries would improve.

Meaningful efforts were taken to bring down the tensions during the period of political leadership of Mr. Rajiv Gandhi and Benzir Bhutto. Three agreements were signed in Dec. 1988, (i) prohibition of attacks on the nuclear installations and facilities (ii) avoidance of double taxation on incomes derived from international air transport and (iii) cultural cooperation.

In 1991 the Foreign Secretaries of India and Pakistan agreed on advance notification of military exercises by two countries. Despite these efforts, tension persisted between the two countries because Pakistan tried to internationalize Kashmir issue in violation of Simla Agreement, and continued to extend support

to the militants in Punjab and Kashmir. India also felt greatly concerned over Pakistan's programme of induction of sophisticated weapons and production of nuclear bomb. The other factors which have strained India's relations with Pakistan are Pakistan's growing links with fundamentalists, trans-border smuggling of weapons and drugs and the treatment meted out to minorities in Pakistan.

Indo-Pakistan relationship-Recent happenings:

This is the fourth time that the Pakistan military has conquered and occupied its own country. Earlier, it was Field Marshal Ayub Khan, Gen. Yahya Khan and Gen. Zia-ul-Haq and now it is Gen. Musharraf. India is not amused to see the author of Kargil make himself the supreme ruler of Pakistan.

SAARC summit has been postponed, thus signaling to Pakistan the unwillingness of the SAARC leaders to confer legitimacy on Gen. Musharraf. The Durban Common Wealth Summit condemns Gen. Musharraf's coup as unconstitutional, wants Pakistan to return to democratic functioning and demands immediate release of the Prime Minister, Mr. Nawaz Sherrif so as to ensure that the rule of law is observed in Pakistan.

Pakistan, as a nation cannot be ignored since it wields nuclear warheads and missiles capability, and is one of our closest neighbour.

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The new members of the Pakistan Cabinet and their National Security Council appointed by the General are all conservatives and status quo men of Zia or pre Zia vintage and seem to have nothing new or innovative in improving their security and neighbourhood policies with Afghanistan and India. Kashmir is the core issue for them. They maintain that their support in Kashmir is merely 'political, moral and diplomatic'. They have lost the trust of India due to the Kargil issue. Nearly 60 per cent of its budget and 7 per cent of its GDP are utilised for its armed forces. So what be the development of its economic position is to be observed. It is better for India to stand by the words of the Foreign Minister Mr. Abdul Sattar, 'need not trouble Pakistan with our zealous declaration of friendship or hints of adversarial intent'. Better protect the international border and the line of control and be firm about extending Pakistan strict and precise reciprocity.

Pakistan is not in a position to launch any full-fledged offensive against India, because of its own domestic and economic problems. However it will encourage militancy in Kashmir and continue a low-intensity war in the valley to tie down the troops and drain India's economy. It is there fore necessary to

start secretary level talks and de-escalate the situation. Only then can India ask Pakistan to first stop cross-border terrorism and reach an understanding.

Pakistan's new foreign policy: The major issues in focus in the Musharraf government's new foreign policy are (i) Kashmir in the context of Indo-Pak relations, (ii) the nuclear programme with special reference to the CTBT, (iii) its relations with Afghanistan, Iran, Japan, the U.S. and Europe.

Regarding the CTBT issue, it is waiting to see the actions of India, whether it signs the CTBT, how good is U.S. support to India for signing CTBT.

It is assured that Pakistan will continue to pursue a policy of nuclear and missile restraint and sensitivity to global non-proliferation and disarmament objectives.

Pakistan has no objections to CTBT, but it should be reassured against a discriminatory approach on part of one or more nuclear powers, offering rewards to one signatory but refusing to extend the same to another. Clarifications, on this aspect and removal of sanctions will be indispensable for Pakistan's consensus on this sensitive issue.

A diplomatic track on Kashmir: In the view of Mr. C. Raja Mohan, while continuing to engage the militant group in the valley, India needs to step up its diplomatic efforts to rally international opinion behind its

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peace initiatives in Kashmir. This issue has become a festering sore on India's body politic and undermined New Delhi's larger ambitions in the global arena.

All these years, only bilateral solution has been thought to be the only solution, but now it is time for reassessment. As Pakistan responds with bloody violence to the Indian initiative for a political reconciliation, New Delhi will eventually be forced to call off the fledging peace process. Islamabad was never in favour of 'bilateralism' to resolve their issue. The lesson for India from the 'Lahore initiative' is simple -Islamabad has no desire to respect any bilateral agreements with India nor is it interested in any serious peace process. Its approach is rooted in the belief that a total victory in Kashmir is possible through the low cost campaign of terrorism and destabilization.

India's strategy has been to cope with cross border terrorism and ignore Pakistan. Doing nothing on Kashmir and hoping that the problem will just disappear has been a preferred strategy for New Delhi for a long time. It has worked for a while, but not for too long.

'Internationalisation' is not something new in India's policy on Kashmir. It was India, which took the Kashmir issue to the UN in 1948. India accepted Russian mediation at Tashkent after the 1965 war with Pakistan. It was only after the 1971 war and the Simla agreement of 1972 that the India's policy has been centered on "bilateralism".

The renewal of Pakistani clamour in 1980 and 1990s for third party mediation and international intervention and India's opposition were both based on a reading of the international correlation of forces. Islamabad believed, rightly, that any international intervention would be in its favour. Given the traditional western tilt towards Pakistan and the American ambiguity about Kashmir, there was no way India could accept an external role.

Over the last decade, much has changed in great power relations with India and Pakistan. With the end of the cold war, the US and other Western nations are developing their separate policies towards the subcontinental rivals on the basis of the inherent interests in both countries.

India's rapid economic growth in the 1990s and the endemic financial crisis in Pakistan have begun to differentiate the Western policies towards the two nations. Pakistan's drift towards extremist policies has also alarmed the major powers and many of Islamabad's neighbours.

The international community is concerned about the situation in Kashmir, and is worried that the Kashmir conflict might escalate quickly

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into a nuclear one. The Kargil crisis saw an important shift in the US approach, which forced Pakistan to unconditionally and unilaterally withdraw from across the line of Control.

The diplomatic challenge before India is to move beyond the traditional posturing against "internationalisation" of the Kashmir dispute and look at ways of using global concern about a nuclear flash point to its own advantage. Moreover, the emphasis of India must be more on political outcomes rather than on the process alone. In shaping an external component to its policy on Kashmir, New Delhi needs to clearly define the likely outcomes and the boundary conditions of the process.

India needs to develop some clarity on both the eventual destination of its Kashmir policy and on how to get there. Elsewhere on the diplomatic front, decisiveness has helped India overcome many of its long-standing dilemmas. The government has acted boldly to end the protracted nuclear ambiguity. It is also pressing China to accelerate the talks resolving the prolonged boundary dispute. There may be room for a similar decisive approach on Kashmir.

Sino-Indian relations:

New Communist regime was created in China under the leadership of Mao-Tse-Tung. Liberating Tibet was contemplated. Tibet is a region, which had been under Chinese Nationalist Revolution in 1911, the Chinese forces were driven out, and Tibet declared its independence in 1913. But the British for fear of Russia's invasion into Tibet, they continued to recognise Chinese control on Tibet. Hence Chinese forces entered Tibet in 1950. India was not in favour of this move of China. Yet for the success of non-alignment India was seeking the concurrence of China in this issue.

The relationship between India and China was such that, they became the joint authors of the Panchsheel in April 1954. But there was always the tension imposed on Sino-Indian due to the cold war between the superpowers that were trying to gain countries to their support.

Moreover China resented the power and position India was gaining in International forums in the 1950s. There was also the long and undefined border dispute between these two countries.

India and China have a 2,896-kilometer border. The dispute between them involves 90000sq.km. of territory in the eastern, 2000 sq.km, in the central and 33000 sq.km., in the western sectors. They were separated by two vast and sparsely populated territories, Tibet and Uigur, which were independent entities. Like Tibet, Uigur also had Chinese dominance in the 18th century, and Britain was very much in support of this Chinese supremacy in Tibet and Uigur.

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So in the Simla conference in 1914 to delimit the border between Tibet and India, China also was invited, by the British Indian Government. The Simla convention recognised the Northeast frontier Agency, (now Arunachal Pradesh) as a part of India. The line that marked the border in this sector has been called the McMohon Line, after the British representative at the conference.

In September 1957, China announced the construction of Sin-Kiang-Tibet highway across Aksai-Chin, a part of Ladakh, which is in the state of Jammu and Kashmir. Ladakh though originally belonged to Tibet, Maharaja Gulab Singh of Kashmir, defeated Tibet in 1842, and annexed Ladakh to Kashmir. An Indian patrol party to the area was detained by the Chinese in August 1958 and later released. From then onwards, border incidents increased between the two countries.

In March 1959, there was a revolt in Tibet against Chinese Supremacy in their country. The Dalai Lama and his followers fled to India and were given protection. This further increased the tension between China and India.

Aksai-chin, had invasion of Chinese in its area India did not have sufficient mountain divisions nor the arms necessary to fight at high altitudes. Yet in August 1960, army was made responsible for the protection of the Himalayan border, which was hitherto guarded by border security force. These border tension led to the war in 1962.

China supported Pakistan in its efforts against India in 1965 and during the Bangladesh crisis in 1971. China also trained and armed the tribal guerillas of Nagaland and Mizoram, which were claiming separate land for them from India. China considered Russia to be its enemy because she resented the India-Soviet relations. Yet over the years the resentment has come down.

In 1976 we posted our Ambassador to Peiking after downgrading our diplomatic relations with China to 'charge affairs' level since the war with China in 1962. Many rounds of talks have been conducted between officials of both the countries regarding border settlement and bilateral issue. In 1987 there was a tight position when both armies moved close to the border over the sumdorng valley issue. But war was avoided due to political leadership, which showed greater restraints to bring down the tensions.

During the period of Mr. Rajiv Gandhi, a joint committee at the ministerial level was set up to promote scientific and technological cooperation and the first science and technology agreement between India and China was signed. Thus though not any starting results, at least a positive political atmosphere and working relationship was created.

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Sino-Indian relationship - towards togetherness

This year 2000, the golden jubilee of the establishment of diplomatic relations between India and China is being celebrated. The Foreign Ministers, Mr. Jaswant Singh and Mr. Tang Jiaxun have arranged for parallel functions in New Delhi and Beijing. It is hoped to have a "cooperative and constructive relationship into the future".

Past happenings: Even before independence, India had an Agent-General in China. Full-fledged embassies were in place well before August 15, 1947 in the Kuomintoung era. But the proclamation of the People's Republic of China (PRC) on October 1, 1949, wiped off these.

India recognised PRC on December 31, 1949, after Burma accorded recognition to the People's Republic. Mao Zedng cabled the then Burmese Prime Minister asking him to send a representative to Beijing to 'negotiate' the establishment of diplomatic relations. On the same lines, telegram was also sent to Jawaharlal Nehru as soon as Indian recognition was announced.

The Indian representative, A.K.Sen arrived at Beijing earlier than the Burmese, thus India became the first "non-socialist" country to have diplomatic relations with New China. The reason for negotiations before diplomatic relations was that Beijing wanted to make sure that no country having dealings with it recognised the Kuomintang clique or tried to create two Chinas.

But Sino-Indian relationship had not been noteworthy and after 20 years even with the efforts of Mrs. Indira Gandhi in 1981, there hasn't been much improvement.

Not only boundary agreement but even the Line of Actual Control (LAC) has not yet been delineated, though two agreements on the maintenance of peace and tranquility have been observed.

In the mid eighties, the dialogue was derailed due to Sum Dourongchu, one of the several 'grey areas' about which the two sides disagree whether it lies to the south or north of the McMohan Line.

Recently the Pokran issue has added to chillness in the relationship. China continues to demand compliance with the UN Security Council resolution, calling for a stoppage of nuclear programmes by India and Pakistan. But this is against the Chinese doctrine of every nation having a 'sovereign right' to decide what weapons it needed for its security.

Moreover, China has been aiding and abetting Pakistan nuclear and missile programmes. Currently, Beijing is assisting Pakistan in the establishment of a solid-fuel missile factory at Fatehjung near Allock. The Chinese-assisted plutonium production plant at Chashma is totally

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without safeguards and thus falls foul of the non-proliferation regime that China claims to uphold. Yet, both the countries have not yet taken up this sensitive matter either fully or as forthrightly as required. The nuclear question should be dealt bilaterally rather than argue about it on multilateral forums.

Sino-Indo relations — March 2000: As on Feb. 22, 2000 the Commerce Minister of India, Mr. Murasoli Maran and the Foreign Trade Minister of China Mr.Guangsheng have signed an agreement wherein New Delhi has pledged its support to Beijing's entry into the WTO, and for boosting bilateral trade. The two countries are looking forward to increasing their bilateral trade from the present level of $2 billions a year.

China has (i) promised to look into the prospect of reviving the ailing India Iron and Steel Company (IISCO) at Barunpur. It would explore the possibility of participating in a joint venture for IISCO's modernisation, (ii) signed a MOU for setting up a joint working group (JWG) for increased cooperation in the metallurgical sector, (iii) agreed to depute a technical team by June this year to see India's iron ore and magnesium ore mines for increasing imports of these items.

India has put forward a list of about 180 export commodities, mainly agricultural products, on which it wanted to see lower tariffs.

But as incidents stand on February 27, 2000, it is observed that the decision by the US President Mr. BillClinton to explore a new political partnership with India despite the differences over the nuclear issue is leading to political heartburn in some countries in particular China. Beijing has reminded Mr. Talbott the US Deputy Secretary of State of the American obligations to the international non-proliferation regime and the importance of not accepting additional states into the nuclear club.

New Delhi's unhappiness as made known to the Chinese side, was based on various factors, (a) China's "get-tough" exhortation to the US was not in tune with the understanding shown by India regards Beijing's problems with Washington on human rights and the WTO, (b) Such a step did not fit in with the spirit of amity in India-China relations, (c) It was somewhat unusual for a third power to interfere in the bilateral dealings of others, (d) the advice on the nuclear non-proliferation issues coincided with Beijing's pleas to the US to include Pakistan in Mr. Clinton's South Asia itinerary.

The Union Commerce and Industry Minister Mr. Murasoli Maran has said that it is possible to raise bilateral trade with China to $5 billion from present $2 billion annually.

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India would welcome Chinese investment to raise the FDI target to $10 billion annually. At present, China accounted for only 0.34 per cent of the total investment approvals accorded by India to all countries and the actual inflow, at $0.6 million, represented only 0.27 percent of the total FDI approved with China.

Sino-India 50th anniversary of diplomatic relations: April 2000 marked the 50th anniversary of the establishment of diplomatic relations between India and China. These 50 years had their high points and also saw, unfortunately, too long a period of strain and divergence which culminated in the war of 1962. This event cast deep shadows on the ties between the two states that began to lift only in 1988 after the path-clearing visit by Rajiv Gandhi to China. The process of dialogue had begun earlier, following the visit of Mr. A.B.Vajpayee, then External Affairs Minister, to Bejing in 1979. But the progress towards recovery of confidence had been slow.

Dialogue was sustained despite periods of turbulence as in 1986-1987 and again a decade later, following the nuclear tests in South Asia. It continued despite changes of leadership in the two countries. Each time India and China not only pulled back from confrontation, but also in fact, raised the level of interaction.

In the 10 years since the Rajiv-Deng summit of 1988, considerable progress had been made by both states following a dual track strategy. Contacts and exchanges at all levels of state and society were revived and strengthened. In addition, economic and trade exchanges grew from a meagre beginning to close to $2 billion in 1997.

The events after Pokran slowed, but did not disrupt the process of normalisation. India responded sensitively to China's sense of 'hurt' at the references from various quarters to it as a potential 'threat' to India. The matter was cleared by the time of the visit of Mr. Jaswant Singh, External Affairs Minister to China for both sides to make public statements to the effect that neither considered the other a threat to its security. It thus became possible for the two sides, to add an important dimension to the ongoing dialogue. They agreed to conduct a security dialogue for the first time.

Relations at the purely bilateral level have improved enough, both qualitatively and substantively, to clear the way for the establishment of a constructive and cooperative relationship for the 21st century. However, there are still some differences, on the nuclear question as well as on other sensitive issues of a bilateral nature. These need to be frankly and openly addressed in a spirit of understanding and accommodation. India's concerns relate primarily (i) to the territorial issue, (ii) to the Chinese

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friendship with and assistance to Pakistan and (iii) to China's perceptions of India's nuclear programme.

For both countries it cannot be satisfactory situation to have de facto borders indefinitely; both should prefer to have firm, mutually acceptable borders, enshrined in a legally binding and voluntarily accepted treaty. Both have, however, realistically accepted that such a final settlement is a most complex process, not likely to be completed in the near future. As an interim arrangement, the two sides have therefore agreed to honour and stabilise the LAC in all sectors that came into being after 1962. In 1993 and 1996, India and China agreed to ensure that peace and tranquility prevailed along its entire length. They agreed to smoothen out differences through negotiations and to put in place far reaching confidence-building measures.

Of late, observers of the China scene and policy makers have noted that Beijing was making significant readjustments in its Pakistan policy. They were greatly reassured by the statements the Chinese

President, Mr. Jiang Zemin, made during his visits to India and Pakistan in 1996 that held out the promise of a more balanced and constructive Pakistan Policy.

But as evidence of China's continuing support to Pakistan's nuclear programme became available, old memories and fears were revived, specially after Pakistan's tests in 1998. These fears were not allayed even by China even-handedly calling on both to roll back nuclear weaponisation, not to deploy nuclear weapons and to sign the CTBT and the NPT. In the main, the fears were revived because, over the years, no satisfactory explanation of the quality of this relationship had been offered by China. Nor does Beijing deny the fulsome support and backing that Pakistan claims it has from China for its nuclear and missile programmes. The quality of this relationship, therefore, continues to be cause for concern in India even as it welcomes signs of a rational shift in China's position such as its call, during the Kargil crisis, that the Line of Control (LOC) in Kashmir be respected and that the Lahore process be resumed.

The issue of the nuclearisation of South Asia has three aspects. On the one hand is the right of all sovereign countries to build nuclear weapons for self-defence. The second is the peace/war/stability/instability/ consequenses of the exercise of this right. The third is to strengthen and pursue the gaol of complete and universal nuclear disarmament. Since the Indian and Pakistani nuclear tests of 1998, China has focussed its reactions and responses on the second aspect of the issue, but in doing so it has, in calling for a rollback, weakened the first aspect of the nuclear issue somewhat, and has been silent on the third which cannot be equated only with the signing of the Comprehensive Test Ban Treaty (CTBT).

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There had been criticism within India to these tests. The Government's declaration that it needs and will confine itself to building, only a minimum nuclear deterrent, that it does not target any country and, like China, its commitment that it will not be the first to use nuclear weapons has provided its critics with some reassurance.

Once again the two neighbours need to "stand tall and look far", to borrow a Chinese phrase. As the only two major powers to emerge in the post-World War II world, with a combined population of over two billion and a potential consumer class of at least that figure, India and China can no longer appear to be 'victims' on the international stage. Instead both have to urgently realise that between them they have the future capacity to deplete the world of most its resources. They will always have the capacity to destabilise their neighbours, their region, and the world, because of their sheer size and capabilities. They therefore have the responsibility and, in fact, in keeping with their cultural traditions, it can be said that they have a duty to contribute to keeping the peace and ensuring the stability of all their

neighbouring societies. To do so, India and China have their first talks the mending and stabilisation of bilateral relations.

The present is a critical period of transition from the unipolar world to a new more democratic and multipolar world order, both economic and political. Message of the Panchsheel, the Five Priciples of Peaceful Coexistence that India and China announced jointly in 1954 is the foundation on which state interaction should rest.

The changing world is also throwing up new challenges. Additional principles are needed to guide through the uncertainties that lie ahead. The principles proposed here are not exclusive to India and China. Like the Panchsheel they can have universal relevance, with India and China taking the lead.

The Ten Principles of Constructive Cooperation or the Ten Cs listed below are based on a reaffirmed commitment to the Five Principles as the fundamental norms for inter-state relations:

1) Commitment that existing state limits, either de jure borders or de facto arrangements will not be disputed by force.

2) Concern for the stability of states and societies especially in times of domestic unrest. Each state has the responsibility to resolve domestic problems by peaceful means.

3) Concern and respect for the legitimate interests of all states.

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4) Commitment to no alliances or military arrangements directed against third states, and no activities of one state to threaten, interfere with or commit aggression against another state.

5) Concern for the human rights of smaller or disaffected monitories, which can be taken up by and with Governments on a bilateral, non-intrusive basis.

6) Commitment on no first use of nuclear weapons against all states, as a first step to universal nuclear disarmament and a non-nuclear world.

7) Commitment to not supporting militarism, terrorism, interventionism and separatism.

8) Commitments to greater transparency and information sharing in military and security matters.

9) Commitment to encourage non-exclusive regional cooperative and sharing arrangements and to collective action to safeguard the interests and concerns of developing nations through the reform of the UN and other multilateral institutions.

10) Cooperation in the fight against drugs, disease and environmental degradation and for an enhanced relationship in diverse fields such as trade, investments, exchanges in science and technology and culture.

Indo-China economic ties - new dimensions

India and China, two of the largest economies outside the club of rich - the OECD - are trying to give a new impetus to bilateral especially economic relations.

This question relevant to the future is to what extent the Asian giants have synergies conducive to cooperation compared to the potential for competition.

Under the latest accord of February 22, 2000, China agreed concessions on a number of items of substantial interest to India, including rice, fruits, vegetables, marine products and Pharmaceuticals. This will be effective from the time of China's accession to the WTO.

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India-China economic profile

Indicator India China

Area (mn.sq.km) 3.29 9.56

Population (mn) 944.6 1232.1

Population (sq.Km) 287 128

Urban population (%) 27 30

Human development index 44.6 62.6

Adult literacy (%) 51.2 80.9

GDP ($bn) 358 906

GDP/capita ($) 380 750

Share in GDP (%)

Agriculture 28.8 19.9

Industry 29.2 48.6

Services 41.2 31.5

Visible exports ($bn) 33.7 151.1

Visible imports ($bn) 43.1 131.5

Trade balance ($bn) -9.5 19.5

Import cover (in months) 5.1 7.7Various important agreements: The two countries signed an agreement in December 1984 providing for mutual grant of the most-favoured-nation (MFN) treatment. The setting up of a Joint Economic Group at the ministerial level, subcommittee on science and technology, agreements on cooperation in coal mining and non-ferrous metallurgy, a civil aviation agreement on direct services (1997), a cooperation agreement between Doordharshan and China Central TV (1997) and an MOU on maritime transport cooperation and MFN treatment in this sector have been milestones. The two countries are also covered by a double taxation avoidance agreement, while the Reserve Bank of India has signed a cooperation agreement with the People's Bank of China.

If these agreements have not really meant much in terms of action, this is clearly due to the fact that bilateral trade and investment cooperation, which is the kingpin of economic relations, has not grown adequently.

Bilateral Trade: Traditionally, marine products, iron ore and oil meal have led Indian exports to China. Organic chemicals and electronic goods (several of which are made by multinational corporations in their ventures in China) and coke/coal have been dominating China's export to India.

China's (global) import structure is dominated by manufactured goods with a share of 84 per cent in aggregate imports in 1998. To improve bilateral trade, India should align itself to China's import structure and demand, even while continuing to focus on the Chinese demand for primary products like iron ore, yarn, rice and spices. Major problems in

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expanding India-China trade include, apart from a huge information gap and language barrier, factors like China's non-tariff barriers including import licensing arrangements, commodity inspections and quantitative regimes, export-import balancing requirements and testing and certification procedures.

Top 10 Bilateral Trade

Major Indian Exports to China Major Exports by PRC to India

Iron ore Organic chemicals

Marine products Electronic goods

Other ores and minierals Coal, coke and briquettes

Cotton yarn, fabrics, made ups Medicines and Pharmaceuticals

Drugs, pharmaceuticals, fine chemicals Inorganic chemicals

Oil meal Textile yarn, fabrics, made ups

Inorganic, organic and agro chemicals Machinery (except electricals, electronics)

Castor oil Non ferrous metals

Processed minerals Silk raw

Machinery and instruments Project goodsWith China and India not a part of any regional block such as NAFTA, EU or ASEAN with the exception of APEC, for peaceful global trade relations, the

coming together of these two economies will be good to their mutual interest of their country's economic development.

Perception about current threats from China:

Imports from China: Several apprehensions persist about the impact of Chinese goods on the Indian market. Lower prices and better quality of Chinese products are seen as major causes of concern for Indian manufacturers.

Allegations by Indian Industry are that dumping is being made now, wherein consumer goods are subject to QRs and tariff levels remain high. With remaining QRs likely to be phased out it is imperative that tariff levels are raised significantly. The complaints are specifically about cheaper Chinese imports in the form of tyres, bicycles, dry cell batteries, fibres, ferroalloys, edible oils, chemicals and consumer electronics and components. The routes taken by Chinese products are dumping, smuggled through land and sea routes, re-exports through Nepal. The Chinese economy has several inherent advantages over other countries. Exports are growing rapidly, the annual growth of exports increased from 11.5 per cent in the 1980s to 14.5 per cent in the 1990s. China's trade surplus with the U.S. is comparable to India's total export turnover.

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According to Mr. Ravi Sinha, CEO, SRF Ltd., China can be seen as a role model, as a potential competitor and as a partner for India

The 1997 World Bank Study 'China 2020', shows China will become the worlds second largest exporter by 2020 after U.S. Currently 40 per cent of Chinese exports are in electronics. Further, China's success can be attributed to having an export culture in each and every sphere.

According to Mr. Ashok Goel, Vice President, Organisation of Plastics Processors of India (OPP), who led a 11 member delegation to China, higher productivity is rooted in Chinese labour laws which are flexible and make their products globally competitive. The centralised employment exchanges in China assure a constant supply of all classes of labour, which can be retained even for short duration and terminated with minimal formalities and reasonable compensation. The industry has negligible interference from the government. The Chinese have made massive investments in infrastructure and the wellspread network of super highways facilitates faster movement of raw materials and finished products.

Easy availability of labour, productivity, government policies and excellent infrastructure facilities has made Chinese plastic processors dominate the global market. The immediate challenge faced by the Indian plastics industry is to improve productivity levels and strengthen overseas marketing, according to Mr. V.K.Taparia, President OPP.

Steps taken by Indian government to regulate imports from China: First, the government has increased the basic duty on imports of edible oils. The duty on refined palm oil and RBD palmolien has been increased from 35 per cent to 65 per cent.

Second, the government has ordered anti-dumping investigation into select Chinese imports and is laying down the standards for imported goods.

Third, the introduction of compulsory licensing for imports. This is permitted under the WTO norms and while the government would not deny a license, it would require information and prior notice. This would help in collection of detailed data on imports and would allow easier interpretation of import trends.

Lastly, the government has imposed BIS(Bureau of Indian Standards) norms on the import of 131 goods and has made it compulsory the printing of retail price. While printing of retail price would help check under-invoicing, the adherence to BIS standard would prevent inflow of sub standard goods. Also it is now compulsory for all imported goods to carry the name and address of the importer, according to a notification issued by the Directorate General of Foreign Trade (DGET).

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India has to take the competition head-on. Problems of specific industries should be probed into and suitable corrective measures should be taken. Indian labour is the cheapest in the world and it is time to show by performance that India can compete with any product coming from anywhere.

India's security and China: China has developed a close relationship with Pakistan since 1965, this was largely designed to restrain Soviet expansion into the Indian Ocean via Afghanistan. Sino-Pakistan cooperation has manifested itself by the transfer of conventional weapon systems, they are basically vintage Soviet-copied systems like the whole series of MiG aircraft but are hardly a match for India's

latest generation weapon systems acquired from both Soviet (Russia) and increasingly now from Western sources

However, China is the long-term security threat that India cannot ignore. China has been the chief supplier of nuclear and missile technology to countries of proliferation such as Pakistan, North Korea and Iran. Mr. George Fernandas is not wrong in identifying China as the major future threat to India, despite much confusion being created thereafter about this accusation.

The official reaction to the perceived threat from China is that, the latest (1999-2000) Annual Report of the Ministry of External Affairs notes "we (India) seek friendly cooperative, good neighbourly and mutual beneficial relations with China", and "we remain committed to the process of dialogue to build a constructive cooperative relationship". The Annual Report of the Ministry, highlights China's improvement of it's long-range missile force, the likely entry of Chinese nuclear submarines into the Indian ocean and its growing trans-border military capabilities due to improved mobility, fire power and inter-service coordination. But China being a nuclear threat and its submarines entering the Indian Ocean need not really happen. China would be a nuclear threat, only if the Chinese decide to go back on their no-first use pledge. The possibility of another conventional Sino-Indian war must be rated negligibly low, though China may continue support the several insurgencies in the Northeast. The only threat from China arises now from its policy of transferring nuclear and missile technology to Pakistan. It is another matter that China's strategic objectives from this policy are incomprehensible.

Competitive edge of China in the view of the Chinese Ambassador to India: In response to the mounting campaign against Chinese products from industry bodies in India, the Chinese Ambassador to India, Mr.Zhou Gang has expressed his views. Some of the views expressed by him are:

(i) more than 40 per cent of Chinese exports are from multinationals operating in that country.

(ii) China exports nearly $60 billion worth of goods to the US. This

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stands a case in favour of the quality of Chinese products.

(iii) In the early nineties, when the economy was opened up, India deluded itself thinking that its superior legal and financial system, familiarity with the English language and democratic system of government were positive factors in attracting investment from western countries.

(iv) In the wake of the mew millennium, China is far ahead of India in many respects and in fact it is hoping to become a top economic power by 2010.

(v) China is acknowledged by the US and other major developed countries as an emerging economic powerhouse. It is strategically building an excellent relationship with them.

(vi) China's growth rate during the past decades was around two times that of India's.

(vii) China attracts around 20 times the FDI flowing into India.

(viii) China's exports are around five times those of India.

(ix) Increasing FDI has been instrumental in enabling the Chinese in improving the infrastucture and techniques of production to achieve excellance.

(x) Chinese labour is known for hardwork and efficiency at low cost.

(xi) India and China both have agriculture as the main activity. But inspite of India's green revolution, in rice production, China's per acre output is almost three times more than that of India.

(xii) Competition from Chinese products is faced by Indian Industry over a wide spectrum ranging from capital goods to drugs and from yarn to batteries.

Chinese products displace Indian products not only in the domestic market but also in other countries to which India exports. So increase competitiveness of Indian products, protectionism of sorts resorted to,

like cry about dumping and insisting of BIS quality controls, will not be solution to the impending long term problems.

India needs to implement a consistent policy fostering foreign investment and trade to improve competitiveness. The captains of Indian industry, the bureaucracy and politicians need to redraw their plans, priorities and approach instead of blaming each other.

To sum up, the real threat from China, if it can be so named, has a larger political and economic content; the contest is for power and influence in Asia and the international system. India cannot compete with China unless it puts its internal system in order. India needs to accelerate its reforms process by tackling hard issues such as reducing subsidies, disciplining the civic and civil services, reconstructing the public sector and curtailing budgetary deficits.

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14. INDIA AND THE SUPER POWERS

Indo-American relations

American President's visit-March 2000

In the new millennium-bilateral cooperation

Future outlook

Indo-Russian relationship

Russian President's visit-Oct.2000

India and the major powers- Pointers for the future

Indo-American relations

United States and the United Kingdom were all in support of ideal democracy; and they opposed socialism. India though it accepted their devotion to democracy, it was sceptical about their claims that the cold war (between US and the Soviet) was all about democracy and human dignity versus tyranny and authoritarianism. While the United States and the United Kingdom have been democracies for a long time, their passion for democracy was confined to their borders. Nehru's'socialism was a means to liberate the individual from want or not to subject him to authoritarian control.

Talking about America's foreign policy, an American speaker declared that, in the American foreign policy priorities, Western Europe came first because of its industry, the Middle East came second because of its oil, the Arctic came third because of its strategic location and the Far East ranking below all these. Thus India was not that important in the American diplomatic priorities.

Moreover Nehru's stand on non-alignment and not being in full support of the Western Block, turned the American and English not to support India in issues affecting India's interest. This shifted India's attitude to the West. Yet, Nehru had shared his values about democracy, which was on line with the values held by America.

However, shared values were no guarantee against tension in political relations. The United states need for and desire to acquire bases all over the world to contain Soviet communalism, which was the basic objective of U.S. foreign policy after II World War, and India's stubborn decision to be non aligned were not conducive to harmonious Indo-American relations. The U.S. entered into a military alliance with Pakistan and supplied free arms to Pakistan in return for a base in that country. When Nehru expressed his disapproval, President Eisenhower offered to supply weapons to India which was declined by India.

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The U.S. and its western allies constantly adopted pro-Pakistani attitude on Kashmir issue whenever it was discussed in the Security Council as in 1948, 1952, 1957 and 1962. Soviet cashed in on tensions in Indo-American relations and supported India in the Security. Council in 1957 and 1962.

During the 1965 India-Pakistan war, U.S. and Britain also suspended the military aid committed to India during the Chinese invasion in 1962 to strengthen and modernise the Indian armed forces.

During the Bangladesh crisis in 1971, President Nixon openly adopted a pro-Pakistani attitude. Even economic aid to India was suspended. Other issues which contributed to tensions in Indo-American relations were: the U.S. hypersensitivity to anything that relates to socialism and therefore its opposition to public sector, its insistence on India signing the Nuclear Non-Proliferation Treaty of 1968 and delays in the supply of enriched uranium to the Tarapore Power Plant, built with U.S. assistance.

Though there had been many incidents, which created tensions in the Indo-American relations, there were also many fruitful areas of cooperation between them, particularly in the field of India's economic development. The U.S. made the largest contribution to our economic development. Between April 1951 and October 1970, the U.S. provided aid to the tune of Rs.7,184 crores, while the contribution of the U.S.S.R. during the same period was Rs.1031 crores. Approximately Rs 2,650 crores out of the total U.S. aid was provided in the shape of goods supplied under PL 480 agreements between 1965 and 1971. After the end of the 1971 Indo-Pak war, the U.S. recognised the importance of India in South Asia and its regional power and it started taking into consideration the political and security interests of India.

Under PL 480 India was given loan in dollars, this was repaid in Indian rupees. So rupees were accumulating with U.S. After much discussions on this issue, U.S. agreed to write off about two thirds of India's rupee loan and also paid back to India a large amount of rupees held in her account. This settlement is a landmark in Indo-American relations.

However, in 1974 when India successfully tested a nuclear device (PNE) the U.S. was very critical in arguing that it was a threat to regional and global peace. India's refusal to sign the NPT and her PNE once again hampered the goodwill between them. Slowly good relations were restored and the visit of the American President Jimmy Carter in 1978 to India was regarded as a great mark in the Indo-U.S. relations. Larger economic aid flowed into India. However, a dispute on the supply of nuclear fuel once again disturbed the briefly won goodwill.

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Under the 1963 Symingtons agreement, the U.S. committed to supply nuclear fuel to the Tarapore Nuclear Power Station (TAPS) for a period of thirty years. But U.S. refused supply in 1978 unless India agreed to accept certain nuclear safeguards. The U.S. applied to India with effect an Act passed by the

American congress in 1977. India protested that domestic law could not be applied to an international agreement, that too retrospectively.

Efforts were made to locate bilateral areas where there can be improvement in relations by the year 1982. U.S. arranged supply of nuclear fuel through France. U.S. also expressed her willingness to extend science and technology cooperation to India.

In 1985, with Rajiv Gandhi's visit to the U.S. and the introduction of certain liberal economic policies in India, the U.S. laid down the broader framework of science and technology cooperation. It allowed the transfer of certain sensitive and non sensitive items to India, the sale of super computers, GE Engines to India's Light Combat Aircraft (LCA) and night vision system for tanks.

With the tensions in East-West relations fast disappearing and the cold war becoming a thing of the past, Indo-U.S. relationship has entered an era of pragmatism. After the Russian withdrawal from Afghanistan, Pakistan lost much of her strategic importance. The U.S. has advised Pakistan to settle even in the Kashmir issue, and has advised Pakistan to settle the issue bilaterally as per the Simla Pact. Even when Srilanka asked for U.S. help, the Bush administration fully supported India's role and refused to intervene in the island's ethnic conflict.

However differences do crop up every now and then. India opposed the American proposals at the Uruguay Round f Multilateral Trade Negotiations to include agriculture in the GATT. India also refused to sign the Paris Convention, which deals with intellectual property rights. The US threatened to apply the "Super 301" clause of its Trade Act to India. Under Super 301, the US would impose trade sanctions against a country whose economic policies discriminate against American economic interests. Anyhow introduction of trade liberalisation in India has avoided the imposition of 301. The prevailing situation of 1991 was that the Indian dependence on the US especially for economic purposes, has increased.

Indo-US relationship on the eve of the American President's visit to India

Mr. Bill Clinton's visit scheduled for the 3rd week of March 2000 is the first American Presidential visit to India in 22 years, after President Jimmy Carter's visit in 1978.

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India and US are looking forward to work out substantive agreements in a number of areas extending from business to social development, and from energy to good governance. Expectations are there about new strategic economic partnership between the two countries.

The assessment in both the capitals is that the more intensive Indo-US engagement to be initiated by Mr. Clinton will be far more important than the various agreements that will be signed during the visit.

Sustainable and productive engagement between India and the US had been impossible during the cold war and elusive in the decade since. In the 1990s, relationship floundered due to deep differences over nuclear non-proliferation and divergence over regional issues, in particular Kashmir.

India's economic reforms and the American interest in India as a "big emerging market" has paved way for significant expansion of commercial cooperation between the two nations. Two-way trade has more than doubled to nearly $13 billions. Another important feature has been the coming of age of the Indian community in the US. It has begun to assert itself in American domestic politics and has played an important role in positively shaping domestic American perceptions of India and advancing Indo-US relations.

Despite these stabilising factors, nuclear and Kashmir issues appear to be fundamental and unbridgeable. The twelve rounds of nuclear dialogue between the External Affairs Minister, Mr. Jaswant Singh and the US Deputy Secretary of State, Mr. Strobe Talbott, have provided a framework to reconcile the conflicting imperatives of India's nuclear security interests and the US - led global non-proliferation regime. There is indeed a deep disappointment in the US that the dialogue has not led to concrete actions well before Mr.Clinton's visit to India. At the heart of the proposed reconciliation of the nuclear differences is an American acknowledgement that India's May 1998 nuclear tests cannot be undone and that of India's sovereign right to choose nuclear security. Mr.Talbott has suggested that India could subscribe to the Comprehensive Test Ban treaty (CTBT) without giving up the ability to possess nuclear weapons and have a credible deterrent. India would be free to conduct the so-called "sub-critical" nuclear tests after joining the CTBT.

All indications are that Mr. Clinton's visit is forcing the American establishment to intellectually grapple with the challenge of restoring the Kashmir dispute in the context of the nuclearisation of India and Pakistan. If Washington has understood the nuclear imperative in the sub-continent and its implications for the Kashmir dispute, Mr. Clinton has an opportunity during his visit to highlight the broad principles that should

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govern the security dynamic of the region. By emphasising the unity of multicultural states, stressing the importance of democracy, respect for the rights of minorities, good governance and calling for regional economic integration, Mr. Clinton could give a big boost to peace and process throughout the sub-continent.

In the new millennium - bilateral cooperation

The Presidential visit of the U.S. President Mr. Bill Clinton on March 21, 2000 has paved way for coming closer together of two great democracies of the world, namely the U.S. and India. US has very important strategic interests with India - health, environment, trade and investment, security and terrorism. Indo-US relationship is a very important relationship for the US. The various key agreements entered are:

•Agreement on the foundation of an Indo-US Science and Technology forum,

•Joint statement on cooperation in energy and environment,

•Joint statement on institutionalising the Indo-US political dialogue,

•Vision statement, and

•"Knowledge Trade Initiative" protocol.

The relationship that had been floundering has been revived in various areas as discussed here under.

Revival of defence relationship: It is envisaged to have revival of service-to-service cooperation. The list of planned activities includes (i) joint military exercises (ii) exchange of military personnel and (iii) participation in international seminars related to security. The US has also eased informal restrictions on the content of the training capsule for Indian defence personnel. Indian service personnel train in US military institutions under the IMET programme, which programme had been scrapped following the Pokhran tests. The executive steering groups, one each for the Army, Navy and the Air force, will chart out their activities within the framework of policy guidelines provided by the apex Indo-US Defence Policy Group (DPG). Meeting of the DPG had been stalled even prior to the Pokran nuclear tests.

Science and Technology pact: The agreement was signed by the Union Minister for Science and Technology and Ocean Development, Dr. Murli Manohar Joshi and the US Secretary of State, Ms. Madeleine Albright on the first day (21.3.2000) of the US President is visit to India.

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Diplomatic Envoys

Indian envoys Term US envoys to India Term to the US

K.Asafali 1947-1948 Henry F. Grady 1947-1948

Ms.Vijaya lakshmi Pandit 1949-1952 Loy W. Henderson 1948-1951

Gaganvihari L. Mehta 1952-1958 Chester Bowels 1951-53/1963-1969

M.C. Chagla 1958-1961 George V. Allen 1954-1954

B.K.Nehru 1961-1968 John Sherman Cooper 1955-1956

Ali Yavar Jung 1968-1970 Ellsworth Bunker 1956-1961

L.K. Jha 1970-1973 John Kenneth Galbraith 1961-1963

T.N.Kaul 1973-1976 Kenneth B. Keating 1969-1972

Kewal Singh 1976-1977 Daniel P. Moynihan 1973-1975

Nani A. Palkivala 1977-1979 William B. Saxbe 1975-1976

K.R.Narayanan 1980-1984 Robert F. Goheen 1977-1980

K.Sankar Bajpal 1984-1985 Harry G. Branes 1981-1985

P.K. Kaul 1986-1990 John Gunther Dean 1985-1988

Abid Hussian 1990-1996 John Randolph Hubbard1988-1989

Siddharth Shankar Ray 1992-1996 William Clarke Jr. 1989-1992

Naresh Chandra Since 1996 Thomas Pickering 1992-1993

Frank Wisner 1994-1997

Richard Celeste Since 1997Collaboration in the area of science and technology and been on a low profile for the last few years following differences

over how to handle issues relating to intellectual property rights arising out of collaborative projects and also because of the Pokhran tests.

Under the present agreement, a special forum will be created, which would be registered as a non-profit society under the Indian Societies Act. It would have a 14 member governing body of eminent persons drawn from the government, the academia, and the industry from both the countries. The forum would facilitate active exchange of ideas and opportunities in Indo-US S&T cooperation and promote joint collaborative projects.

Vision Statement: "India-US Relations: A Vision for the 20th Century" has been signed by the US President, Mr. Bill Clinton and the Indian

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Prime Minister, Mr. Atal Bihari Vajpayee. The content run as follows: (1) We are two of the world's largest democracies. Freedom and democracy are the strongest bases for both peace and prosperity. (2) Globalisation is erasing boundaries and building networks between nations and people, economies and cultures. We are leaders on the information age. The currents of commerce and culture that link our societies run strong and deep. Our nations pledge to reduce impediments to bilateral trade and investment and to expand commerce between us, especially in the emerging knowledge-based industries and high-technology areas. We support an open, equitable and transparent rule-based multilateral trading system and we will work together to strengthen it. (3) We will boost joint efforts to counter terrorism and meet other challenges to regional peace. (4) India and the US share a commitment to reducing and ultimately eliminating nuclear weapons, but we have not always agreed to how to reach this common goal, (5) We will do our part to meet the global environmental challenges, including climate change and the impact of air and water pollution on human health, (6) We also pledge a common effort to battle the infectious diseases that kill people and retard progress in so many countries. With leadership, joint research and application of modern science, we can and will do the same for the leading killers of our time, including AIDS, malaria and tuberculosis.

Our partnership is not an end in itself, but a means to all these ends. And it is reinforced by the ties of scholarship, commerce and increasingly of kinship among our people. The industry, enterprise and cultural contributions of Americans of Indian heritage have enriched and enlivened both our societies.

As on March 21, 2000, Mr. Bill Clinton has eased economic sanctions against India further to restart the 25 million USD Financial Institutions Reform and Expansion (FIRE) programme to modernise Indian financial markets. He has agreed to waive the Glenn Amendment and start the FIRE project.

The project, which spent over 12.billion USD during its first phase from 1994 to 1998, was largely responsible for the modernisation and reforms in the Indian financial markets, including the rapid progress of the National Stock Exchange (NSE)

Source: The Hindu 22.03.2000

US-India commercial Dialogue: One of the most significant announcements of an arrangement for a Government-to-Government dialogue on economic issues, the three-tier mechanism envisages regular meetings at the Ministerial level for trade and investment. The talks will be held between the India's Finance Minister and the US Treasury

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Secretary at one level and at the second level between the Prime Minister's office and the US Trade Representative's Office. The third tier is the Indo-US Commercial Dialogue between the Indian Commerce Ministry and US Commerce Department.

The unique aspect of the Dialogue is that it will be both at the Ministerial level and on an industry basis. The Washington based US-India Business Council (USIBC) will act as the catalyst on the US side with the major Indian Chambers of Commerce being involved at the other end. and the dialogue will be largely industry-led.

The commercial dialogue envisages regular consultations on (a) issues related to WTO matters, (b) multilateral trade matters like automobile policy, export conditionality being imposed on multinationals setting manufacturing facilities in India, (c) impact of US sanctions, (d) taxation disputes, (e) implementation of intellectual property laws and (f) telecom deregulation.

Establishment of Indo-US economic forum: A document setting up the bilateral financial and economic forum was signed at Washington on 17.4.2000 by the Indian Finance Minister Mr. Yashwant Sinha and

the US Treasury Secretary Mr. Lawrence Summers, in the presence of India's Ambassador to the US and the Indian Executive Directors on the Board of the World Bank and the IMF.

The financial and economic forum is a part of the broader economic and commercial dialogue between the two countries as envisaged in the Vision Statement. The Indian Finance Minister and the US Treasury Secretary will head the forum

The meetings are to be on an annual basis but supplemented by sub-cabinet level meetings and will involve the participation of the US Securities and Exchange Commission, the federal Reserve System, the Office of the Controller of Currency, the Council of Economic Advisors and on the Indian side by the Securities and Exchange Board of India and the Reserve Bank of India.

Business agreements concluded: The business delegation accompanying Mr. Clinton has concluded numerous agreements involving an estimated investment of 1.4 billion USD. The major sectors for these tie-ups were energy, environment and information technology. To state a few:

(i) Bank of America (Chicago) with DSQ software to facilitate the setting up of a global information technology services company specialising in financial services,

(ii) IBM and DSQ World.com Ltd., to supply a range of computer products and services

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(iii) Info Dream of Santa Clara (California) with Modi Corp Ltd., for the creation of an innovative web portal for automating the entire process of resource management in a service enterprise,

(iv) Neuvis Inc. and DSQ Software to help speed innovations in the Neuvis e-business platform and increase the rate of customer contacts on the global e-commerce market,

(v) In the energy sector, Ogden Energy of Newyork signed an agreement with the Tamilnadu based Balaji Group of partnering a 106 MV greenfield project in the State. Ogden also signed an agreement for the Shree Maheshwar Power Project in Madhya Pradesh. The company signed the agreement with the

Madhya Pradesh Electricity Board for the construction of the hydro-power dam which will provide 400MW of power to the State,

(vi) Memorandum of Intent between Synergies Energy Development Inc. of Annapolis and Power Finance Corporation of India (PFC), under which PFC will commit to financing 25 per cent of the Shrinagar hydro-electric project in Uttar Pradesh,

(vii) The US Energy Association and the Confederation of Indian Industry for establishing a joint Indo-US private sector trade and Investment working group which will work with both governments to promote commercially viable clean energy and environmental opportunities,

(viii) Global Market Resources and Healing Medicaids Private Ltd., for purchase of hydroclave medical waste system,

(ix) Lightstream Technologies and its Indian partner, Subhash, for a strategic alliance for introducing chemical free, high powered ultraviolet light water disinfection technology in India,

(x) Water Systems International of Washington and the Haryana Industrial Development Corporation to establish a state-of-the-art manufacturing facility for water purification units

(xi) In the tourism sector between World Corporate Club Inc., and an Indian Company, Flex group, to evaluate the suitability of property for the construction of an international business club in New Delhi.

Thus the various projects in pipeline are:

Industry

•US Energy Association and CII for joint working group on clean energy and environmental opportunities

•Knowledge trade initiatives-FICCI and US India Business Council Information Technology

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•Bank of America with DSQ Software to set up a global IT service company

•IBM and DSQ.com to supply computer products and services A Info Dream and Modicorp for web portal A Neuvis Inc. and DSQ Software for innovations in e-business Energy

•Ogden Energy with Balbji Group for 106MW power project in Tamilnadu

•Ogden and Shree Maheshwar Power Project

•Synergies Energy Development and Power Finance Corporation

Environment

•Global Market Resources of US and Healing Medicaids A Lightstream Technologies and Subhash

•Water Systems International and Haryana Industrial Development Corporation

Tourism

•World Corporate Club Inc. and Flex group

Government Business Agreement

•Indo-US Commercial dialogue- terms of reference signed by US Commerce Secretary and Indian Commerce Minister

•A public and private sector trade and investment mechanism

Future outlook:

As we move into 21st century, economic consideration seems to reign supreme in giving shape to international relations, keeping aside the compulsions of political, military and ideological views that ruled the hazy days of Cold War.

India and the US have come a long way in their economic relationship from a donor recipient one of 1950s and 1960s to a commercial alliance of 1990s based on mutual benefit. Today, the US is India's largest trade partner, the biggest source of foreign investment and the most favoured destination for Indian professionals. India's trade surplus with the US has grown from a little less than US $2 billion in 1992 to nearly $5 billion by 1999.

Despite improvement in bilateral trade relations between the two countries, differences over labour laws, quality control, visible and invisible import restrictions hamper the potential to create bilateral trade ties. However, the differences of opinion have been accepted by both sides as essential and they have pledged to work closer than ever before to resolve the contentious issues, which were responsible for the failure of the Seattle round of WTO.

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The Comprehensive Test Ban Treaty (CTBT) has been another area of difference between the two countries. In India, the criticism of the CTBT has been centred on four main points. They are:

A The CTBT is not linked to a time bound schedule for disarmament A The CTBT is discriminatory in character

A The CTBT is decisively flawed and rendered effectively worthless at least for the US, France, Britain, China and Russia. This is because, in its present form, it allows subcritical testing, does not prevent advances in computer simulation techniques that will set up a " Virtual testing regime" or "information at test ground".

A The CTBT is another building block, after the NPT, in the perpetuation and strengthening of nuclear hegemony proclaimed by the nuclear haves against nuclear have nots.

Prospects in Indo-US ties: According to Prof. P.R.Chari, New Delhi, the prospects of Indo-US ties runs as follows: Indo-US relations possess a roller-coaster quality. Alternating periods of normality and impasse mark them. American interests in China and Pakistan reflect negative concerns, but the US interests in providing greater content to its relations with India have a positive content, which is an important distinction. The US commitment to the non-proliferation goal remains undiluted and delimits the scope of Indo-US relations. It would be prudent to believe that the bipartisan nature of American Foreign policy limits the scope of USA understanding with India on these questions; it would be informed by India's compliance with the "bench-marks" collectively laid down by the P5 countries in Geneva, G8 countries in London and embodied in the UN Security Council Resolution 1172 of June 6, 1998.

These require India and Pakistan to "conduct no further nuclear tests; sign and ratify the CTBT immediately and without conditions; refrain from deploying nuclear weapons or missile systems; halt

the production of fissile material for nuclear weapons; participate constructively in negotiations towards a fissile material cut-off treaty; formulise existing policies not to export weapons of mass destruction and missile technology or equipment and resume a direct dialogue to address the root cause of tensions between them, including Kashmir". These issues lie at the heart of the Strobe Talbott-Jaswant Singh talks.

Coming to the economic dimension of Indo-US relations, it is clear that the prohibitions on dual use technology exports to India remain; so

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would US sanctions that oppose financial assistance to India from multilateral institutions like the World Bank and the International Monetary Fund. Some marginal sanctions imposed by the EXIM bank have been removed, apart from the ban on providing investment guarantees. These are intended to promote bilateral cooperation in the information technology area where there is a dearth of personnel in the US. Differences persist over labour law requirements, intellectual property rights and so on that could ensure non-tariff barriers being imposed on Indian exports. Assertions that the Indo-US relations are normalising are decidedly premature at present. The US is likely to abandon its present nuanced policy towards India, and, for that matter China and Pakistan. Neither it is likely to dilute its commitment to its non-proliferation objectives. How India will readjust its own policies to synchronise with those of the US needs to be watched.

Indo-Soviet Relations:

In April 1947, the Interim Government of India and the Soviet Government decided to establish diplomatic relations. In August 1947, the first Indian Ambassador to the Soviet Union, Mrs.Vijayalakshmi Pundit reported in Moscow. The first Soviet Ambassador to India, Novikov, took office in January 1948. However during the Stalin era, Indo-Soviet relations turned cold, since Stalin was busy with establishing his control over Eastern Europe. In the post-Stalin period, Russia was brought closer to India, because of (i) the cold war between the super powers entering Asia, (ii) to take advantage of the tension between the non-aligned countries and the West, (iii) due to the neutral role maintained by India in the Korean issue, (iv) supply of arms to Pakistan in 1954 which was opposed by India and Russia, (v) also the geographical nearness of the countries namely India and Russia and (vi) Russians realisation that she needs more influence among Afro-Asian countries to counter US. They called India a great power and supported the Indian stand on Kashmir and Goa.

Though initially Soviet remained neutral about the India-China war in 1959, in the border war of 1962, Soviet Union blamed China for the war and also agreed to help India in manufacturing the MIG 21 supersonic aircraft.

In the Indo-Pak war of 1965, the Soviet Union adopted a strictly neutral stand. It played host to the Tashkent meeting between the Indian Prime Minister and the Pakistani President in January 1966.

The ups and downs in the Sino-American relationship were always a cause for apprehension for the Soviets. To strengthen the Indo-Soviet relations, on 9th August 1971, the Soviet Union and India signed the 20-year Treaty of Peace, Friendship and Cooperation. This is in no a way a

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military alliance, and India was ready to sign similar treaties with the western powers. But no western country volunteered to do so. The Soviet Union gave strong diplomatic support to India in the UN on the Bangladesh crisis in Dec. 1971.

The Soviet Union helped India in setting up two big steel mills at Bhilai and Bokaro, a heavy engineering plant at Ranchi, a mining equipment plant at Haridwar, an antibiotics plant at Rishikesh, a surgical instrument factory in Madras and oil refineries at Gauhati and Koyali.

Indo Soviet collaboration in the economic field has proved more beneficial to our country in the field of heavy industry. The West which was not very much interested in the request by India for help in industrialisation, cold war status being what it was, did not want Soviet alone to get credit for the industrialisation in India, and hence came forward to help India with greater aid. Thus Soviet aid though smaller in comparison, was the catalyst to bring forward greater aid and concessions from the West.

Unlike the United States, which tried to equate India with Pakistan, the. Soviet Union showed due respect to India's size and potential.

In 1973, Brezhnev visited India and wanted support for the Asian Collective Security Plan, which was envisaged by Soviet to counteract against the growing Sino-American relations, but India was very

passive in this matter and due to lack of its support the plan lost its purpose. But this did not affect the Indo-Soviet relations.

When Mrs.Indira Gandhi declared Emergency in 1975, Soviet was in full support, though Western countries attacked the suspension of democracy in India. When Janata Government came into power with Morarji Desai as Prime Minister and Atal Bhehari Vajpayee as the Foreign Minister, down trend in relations was expected, but it turned to remain steady and unruffled.

Rather it was the Russian invasion of Afghanistan in December 1979, which posed a difficult dilemma to India. The Russian presence in Kabul removed the'historic buffer between India and the Central Asian Republics of Russia. Moreover, Russian invasion into Afghanistan was increasing arms flow into Pakistan from Amerida with consequences for Indian security. Soviet-Indian relations were clearly strained by the Soviet invasion of Afghanistan. However, it did not affect co-operation in other areas. In 1980 it was reported that Moscow would supply Rs.1300 crores worth military hardware to India. In 1983 Marshal Ustinov, the Soviet Defence Minister visited India and offered the combat-aircraft MiG-27. Both countries continued their cooperation in the economic field too.

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During Indira Gandhi's visit to Moscow in 1983, Brezhnev offered full support for further development in basic industries like heavy engineering, non-ferrous metals, steel and energy. An Indo-Soviet trade protocol signed for 1984 envisaged enhancing the originally projected figure of Rs.3626 crores to Rs.3840 crores.

In the eighties, there had been changes in India's economic priorities, modernisation plans and gradual liberalisation of the economy, and hence she sought more cooperation from the western countries. In the defence field also, India had diversified her arms purchases and weapons technology from Russia to West Germany, Britain, France and United States. But this does not mean her departure from economic and defence cooperation with the Soviet Union.

Historic changes were taking place within and outside Russia since the Gorbachev era. Russia had withdrawn from Afghanistan, normalised relations with China, and changed the very structure of world politics by terminating cold war with the US. Within Russia, the Communist Party of Soviet Union (CPSU) ceased to be the governing force. Political power had shifted to pluralist leadership. Several Soviet Republics have declared independence from USSR and have been officially recognised as independent

sovereign states. India has now to deal with not only Moscow but also several Central Asian Republic. Russia can no longer remain the important source of economic and military assistance to India. In August 1991 the Indo-Soviet Treaty of Peace, Friendship and Cooperation, which completed its twenty years term was renewed but it lost its relevance due to the fundamental changes, which have taken place in the global scenario.

Russian President's visit-Oct.2000

Strategic partnership has bloomed between Russia and India when the Russian President Mr.Vladimir Putin made a four-day visit to India from October 3rd to 6th 2000. The most important areas of cooperation are the nuclear issues, defence deals, declaration of strategic partnership, the legal sphere, information technology and tackling of global terrorism.

On nuclear issues: Of the many issues in discussion, the most important issue is that of nuclear non-proliferation and cooperation in the peaceful uses of atomic energy. Mr.Putin's visit to the Bhabha Atomic Research Centre at Trombay reflects the reality that today Russia is the only great power, which is ready to cooperate with India in the field of atomic energy.

Despite the unrelenting pressure from the U.S a few years ago, Russia has pressed forward with plans to build up two nuclear power reactors at Koodankulam in Tamil Nadu. As on date, India and Russia are discussing

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various ideas for increasing cooperation in the civilian nuclear energy sector. Many political obstacles would have to be overcome before substantive Indo-Russian nuclear cooperation is institutionalised.

Mr.Putin has insisted that Russia's plans for nuclear cooperation with India would be strictly kept up with its commitments under relevant international obligations. Mr.Putin is likely to seek India's commitment to sign the Comprehensive Test Ban Treaty at an early date. Russia has already signed and ratified the treaty.

The Russian President Mr. Vladimir Putin has breached the longstanding international nuclear blockade against India by committing his nation to expand atomic energy cooperation with India and has agreed to contribute to India's growing nuclear energy requirements. As on October 4th 2000 top atomic

energy officials from both sides signed a Memorandum of Understanding (MoU) on intensifying bilateral cooperation in the peaceful uses of atomic energy. The agreement would certainly boost India's plans to accelerate the nuclear power generation programme.

India needs external cooperation to boost its sagging atomic energy programme. Besides Russia, New Delhi is also looking at other suppliers including France. The current international rules on transfer of nuclear power reactors has made difficult to have nuclear cooperation with India. These regulations issued by the Nuclear Suppliers Group, a cartel of advanced nations, in early 1992 demanded that any nuclear sales to India must be followed by the so called "full scope safeguards" or complete international control over the Indian atomic programme, but India has no intention in accepting such external controls.

Today's nuclear MoU suggests that Russia is ready to go ahead without demanding any unacceptable political conditions. New Delhi is prepared to accept" facility specific safeguards on the imported nuclear reactors, but not on the entire atomic energy programme.

This has raised questions like, how will Moscow reconcile its current obligations under the NSG (Nuclear Suppliers Group) with an agreement to provide new nuclear reactors to India? Will it demand a change in the NSG rules? Will other key nations such as the United States and France go along with Russia? It is hoped that the near future will provide answers to these issues.

Declaration on strategic partnership:

Signed by Prime Minister Mr.Attal Behari Vajpayee and the visiting Russian President Mr.Vladimir Putin, this present declaration is in continuity with the traditionally close and friendly ties to mutual benefit

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existing over half a century. It emphasizes the fundamental and lasting importance of the treaty of friendship and cooperation between the Republic of India and the Russian Federation of 28 January 1993, which was continuation of the bilateral Treaty of Peace, Friendship and Cooperation of 9th August 1971. It also has as its basis the Further Development and Intensification of Cooperation between the Republic of India and the Russian Federation of 30th June 1994 and of the Moscow Declaration on the Protection of the Interests of Pluralistic States of 30th June 1994. The present declaration seeks to impart qualitatively a new character and long term perspective to the multifaceted bilateral relations

and to actively develop in political, economic, trade, scientific, technological, cultural and other fields in the years ahead.

This strategic partnership is based on the principles of sovereignty, equality and territorial integrity of states, non-interference in their mutual affairs, mutual respect and mutual benefit.

The strategic partnership envisages to have enhanced cooperation in the following fields:

Political: Convening of annual summit level meetings, regular bilateral, political and foreign consultations on issues of mutual concern, close cooperation at the United Nations, further intensifying their efforts aimed at strengthening international peace and security, disarmament, efforts to reduce nuclear weapons globally, peaceful settlement of disputes and respecting the sovereignty, territorial integrity or national security interests of the other side.

Trade and Economy: Strengthening cooperation through (i) intergovernmental commission on trade, economic, scientific, technological and cultural cooperation, (ii) joint bodies of business and industry representatives in sectors such as metallurgy, fuel and energy, information technology, communication, transport including merchant shipping and civil aviation, banking and finance, insurance and customs procedures. Enhancing cooperation and coordination in international trade and jointly exploring the possibilities of regional trading arrangements with third countries.

Defence: Consolidating defence and military-technical cooperation with a long-run perspective and deepening service -to -service cooperation.

Science and Technology: Promoting cooperation in fundamental and applied scientific research, exchange of scientists and scientific information, cooperating in areas such as oceanology, agricultural sciences, medical sciences, biotechnology, meteorology, standardisation and quality controls. Cooperating in the peaceful use of nuclear energy and the peaceful use of outer space.

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Culture: Promoting cultural cooperation, activating contracts between peoples and organisations in the field of culture, media, education, youth and sports. Promoting tourist exchanges and cooperation between tourist organisations in both countries.

Other fields: Cooperating to fight against international terrorism, separatism organised crime and illegal trafficking in narcotics.

The strategic partnership between the sides is not directed towards any other state or group of states and does not need to create a military-political alliance.

Defence Cooperation:

On October 4, 2000 India and Russia signed an agreement to establish an inter-ministerial commission on military-technical cooperation and signed three key defence deals within the framework of their strategic partnership. The inter-governmental commission of defence, will control and coordinate all aspects of military hardware exchanges between the two sides.

Regarding the defence deals, India and Russia have signed the Admiral Gorshkov aircraft carrier deal. With the nearly 40000 tonne ship in its possession, India will be able to better protect its coastal areas and the vital commercial shipping lanes of the Indian Ocean. The presence of the MiG 29K planes and the Sea Harriers on board, the navy can more than counter Pakistan's P3C Orion aircraft which can be used to target India's vital energy assets including the Bombay High. The Gorshkov's package includes the induction of the Ka-28 and Ka-31 early warning helicopters.

While the Russians would part with Gorshkov free of cost, India would incur an expense of Rs.1800 crores for its modernisation and further about Rs.3200 crores for the transfer of around two squadrons of Mig-29K air defence planes.

The two sides also signed the deal for producing 140 SU-30 MKI aircraft under a Russian licence by the Hindustan Aeronautics Limited. In the long run this will greatly extend the reach of Indian Air Force (IAF). The agreement envisaged the establishment of facilities to overhaul these planes. It also offered cooperation between Indian and Russian scientists to these planes being regularly modernised during their life cycle.

A contract for 310 T-90 S tanks was also signed. These tanks are equipped to fire missiles. Licenced production of these machines is also envisaged. The presence of T-90s can offset the induction of Ukranian T-80 UD tanks by Pakistan. The contract includes the transfer of 124 tanks

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off the shelf and another 186 tanks to be produced here under a Russian licence. The total deal for 310 tanks is expected to cost India around Rs.3000 crores.

Diversification issue in defence supply : The establishment of an Indo-Russian Inter-Governmental commission on military-technical cooperation would surely deepen and strengthen defence cooperation between two old allies. A host of defence deals, covering the needs of the Indian Army, the Air force and the Navy have been clinched, providing a major impetus to the Russian defence industry.

Though Russia's costs are half of Europe's, New Delhi needs to diversify its focus and source its hardware requirements from different countries to maintain a balance of our dependence for defence supply.

India's experience is that, it got into a lot of technical problems in the supply of spares for the original Bofors howitzers as well as for contracted spares from Britain, in the aftermath of sanctions clamped on India after the Pokhran -II nuclear tests in May 1998.

Consequently, defence authorities are now trying to ensure that the contracts are specific on pinning the responsibility on the manufacturers for the regular and assured supply of spares. India has acquired aircraft, submarines and other military hard wares from countries such as Britain, Germany, France and Russia.

Future scope of Indo-Russian defence deals: To offset the huge trade balance in favour of Moscow, it is high time the Russian defence industry begins to invest in India. It must collaborate with Indian partners to take up both manufacture and research here. This would help in joint production and marketing in the global market.

Many countries have approached India to assist in maintaining and servicing of their aircraft and weapon systems. Hence Russia and India should enhance collaboration so that Indian software and

sophistication could be added to Russian hardware, and together they could emerge as major defence players in the world.

From India's strategic and security view point it is essential to develop a major defence industry that can, not only meet national demands but also the needs of the developing countries. India is particularly suited to cater to the needs of many Southeast Asian nations, West Asian and African states to build or expand their Navies. Supply of small arms can be another productive area. But, for this, India has to expand its infrastructure, which would call for incremental investments, development of a spares and service industry, competitive pricing and astute marketing skills.

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It will take a decade or more for the country to develop that capacity, which means a decision will have to be taken now to make India a defence player by the years 2010-2020.

Cooperation in Legal Sphere:

This is the first ever MoU on mutual cooperation between institutions of justice/courts in India and their counterparts in other countries including training of judicial officers and legal education.

The MoU provides for cooperation in nine areas including mutual assistance, exchange of experience in the field of administration of justice, use of information technology, legislative drafting and exchange of professionals.

It will facilitate education and training of judicials and legal experts, assistance to educational institutions in setting up and management of law courses, exchange of legal literature, publications and other relevant information.

The Institution of Legislative Drafting and Research (India) of the Law Ministry's Legislative Department will train Russians in legislative drafting and facilitate exchange of current legislation.

Another MOU to provide for legal assistance and legal relations concerning civil and commercial matters was also signed.

Cooperation in the IT sector:

The sectors identified for meaningful cooperation include (i) certification of electronics and IT products including software, (ii) cooperation in communication and network technologies including Internet, (iii) high-performance computing systems and their applications, (iv) partnership in the area of high technologies and electronic materials, and (v) cooperation in application of IT in education. Russia has agreed to send a proposal with relevant details for the purchase of computers from India for Russian schools.

On terrorism:

Talks centered on the menace of the "terrorist international" with its dangerous global spread. India was as much a victim of it in Kashmir as Russia in Chechnya. Mr.Putin's view was that, often it was the same individuals, the same terrorist organisation, who were conducting terrorist acts from the Philippines to Kosovo, including Kashmir, Afghanistan and Russia's Northern Caucasus. Both countries have expressed mutual support to one another in combating international terrorism.

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Indo-Russian tie-ups and likely reactions by the U.S and other world countries:

The Clinton administration has not substantively commented on the Russian Presidents visit to India and signing of accords. One view is that it is unlikely that Washington would react at all, given that the administration is now in the election mode. Moreover, what transpired in New Delhi during Mr.Putin's visit had been envisioned for some time now.

The agreements between New Delhi and Moscow on military hardware are "not a big deal", China and even the U.S had similar deals with Russia.

But the cooperation on nuclear issues is likely to raise some eyebrows in the non-proliferation community. Another area of importance is Afghanistan and what India and Russia planned to do by way of cooperating to combat terrorism. If it so happens, that U.S., Russia, India, China and Iran line-up to targeting the Taliban, then it would put Pakistan in a tight spot and this could raise problems in the future.

Overall Comment: Apart from finalising defence tie-ups, New Delhi and Moscow signed 12 agreements covering agriculture, communication, legal relations, culture, and energy. Moscow's political support, apart from commercial defence deals, is of great value to New Delhi. On its part, Russia knows that its armament industry cannot survive without purchases by India. India and Russia have elevated their multifaceted ties to a higher and qualitatively new level, with stress on mutual interests, commonalties and pragmatism.

India and the major powers-Pointers for the future

The U.S. President Mr.Bill Clinton visited India during March 2000, and the Russian President Mr.Vladimir Putin visited during October 2000. The Indian President Mr.K.R.Narayanan was at China and other high level officials from France, Germany, Britain and Russia have also visited Indian either trying to trade weapons or engage in commercial deals.

In the views of Shri Mohammed Ayoob, economic liberalisation and the consequent growth are substantially responsible for the greater visibility India has acquired recently. The Indian nuclear tests of May 1998, New Delhi's responsible behaviour following the tests and its measured response to Pakistani provocation in Kargil in 1999 has added to India's image as a mature regional power. However, much of this has been achieved without forethought and often without clear articulation of a game plan on the part of India's policy makers.

India has to analyse the intentions and capabilities of the major powers that have the wherewithal to harm India's security, political and

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economic interests in the foreseeable future. It is also necessary to understand the nature of the evolving relationship among the major international players themselves. All this must be done without ideological blinkers and preconceptions regarding the inherent nature of any major power.

These are no fundamental points of conflict between India and Russia. However, Russia's potential aid to India, While still considerable in terms of weapons supply, is limited because of its economic incapacity and its technological retardation. Russian supply of sophisticated weapons to China, although understandable in the light of its economic plight, should also cause alarm bells to ring in New Delhi.

China's objectives towards India, despite the recently witnessed friendliness in bilateral relations, lacks clarity and transparency. There exists between Beijing and Islamabad the conventional arms supply and the transfer of nuclear weapon design and missile components and technology by China and its surrogates to Pakistan. China does not want India to grow in power and be a competitor to it in the Asian region. Lavish Chinese banquets for visiting dignitaries do not make up for the transfer of M-11 missile to Pakistan. New Delhi must work harder on building long term relations with Japan, the other Asian power seen as a competitor by China and, therefore, India's logical potential ally in Asia.

India's interests diverge from those of the U.S. on the question of nuclear proliferation. But on a whole host of other issues ranging from countering terrorism to containing China, Indian and American interests are beginning to coverage. With a new President, American suspicions of China in the security realm might multiply in geometric progressions. India has a vested interest in tense relations between China and the U.S. It elevates India's position in American strategy. Also, China and not the U.S. pose the greatest threat to India's security.

India must also learn to exploit potential contradictions in Russian -Chinese relations. The Russian Government is extremely suspicious of Chinese long-term intentions and its capabilities.

The powers at New Delhi have the critical task of showing clarity in strategic thinking to position India to take maximum advantage of the competing interests among the major powers. In international politics there are no permanent friends or enemies, only permanent interests. Even interests change, as one's own capabilities and those of other relevant powers undergo transformation.

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15. INDIA'S STANCE ON NUCLEAR WEAPONS

Hiroshima and after

Nuclear disarmament treaties - History of disarmament

Current status of India on nuclear disarmament

Review meet 2000

Beyond nuclear obsession

With the bombing of Hiroshima and Nagasaki, the world came to shocking awareness of the destructive power of nuclear fission. A turning point in history, it was the starting point of an exclusive weapons club, which treaties, over time, have attempted to control.

Hiroshima and after - towards a nuclear free world

On August 6, 1945, a nuclear bomb was dropped from "Enola Gay" on the Japanese City of Hiroshima. It was the first use of a nuclear weapon in a military situation and the beginning of the nuclear arms race. Japanese launched a surprise air attack on the U.S.Navy in Pearl Harbour, Hawaii on Dec.7, 1941 during which nineteen warships were sunk or damaged and some 2300 navy personnel were killed. At the same time, Japanese planes attacked British warships stationed in Singapore and the unsinkable H.M.S.Renown was sunk. The U.S. had been a neutral state in the war in Europe till then. On Dec. 8, the U.S. declared war on Japan and joined the Allied Forces in Europe against the Axis powers, Germany and Italy. The Japanese had committed a political blunder of "Himalayan" magnitude.

During the next three years, from 1942 to 1944, Japanese forces systematically occupied the countries on the Pacific rim, from Korea to Malaya, and ruled them with an iron hand. Prisoners of war were taken by the thousands, and put to enforced labour while subsisting on a starvation diet. Horror stories of the Japanese occupation figured in the headlines of every American newspaper, and broadcast over the electronic media. The mood of the people in the U.S. was intensely anti-Japanese.

By the beginning of 1945, the Axis forces were being beaten back, and Germany formally surrendered on May 7. But the war in the Pacific was continuing and there was no sign of the weakening of the war effort on the Japanese side. President Roosevelt had passed away on April 12, and the former Vice President Harrry.S Truman had become the President. By then, the U.S. already had on hand nuclear bombs, which could be used in a military situation. Truman's military advisers strongly advised him to

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permit the use of nuclear bombs against civilian targets in Japan, and predicted that this would spell a quick end to the war in the Pacific.

With Truman's approval, Hiroshima was bombed on Aug. 6, 1945, and Nagasaki three days later. The Hiroshima bomb caused the death of some 200,000 out of a population of 350,000. The Nagasaki death roll was 140,000 out of a total population of 270,000. Japan surrendered on Aug. 15, 1945. To that extent, Truman's military advisers were right.

In the immediate post-war period, the Soviet Union became a major nuclear power, in direct competition with the U.S. France and the U.K. also developed nuclear arsenals, and the People's Republic of China joined the nuclear club a little later. In Western democracies, however, many leaders demanded an end to the reign of the "balance of terror", and the reversal of the nuclear arms race. Atmospheric testing of nuclear weapons produced dangerous radioactive fall-out, often on neighbouring countries. Canada was one of the main sufferers from the testing of nuclear weapons by the U.S.. The movement for a total ban on testing of nuclear weapons was taken up in India by a group led by C.Rajagopalachari. In the summer of 1962, he and his group were received by Khrushchev in Moscow and by Kennedy in Washington D.C. They also called on Secretary-General U Thant at the U.N. headquarters in New York. All this propaganda against nuclear testing led to the formulation of the Partial Test Ban Treaty, which was signed in Moscow in August 1963 by the U.S., the USSR and the U.K. The main provision of the Treaty was a total ban on any nuclear testing in the atmosphere, or in the marine environment. Only underground testing was permitted. France and China declined to sign the Treaty, and in fact continued with atmospheric testing. In the case of France, the tests were conducted over the French pacific, and led to action against France by New Zealand at the International Court of Justice. China's test was conducted over its own territory. Even so, the protests against these atmospheric tests were so vocal and widespread that neither France nor China conducted any more tests in the atmosphere.

One development in the latter half of the 1962 is also noteworthy. For some time, the USSR was clandestinely shipping Intermediate Range Ballistic Missiles (IRBM) and nuclear warheads to its satellite, Castro's Cuba. In October 1962, U.S. reconnaissance planes discovered the launching sites in Cuba; it was also found that Soviet ships carrying additional nuclear weaponry were on the high seas, bound for Cuba. The situation came to a head on Wednesday October 24, 1962, United Nations Day. There was an emergency meeting of the Security Council to consider the situation, since the U.S. had ordered a naval blockade of Cuba, to prevent Soviet ships from bringing in more nuclear hardware. The next

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day, U Thant addressed personal appeals to Chairman Khrushchev and President Kennedy. Khrushchev was urged to recall the Soviet ships "en route" to Cuba and Kennedy was requested to lift the naval blockade. This action by U Thant for which enough credit has not been accorded to him, averted the "eye ball to eye ball" confrontation of the super powers. Both leaders responded positively to U Thant's appeal. The situation continued to be tense for the next three days, but by Sunday October 28, the Soviet ships were seen to be heading back to Russia, and the military alert on the U.S. side was called off.

Between 1963 and 1968, there was a lot of discussion and paper work in the various disarmament groups of the U.N., and also in bilateral discussions between the two superpowers. In the final result, the text of a Nuclear Non-Proliferation Treaty (NPT) was agreed upon, and placed before a special session of the General Assembly of the U.N.. On June 12, 1968, the Assembly commended the Treaty by an overwhelming vote. It was open for signature on July 1, and signed on the first day itself by the U.S., the USSR, the U.K. and more than 50 other countries. By December 1968, 137 States had become parties to the Treaty. Notable non-signatories were China, France, India, Israel, Pakistan and South Africa. The main stated purpose of the NPT was to prevent the horizontal proliferation of nuclear weapons to non-nuclear States; in other words, to preserve the nuclear monopoly of the five nuclear powers. India had consistently objected to this aspect of the NPT.

So far as the nuclear states were concerned, the NPT imposed an obligation on them to halt, and reverse, the vertical proliferation of nuclear weapons. The two superpowers began the exercise which is called Strategic Arms Limitation Talks (SALT) under President Reagan. They also signed the Anti-Ballistic Missiles System (ABM) Treaty, which provides that each side should limit the ABM installations to two, and no more than two sites: one would be for the defence of the nation's capital, and the other for protection of a launching area for Inter-Continental Ballistic Missiles (ICBM). As a result of SALT I and II and START, it has been estimated that the total stockpile of nuclear war-heads in the arsenals of the five nuclear weapons states has been brought down from over 50,000 in 1993 to 36,000 in 1997 - a large enough figure by any reckoning.

The latest essay in the movement towards denuclearisation is the Comprehensive Test Ban Treaty. Even in regard to underground testing, which is permitted under the Partial Teat Ban Treaty of 1963, CTBT prohibits explosive tests that allow fission chain reaction to proceed without hindrance to the release of nuclear energy: this is called the zero-yield barrier. The ban does not rule out what are known as sub-critical

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experiments, but does extend to what are called "hydro-nuclear tests". In layman's language the CTBT prohibits any nuclear weapon test explosion, or any other nuclear explosion, (except those that fall below the "zero barrier")

India and Pakistan have been under great pressure from the U.S. to sign the CTBT without conditions or reservations, since their signature is essential for the "entry into force" of the provisions of the CTBT. This pressure has greatly increased subsequent to the two underground Pokhran tests by India in May 1998, inevitably followed by the tests in Chagai by Pakistan.

In the view of, Mr.C.N. Narasimhan (former Under Secretary General of the UN.), on both economic and political grounds, a good case can be made for India becoming a party to the CTBT, on condition that our neighbour Pakistan does likewise. We are still far from reaching the status of a nuclear-weapons state. To get to that stage, it has been estimated by C.Rammanohar Reddy that the several steps involved would entail an expenditure of not less than Rs.28,000 crores. Apart from the cost aspect, our subscribing to CTBT would help to prevent a nuclear arms race with Pakistan and alleviate the fears of our other neighbour, China with regard to our intentions. Most important, it would help us considerably in our relations with the U.S., not only in terms of the removal of sanctions imposed by the U.S. after Pokhran, but also the value of U.S. political support in coming down heavily on the Prime Minister of Pakistan to get off the Kargil adventure. Similar situations may arise in the future, in our relations with both our neighbours, Pakistan and China. The Indian government would be well advised to keep in mind the value of this goodwill factor in future decisions to participate in the CTBT regime and, as a corollary, the Fissile Material Cut Off Treaty (FCMT).

Nuclear disarmament treaties

Disarmament and arms control have become significant issues in international relations in the present day world. After the II World War, they have become important determinants of international peace and stability. Conceptually disarmament is different from arms control.

Disarmament means the limitation or abolition of armaments. It could be unilateral or multilateral, general or local, total or partial. It does not refer to the control of prospective weapons. Example of general disarmament - Washington Treaty

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for the Limitation of Naval Armaments. There is also a difference between qualitative and quantitative disarmament. Qualitative refers to limitation or prohibition of certain types of weapons (example: SALT - Strategic Arms Limitation Treaty,

START - Strategic Arms Reduction Talks) and quantitative refers to the control of weapons of all categories (example: World Disarmament Conference - 1932)

Disarmament attempts to reduce or eliminate armaments, where as arms control aims at regulating the armaments race for achieving military stability. Arms control suggests imposition of restrictions on the use of existing arms.

The World War II revolutionised the weapons system and modern warfare. Science and technology, politics and history got inextricably linked with one another. The conclusive political and scientific environment enabled the United States to utilise the power of atomic fission for military purpose during the II World War. If the concept of power and security is accepted as the key issue of international relations, the acquisition of atomic weapons seems to be a sure way of gaining and maximising power and security for states.

By 1945, U.S.A. was the first country to produce and use atomic weapons. By 1949, the Soviet Union also became a nuclear power. Consequently the United Kingdom in 1953 and France in 1960 gained the status of nuclear weapon states. By 1984 China exploded her nuclear devise. India also began to acquire and develops nuclear technology for developmental purposes. In 1974 India joined the nuclear club by exploding an atomic device.

The superpowers, along with U.N. had begun to emphasise the need for disarmament as early as in 1950's itself. But the superpowers who were in favour of disarmament at several international and bilateral forums, continued to improve the quality of the atomic weapons. Hence even developing countries are drawn into this race of acquiring arms and technologically advanced weapons. Moreover the acquisition of weapons has also led in certain countries to the strengthening of army in domestic politics. Acquiring more arms leads to overrule by military. Pakistan, Iran and Argentina are examples of such cases.

Technological progress has improved the quality of weapons to a high degree of sophistication and to higher destructive capability. Ballistic missiles and satellite technology have resulted in better targeting,

hit accuracy and kill-effectiveness. The advances in computer technology and its applications have generated the probability of war occurring through technical error or by accident. The arms race has led to an enormous increase in the number of conventional weapons and an improvement in quality.

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History of Disarmament

Western powers and Russia made many proposals to reduce armaments during the nineteenth century, but not much has been reached. The only successful disarmament agreement reached during the last century was the Rush-Bagot Agreement of 1817 by which the U.S.A. and U.K. agreed to demilitarize the Canadian American frontier.

Hague conferences (1899 and 1907). The first international conference on disarmament was held at The Hague in 1899. No substantial result was obtained at this conference. Two resolutions asking the 26 participating states to cut down their military expenditures were adopted. The second conference in 1907 was less successful than its predecessor and the outbreak of World War I, shows only the failure of the conference.

The emergence of League of Nations changed the scope of disarmament talks. During the League era, some territories such as the Rhineland and Danzig were completely demilitarised, conferences were sponsored and studies were conducted on disarmament. As a result of Versailles Treaties, severe strictures were placed upon Germany's rearmament, authorising Allied powers to monitor the international behaviour of Germany.

Washington naval conference 1922. The first post war effort to limit the arms race took place outside the League of Nations. The treaty signed at Washington Naval Conference in 1922, on the initiative of the U.S., limited the size of warship, restricted the construction of battleships and aircrafts for ten years. By a ratio agreement, the treaty also imposed limitations on the naval bases in the Pacific.

World disarmament conference 1932. World disarmament conference 1932 held at Geneva, under the League auspices failed to produce any major agreement. Each major European nation submitted proposals taking care to leave its own political objectives unaffected. Agreements were only along general lines, such as denunciation of the use of chemical and biological weapons, the need to reduce military budget and the like.

The only positive contribution that the League made to disarmament over a period of 20 years, is that is kept the issue alive.

U.N. and disarmament. The anxiety of the new states (which had gained political independence with the end of II World War) and the apprehension of the superpowers (the cold war between the superpowers and the division of the world into rival political and military blocks) about the arms race made disarmament a crucial issue in international relations in the U.N. era.

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The very first session of the U.N. General Assembly in 1946 established a U.N. Atomic Energy Commission (UNAEC). The immediate task of the commission was to make specific proposals for the elimination of atomic weapons and all other major weapons of mass destruction from the national arsenals. The Commission, however, concentrated entirely on nuclear weapons only.

On 14th July 1946, U.S.A.'s government published a plan for the control of atomic energy. This plan known as the Baruch Plan, provided for the creation of an International Atomic Development Authority (IADA).

A few days after the Baruch Plan, the then Soviet Foreign Affairs minister, Anderi Gromyko presented a counter plan to the U.S. Atomic Energy Commission. The plan in all its aspects was diametrically opposed to the Baruch Plan.

From the proposals and counter proposals of the two plan it can be easily judged that each superpower proposed its plan in such a way as not to endanger its own existing military superiority or potential superiority over the other, and attained nothing concrete regarding the control of either nuclear or conventional weapons.

Disarmament commission. It was established by the U.N. General Assembly in Jan. 1952. It was directed to draft a treaty for the regulation and balanced limitation of armed force and all armaments adequate for defence and to prohibit atomic weapons. After the rejection of the Commission by the Soviet Union in 1952, the Western block proposed several disarmament plans.

The 'Open Skies' plan. In 1955, President Eisenhower, of the U.S.. proposed 'Open skies' plan in order to reduce the threat of surprise attack. According to this plan, the two major nuclear powers would permit unrestricted survey of each other's territory and would exchange blueprints of military establishments. Ultimately Soviet Union rejected the plan on the grounds that it omitted any mention of the necessity for reduction of armaments and prohibition of atomic weapons.

Demiliterisation of the Antarctic. The first successful agreement of a limited value was the demiliterisation of Antarctic. Signed in Dec. 1956, by the superpowers and 13 other countries, the Treaty prohibited any measures of military nature like the establishment of military bases, carrying out of military manoeuvres as well as testing of any type of weapon, in the Antarctic area.

The eighteen-nation disarmament committee (ENDC). It was established by the U.N. General Assembly. It also included India and was largely a product of the initiative taken by Non-aligned countries. Its

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position was weakened since France refused to participate on the ground that disarmament negotiations must be limited to the four nuclear powers only.

The partial test ban treaty. The initiative to ban nuclear tests was first taken by Jawaharlal Nehru at the U.N. in 1954. In 1958, the Soviet Union, U.S.A. and the U.K. agreed to appoint a group of experts called the Geneva Expert Conference on Nuclear Tests. After protracted negotiations for over four years, a partial test ban treaty was signed at Moscow in August 1963.

The treaty is rightly called the partial test ban treaty for two reasons. Firstly it does not prohibit underground nuclear tests, due to inadequate scientific knowledge to detect underground nuclear test accurately. Even after the achievement of sufficient scientific progress in accurate detection, the Treaty has failed to bring such tests under its purview.

Secondly, though over a hundred nations subscribed to the treaty, two nuclear powers, France and China refused to sign it, and both have conducted atmospheric nuclear tests since the Treaty came into force on 1963.

The hot-line agreement. To avoid the possibility of a nuclear war by mistake or miscalculation, both the superpowers in 1963 signed the 'hotline' agreement, where by both established a tele type communications link between the capitals of the two countries for urgent consultations to avoid military confrontations.

The outer space agreement. With the launching of the earth satellite in 1957, it was feared that satellite stations might exploit the outer space for military purposes. On the U.N. initiative the superpowers accepted a resolution passed unanimously by the General Assembly on the peaceful uses of the outer space. The resolution 'internationalised' outer space. The U.N. resolution also called for the exchange of scientific information on space programmes.

Nuclear non-proliferation treaty. Dissemination means the spread of nuclear weapons from one country to another whereas proliferation includes the manufacture of such weapons by both the existing and potential nuclear powers. The non-aligned countries led by India made great efforts to stop dissemination and the consequent danger of proliferation of nuclear weapons. In 1964, India proposed a special agenda item 'Non-proliferation of Nuclear Weapons' in the U.N. General Assembly. In 1965, the superpowers also submitted draft treaties. After about three years of negotiations, the Nuclear Non-proliferation Treaty (NPT) was

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voted by the General assembly in June 1968.

Among the many countries that did not sign NPT are India, France, Brazil, Argentina and China.

They refused to sign due to the reasons that (i) the NPT monopolises the right of the existing nuclear countries to manufacture weapons and possess them, while the non-nuclear countries not only cannot manufacture and possess the nuclear weapons, but cannot even obtain nuclear knowledge for peaceful purposes. (ii) Only the non-nuclear countries should submit themselves to the verification and controls of the IAEA, and the nuclear countries were under no such obligation. (iii) Only the nuclear countries are free to transfer to each other the know how of nuclear technology, but the non-nuclear countries are not allowed to do any such transfer and exchange of knowledge and weapons.

With its discriminatory character, the NPT turned out to be only a very limited disarmament measure.

SALT negotiations. The negotiations between the superpowers to limit the strategic arms came to be known as SALT (Strategic Arms Limitation Talks). Strategic weapons in military language are understood as those weapons with which the superpowers can directly hit each other's homelands.

SALT'S objective is to maintain a strategic nuclear parity between the superpowers, which even after suffering a nuclear attack would leave the victim with enough force to counter-attack the offender. The points in appreciation of SALT is that it limits nuclear arms production to a particular level and even obliges each superpower to destroy some existing weapons.

SALT-I. The first SALT agreement was reached between Nixon and Brezhnev in 1972. Under the treaty also known as the ABM treaty, it was agreed that both the signatories should limit the ABM installations to two sites. One ABM system for the defence of each nations capital and another installation for the defence of a launching area for intercontinental ballistic missiles. (ICBM)

SALT H. At Valivostock, in 1974, the second phase of SALT negotiations was formally opened by the Ford-Brezhnev meeting. After five years of negotiations, the SALT II agreement was signed at the Carter-Brezhnev meeting in 1979 in Vienna.

A notable feature of the SALT II treaty was that, the treaty obliged a country to destroy a portion of its weapons. But its implementation was affected by Soviet involvement in Angola and Ethiopia, their role in the Iranian crisis concerning American hostages and Soviet involvement in Afghanistan. American President Carter withdrew the treaty from Senate

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since he was sure about the absence of 2/3rds majority needed for ratification. Subsequently President Reagan announced willingness to observe the terms of the treaty depending upon Soviet willingness to do so, General Secretary Leonid Brezhnev of Soviet Union made a similar statement and the treaty was implemented unofficially.

Threshold test ban treaty. President Nixon and Secretary Brezhnev signed in 1974, the Threshold Test Ban Treaty prohibiting all tests, including underground, with a yield of 150 kilotons. However, President Carter did not seek senatorial ratification for this treaty.

Intermediate range nuclear forces agreement. This agreement was signed between the superpowers in 1987, which provided for the elimination of all intermediate range land-based nuclear weapons, that is, 500 - 5500 Km range, held by the two countries. By 1991 the treaty was more or less implemented by the signatories.

Nuclear safety and the environment : The accident at the Chernobyl nuclear power plant in the Soviet Union on 25 - 26 April 1986 brought to the attention of the world community, the serious flaws existing in the rules of international law concerning nuclear safety and the environment. Already due to the "Three Mile Island" accident in the United States, there were discussions about the implications of such accidents in the world environment.

The Chernobyl accident led to a special session of the General Conference of the International Atomic Energy Agency (IAEA) in Vienna, where two previously unheralded historic conventions were adopted on September 26, 1986, namely (i) the Convention on Early Notification of a Nuclear Accident or Radiological Emergency entered into force on October 27, 1986, (ii) the Convention on Assistance in the Event of a Nuclear Accident or Radiological Emergency (entered into force on February 26, 1987)

Earlier, there had been concluded a Convention of 1979 on the Physical Protection of Nuclear Material adopted as a result of one of the recommendations at the first Review Conference on the Nuclear Non-Proliferation Treaty of 1986 (NPT); this «onvention entered into force on February 26, 1987. It binds parties to take measures to deter the defeat deliberate acts such as theft, sabotage or removal and use of nuclear materials, whether in transit, storage or otherwise.

In the area of nuclear safety, the 14 Pacific States signed the Treaty of August 6, 1.985, establishing a South Pacific Nuclear Free Zone.

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The problem of removal of nuclear waste is almost insoluble, for any disposal would to some extent or the other affect the environment, marine or otherwise, selected as the final site for such wastes.

Certain issues in arms control measures. There exist certain limitations in the implementation of control measures acceded to. (i) what means and mechanisms should be adopted to ensure that the agreement on disarmament is not violated by the signatories, (ii) what should be the nature, powers and composition of such a controlling agency, (iii) when should such an agency verify or inspect treaty violations, as a continuous preventive measure - ante facto, or when reasonable suspicion is aroused - expost facto, (iv) what should be the method of such inspection, (v) if violation of treaty is established, what punitive action should be taken.

There has hardly been any unanimity of opinion between the countries involved in disarmament talks. International atomic energy agency is the only international agency today endowed with verification power. Inspite of lack of any consensus between the superpowers on the question of verification, through satellites, radars, acoustic devices such as sonars, marine surveillance, analysis of telecommunication, signal frequencies etc., it has become possible to detect production and deployment of weapons.

Even the IAEA as the controlling agency of NPT has done nothing against the NPT defaulters, due to lack of powers. Thus there has been only slow and limited progress in the field of disarmament. But the nuclear arms race runs unabated between the superpowers. To hope for meaningful agreements, disarmament negotiations must be separated from power politics and peace for all must be the overall goal.

Current status of India on nuclear disarmament

India's nuclear policy remains firmly committed to, both in global disarmament and in the exercise of the principle of equal and legitimate security for all.

In January 1993, India along with more than 60 nations, including the five permanent members of the Security Council, signed the Paris Convention, which prohibits the use and elimination of chemical weapons within 15 years

In the words of our Prime Minister, Mr. Vajpayee, "India is now a nuclear weapon state. But, India's bomb will never be a weapon of aggression".

India cannot accept a semi-colonial and inferior status as a nation whose prescriptions are determined for it by others.

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The Government of India ruled out on May 9, 2000 the possibility of giving up the nuclear weapons programme and joining the Nuclear Non-Proliferation Treaty (NPT). The External Affairs Minister Mr.Jaswant Singh has declared at the Parliament that "the NPT community needs to understand that India cannot join the NPT as a non-nuclear weapon state". This has been in response to the five NPT nuclear weapon states having insisted at the Sixth Review Meet of the states which are party to the NPT, at the United Nations in New York, that they will not accept India as a nuclear weapon state under the treaty.

The Minister said that it was legal fiction to pretent that India was not a nuclear weapons state under the NPT rule; he also added that, India was in better compliance with the obligations of nuclear weapon states under the NPT. The principal obligation of the nuclear weapon states under the NPT is to avoid assisting other countries from making nuclear weapons. In claiming that India's record on this front as "impeccable", Mr.Singh was indirectly criticising China and the West for assisting the clandestine nuclear weapon programme of Pakistan. On the special obligation of nuclear weapon states under article VI of the NPT to work for effective nuclear disarmament, Mr. Singh said "India today is the only nuclear weapon state that remains committed to commencing negotiations for a Nuclear Weapon Convention in order to bring about a nuclear-weapon-free-world. Mr.Singh pointed out India was ready to support nuclear weapon-free zones in other regions, and was willing to give unconditional assurances that would not be the first to use nuclear weapons."

India and NPT: 'Discrimination' is what is felt by India regarding the NPT. It feels the NPT to be both unjust and ineffective. India, in fact, was among those few countries that had called for negotiation of a non-proliferation treaty in the mid 1960's, being deeply concerned by the first Chinese nuclear test in October 1964. But the NPT that came out of those negotiations left India stranded. It neither met India's security concerns nor provided a framework to effectively manage the threat of nuclear proliferation.

Much has changed and now there is a new political legitimacy to the NPT as more and more states have joined up. Only four countries, Cuba, India, Pakistan and Israel are holding out. Near universal membership does not mean that the treaty has stopped being discriminatory or that the member states are no longer unhappy at the way it is being implemented.

At the NPT Review Meet, the nuclear weapon states have issued a statement that they will not recognise India as a nuclear weapon state, despite its nuclear tests.

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Arab world in its demand to enforce universal membership of NPT is targeting against Israel, which has nuclear weapons. Although motivated by regional concerns, there is no question that India gets trapped in the Arab-Israeli nuclear wrangle.

There may be two ways in which to admit India into the NPT as a nuclear weapon state. One is to amend the Treaty and acknowledge India as a nuclear weapon state. But the procedures for amendment are extremely complex. The other is to add a protocol to the NPT recognising the reality of India as a nuclear weapon power, and at this stage there is no real political support to expand the Treaty to include India as a nuclear weapon power.

The practical reality is that India is in possession of nuclear weapons and will not give them up unilaterally. India is trying to engage the major powers to politically accept the fact that India will build and maintain a credible minimum deterrent, so long as other nations maintain them.

The n-proliferation: In 1945 when atomic bombs were dropped on Hiroshima and Nagasaki in Japan, the world had less than 10 such bombs, all with the U.S. In the eighties the total number of nuclear weapons was about 70,000 mostly with the U.S. and the erstwhile USSR. In some 35 years, there was a 7000-fold increase in the global nuclear destructive capability. No other human activity has seen such a massive buildup in so short a time.

The arms build up may have involved only conventional weaponry. The countries, which supplied most of the conventional weapons worldwide in the last five decades, are the U.S., the erstwhile USSR, France, Britain, Germany, China and Sweden. The U.S., the USSR and China provided soft loans and grants for some of these supplies. It is well known in nuclear circles that China has given substantial help to Pakistan in its quest for getting the nuclear bomb. Similarly the high priest of non-proliferation, U.S. aided Israel in acquiring nuclear weapons. France helped to build Israel's plutonium producing reactor, outside of international controls, many years ago. Even earlier, the former Soviet Union gave China blueprints of a plant to produce weapons-grade enriched uranium, apart from supplying a whole range of facilities for nuclear research and development. The Libyans were keen on getting from India sensitive nuclear technologies and offered substantial sums of money. India however refused the offer.

The U.S. and the erstwhile USSR were primarily responsible for the unprecedented proliferation of nuclear weapons.

India and CTBT: Of the 187 parties to the Nuclear Non Proliferation Treaty (NPT) 182 do not have nuclear weapons, five do. Having

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possession of nuclear weapons India knows that approval cannot be achieved by accession to the NPT as a nuclear weapons state, because most countries would not stand for it. India's hope seems to be that it Will be recognised as a weapon state in other ways, such as being a party to the Comprehensive Test Ban Treaty (CTBT) that will engage in new weapons design through American-style stockpile stewardship, and by acquiring nuclear technology from members of the Nuclear Suppliers Group, who have heretofore restricted exports to India.

The CTBT could be a sound instrument for disarmament, since it bans all nuclear explosions. Its disarmament goal is being vitiated by non-treaty factors. One of the principal problems is the flagship enterprise of the U.S. stockpile stewardship programmes namely, a huge laser-drive device, called the National Ignition Facility (NIF), designed to create laboratory thermonuclear explosions. These explosions, which are intended to reach ten or more pounds of TNT equivalent, would be illegal under the CTBT, according to the analysis done in the institute. Planning for them is also prohibited under Article I of the CTBT. Interestingly the U.S. Department of Energy (DOE) has so far failed to respond to a letter from the U.S. Senator from Iowa, Mr.Harkin, even though the DOE states that smaller fission explosions (four pounds TNT equivalent) are banned.

France is similarly violating the CTBT, since it is building a device of the same type and size as NIF near Bordeaux. Britain is cooperating with the U.S. in the NIF program and such collaboration is also prohibited by Article I. The French and British actions are all the more questionable, since both countries have ratified the CTBT.

Further, the U.S. is developing new low-yield nuclear weapons, and may develop pure fusion weapons, the latter by using NIF as a scientific proving ground (though not for detailed weapon design). Pure fusion weapons would have essentially no radioactive fallout. It may be undertaking these activities with one eye on the World Court opinion, which found that nuclear weapons are illegal, in part because they

cause indiscriminate damage. This path of seeking to legitimise nuclear weapons increases the chances of nuclear war.

The nuclear weapons powers, notably the U.S., were converting the CTBT into an instrument of non-proliferation to the exclusion of the long-cherished goal of disarmament.

India should sign the CTBT, with the announcement that it intends, as a signatory, to ensure that it will be an instrument of disarmament. And seek an end to design of new weapons by all nuclear weapon states, as well as clarification of Article I to ensure that laboratory thermonuclear

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explosions are explicitly banned. India could invite Pakistan to sign the CTBT and to join it in this effort. It could also enlist the support of the vast majority of other signatories, possibly including Russia and China, to make the CTBT a true disarmament treaty.

CTBT plus FCMT does not equal NPT. NPT requires states other than those who tested nuclear weapons prior to 1968 to forswear the acquisition of such weapons and to refrain from helping others to acquire them.

The CTBT bans only explosive testing of nuclear weapons. The Fissile Material Cut-off Treaty deals with production fissile materials. FCMT should deal with future, not past production or current stockpiles.

Therefore, a state can subscribe both to CTBT and the kind of FMCT envisaged, without giving up the ability to possess nuclear weapons and to have a credible deterrent.

Acknowledging India's sovereign right to choose nuclear security, the U.S. Deputy Secretary of State, Mr.Strobe Talbottt suggested India could subscribe to the CTBT "without giving up the ability to possess nuclear weapons and have a credible deterrent" and added that India would be free to conduct the so-called 'sub-critical' nuclear tests after joining the CTBT.

The CTBT did not come into force on September 24, 1999, as stipulated originally by its signatories in 1996. Out of the five nuclear weapon states, only two - Britain and France - ratified it. The other three - the U.S., China and Russia - did not ratify it. Out of the 154 signatories, only 47 countries have so far ratified it. India decided not to attend the CTBT Review Conference (October 6-8,1999) held in Vienna.

The main concerns which force India to stay away from it are, first of all the CTBT is not an independent treaty. It has a symbiotic relationship with the NPT, concluded in 1970, which created two classes of states -recognised nuclear weapon states (NWS) which have the right to process and improve nuclear weapons, and non nuclear weapon states (NNW), which do not have such rights.

In effect, the NPT created a framework for the permanent domination of the NWS over the NNWS. India did not sign it because of its basically discriminatory character. The implication for India was that on the one hand the NPT legitimised China as an NWS, on the other it sought to prevent India from becoming a NWS. That was inimical to India's security. The indefinite extension of the NPT in May 1995 indicated that the five NWS were keen to keep their nuclear weapons monopoly in perpetuity.

Article VI of the NPT made it incumbent on the nuclear weapon states to negotiate a treaty for general and complete nuclear disarmament.

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Instead of proceeding on those lines, the NWS chose the path of developing and adding more and more advanced nuclear weapons to their arsenals. When they assembled to sign the CTBT in 1996, they already possessed about 35,000 nuclear weapons - Russia 22,500, the U.S. 12,070, France 500, China 450 and Britain 380.

In addition, these five countries, by 1996, had already conducted 2,047 nuclear tests - the U.S. 1032, Russia 715, France 210, and Britain and China 45 each. France and China continued their nuclear tests right up to the signing of the CTBT. It indicated that none of the NWS had any inclination to give up their nuclear weapons.

India was forced to adopt a more pragmatic approach, keeping in view the country's future position in world politics, its long-term security interests and maintenance of equity in international relations.

India's security environment underwent a sea change after China conducted nuclear tests in 1946 and acquired the nuclear weapon state status and moved to become hegemonic. That is a situation, which, India has reasons to be concerned about.

For India, China is not just like any other neighbour. Way back in 1950 Sardar Patel assessed China as a "potential enemy". In 1962, China fought a border war with India and occupied about 90,000 sq.km of Indian territory. Dispute over occupation continues even today.

When China committed aggression on India in 1962, it was neither a nuclear weapon state, nor a permanent member of the U.N. Security Council - positions that it acquired subsequently. Secondly, since the Chinese aggression of 1962 took place when the cold war was at its peak, Britain and the U.S. could instantly come forward to support India against China, as they perceived aggression as an instance of communist expansionism in Asia. But in the post-cold war period, the U.S.-U.K. policies toward China have undergone a tremendous change, because of their spirited drive for the Chinese market. Therefore, it is unrealistic to expect them to come to India's aid instantly, should a similar situation arise in the future.

In order to underplay the Chinese dimension to India's nuclear weapons policy, some analyst have portrayed that India's policy is directed against Pakistan. Many Western analyst prefer to see the Indian nuclear weapons policy as a tale of two countries of the Indian subcontinent. But, many now realise that the policy is not essentially Pakistan-oriented. Ofcourse, India has taken note of Pakistan's nuclear and missile programme and the active assistance Islamabad has received from China for these programmes. Yet, it is not India's prime concern for two

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reasons; first, the programme's indigenous content is negligible; and secondly, Pakistan does not have the potential to sustain these programmes.

One way of looking at India's drive for nuclear weapon is its threat perception and national security interests. Though this approach is partially correct, it does not give the full picture.

The reasons for India's drive for nuclear weapons are much more fundamental than what are apparently seen in the context of security considerations. Essentially it is tied up with India's vision of its own place in the emerging global scenario in the new millennium.

India is a potential great power in the new millennium. And, it is fast acquiring the characteristics. Indeed, India's decision to go in for nuclear weapons is the manifestation of a fast growing nation. It is also an assertion of India's right to be on the top table, along with the other major powers, to deal with global issues.

In the global power hierarchy today, the nuclear weapons status is a critical consideration. With its nuclear power position, its missiles capability, its fairly modern defence forces, the growing economic strength and scientific and technological capabilities, India is poised to become a powerful actor in world politics in the new millennium.

As per Professor B. Vivekanandan, what is the likely global scenario in the new millennium, which India has to bear in mind in charting its course for future, is that, probably, the emergence of an effective multipolar international power structure, with five power centres trying to maintain the equilibrium in world politics - the U.S., Russia, European Union, China and India. In this group of nations, all except India, have acquired recognised position and the necessary military, including nuclear, power. India's approach to the CTBT has to be formulated in the context of these considerations.

In favour of signing the CTBT: At this juncture, when India is gaining consensus on signing the CTBT, it is necessary to dispel the misapprehensions prevailing on the issue and point out what the country is likely to gain and lose by signing the Treaty.

CTBT unlike NPT is not discriminatory. Its provisions will not subject India's nuclear facilities to a more rigorous verification than those of the recognised nuclear weapon states.

The case of signing the CTBT must be considered on its own merits. And the most important consideration is whether signing the CTBT will come in the way of the development of India's minimum nuclear deterrent.

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Firstly, Indian scientists have said that after the Pokhran-II tests they have enough data and the capacity to conduct non-explosive experiments in laboratories as well as sub-critical tests to fabricate nuclear devices to fit the delivery vehicles at India's disposal. It is worth recalling that India has unilaterally applied a moratorium on further testing, as have other powers possessing nuclear weapons. So even without signing the CTBT, India will find it extremely difficult to carry out further nuclear tests.

Secondly, signing the CTBT would help India rejoin the mainstream of the international dialogue particularly on nuclear disarmament and non-proliferation, from which it has been isolated since the Pokhran-II tests. India can consolidate the understanding it is on the verge of reaching with the U.S. on factoring the post Pokhran-II reality into the management of the nuclear order. Full and final recognition of India's nuclear status will come only after India has fully developed its minimum nuclear deterrent and has the economic clout to sustain it.

Thirdly, signing the CTBT will go towards consolidating the new understanding that the U.S. and its allies have come to display of India's problem of cross-border terrorism in Jammu and Kashmir.

Finally, India's signature on the CTBT will result in the removal of most of the economic sanctions against India, particularly by the U.S. and Japan, this though not critical would be helpful to India's economic well being.

Hence, India can now sign the CTBT and ratify it after making sure that all the 44 countries named in the Treaty have either ratified it or going to do so, particularly ensure ratification by China, Pakistan and the U.S.

After signing before ratification, the Treaty should be reviewed thoroughly and be subjected to public and parliamentary debate. For example, India signed the Convention on the Transit of land locked countries after it was negotiated in 1965.But it did not ratify it until the beginning of the 1970s.

Before signing the Treaty, India should, like the U.S. and other nuclear weapon powers, also publicly clarify that if non-explosive tests do not prove sufficient to ensure the dependability of its minimum deterrent, it will withdraw from the Treaty under the 'supreme national interests' clause.

So it is better to sign the CTBT, and proceed to concentrate on building a military and economically stronger India. For this a conducive international environment is needed, which can be hoped for by signing the CTBT.

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Russia's recent stand on CTBT: As on April 18, 2000, Russia was poised to ratify the CTBT, which was rejected by the U.S. Congress last year. The Defence Committee of the State Duma, Russian Parliament Lower House, recommended CTBT for ratification, in close session to its ratification of START-II nuclear arms reduction treaty.

Ratification of START-II has put the ball in U.S. court and calls for slashing the nuclear stockpiles of Russia and the U.S. from the level of 3000-3500 warheads envisaged by START-II to 1500 warheads. It has opened the way for official talks on further reductions of the strategic arsenals of Russia and the U.S.

India should note that most Governments as well as non-governmental organisations at the NPT Review Meet 2000 have given pride of place to Russian treaty ratifications as well as to disarmament proposals of the New Agenda Coalition (Egypt, Mexico, New Zealand, South Africa, Ireland, Sweden, Brazil). India should sign the CTBT and work hard to convert it into an instrument of disarmament.

Review Meet 2000

The NPT was extended indefinitely in 1995. India called it the perpetuation of nuclear hegemony of the permanent members of Security Council who are also the major nuclear powers. India did not join the NPT on the ground that the treaty did not link disarmament and elimination to any time frame. The NPT signatories decided in 1995 that a review of the progress made by the treaty would be undertaken in April 2000.

Assessment on the eve of the Review Meet of year 2000: In 1994, the U.S. had completed its Nuclear Posture Review and had concluded that nuclear weapons are essential to its security needs. The U.S. remains committed to retaining large nuclear arsenals. It is also committed 'to first use of such weapons and the doctrines of nuclear retaliation.

The Russian Government recently made public its stand on nuclear weapons. It feels they are vital to Russia's security interests. The U.S. policies of military intervention and of the expanded role for NATO

have had much to do with it. Britain, France and China will also have nothing to do with disarmament, until the U.S. and Russia make substantial progress on reducing their nuclear weapon stockpiles.

The sanctions against India and Pakistan, which were in retaliation to their nuclear tests, have been withdrawn. Against India they were withdrawn albeit not fully, by its economic growth. Against Pakistan they were withdrawn because the sanctioning states did not wish its economic collapse. The ineffectiveness of the NPT was thus laid bare.

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The U.S. Senate has refused to ratify CTBT. The CTBT is not ratified by China either. The non-proliferation regime is therefore in a limbo and no one knows how to get it moving again. The review meet has no clear notion of what initiatives it can take to make non-proliferation and disarmament feasible.

The longstanding U.S. attitude of protecting Israeli nuclear capability in West Asia and doing deals with North Korea in East Asia are instances of the differing yardsticks applied on the subject.

The meaning of nuclear proliferation has to be made clear. Are nuclear tests the only kind of proliferation? How to treat redeployment of weapons and missiles by nuclear states? Are they also proliferation? The argument that the ABM Treaty [Anti Ballistic Missile Treaty] should be renegotiated is also a form of proliferation, due to the impetus it would give to new forms of weapons and more states going nuclear. The notion of proliferation will need to be enlarged if the NPT is to be revived.

The review meeting 24th April 2000: After a tense month of talks, the five main nuclear powers pledged "an unequivocal undertaking" to eliminate their atomic arsenals to avoid engulfing the world in nuclear war. The conference chairman Mr.Abdallah Balli of Algeria said: "Today is a great day for the cause of nuclear non-proliferation and nuclear disarmament. I declare this conference closed, thank God, for five years".

The five recognised nuclear powers - the United States, Russia, France, Britain and China - approved to reduce their arsenals during a review of the Nuclear Non-Proliferation Treaty (NPT). However, the five avoided setting any timetable to eliminate their nuclear warheads.

Under the 20-year old treaty, the cornerstone of strategic arms reduction accords, the five powers are obligated to move toward disarmament while all other signatories vow to give up atomic warheads for good. Its document committed the U.S. and Russia to implement fully the START-II treaty that would cut long-range nuclear warheads from 6,000 to 3500 on eachside. Washington and Moscow, between them are thought to have more than 30,000 strategic, tactical or stockpiled warheads.

Setback for disarmament: The momentum toward a universal nuclear nonproliferation regime, generated by the end of the Cold War more than a decade ago, has for all practical purposes been lost. Today, genuine global agreement on nuclear nonproliferation, leading ultimately and in time to nuclear disarmament, seems more distant that it ever was in the half century since the U.N. General Assembly adopted an innocuous resolution in November 1959 suggesting a similar goal. A month-long

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international conference to review nuclear nonproliferation has just concluded in New York with a declaration that is interminably long in platitudes and critically short on promise of time-bound action. The U.N.-sponsored conference in which nearly 190 members participated was again witness to the unwillingness of the nuclear powers, the U.S., Russia, China, France and England, to go beyond talks of disarmament. The n-5 repeated a meaningless pledge "to accomplish the total elimination of their formidable nuclear arsenal" but refused to accept a timetable to achieve this. In the absence of the timetable, the promise to disarm will remain hollow and lack the credibility on which the global effort needs to be founded. The failure of the conference. - the euphoric claims of the chairman can hardly conceal this - coming amid increasing signs of a return to Cold War rhetoric, confirms a dangerous slide toward insecurity and instability in international relations.

Beyond nuclear obsession

Having boldly transformed India into a nuclear weapon power, successfully reversed the Pakistani aggression across the Line of Control, and gained world respect for the restraint in the conduct of the Kargil operations, now India has to pursue economic modernisation, political reform and social advancement.

Immediately after its nuclear tests (Pokhran-II), India outlined the broad parameters of its approach to nuclear weapons. These included a restrained nuclear posture and readiness to join the global arms control regimes including the Comprehensive Test Ban Treaty. But this process of reconciliation has stalled for a variety of reasons.

This process of reconciliation with the great powers is of prime importance. For this first, time is of essence. Quick and bold decisions are now needed. Already after its first nuclear test in May 1974 it delayed in deciding whether it wants to be a nuclear power. Now again decisions cannot be delayed.

Secondly, India should adopt newer improved technologies and make crucial investments and policy decisions on the new revolution in military affairs (RMA). The dramatic advances in information and communication technologies and their application to warfare will increasingly determine the locus of military power in the coming century.

Third, nuclear power for India can only serve a limited purpose, that is, of preventing the use or threat of use of nuclear weapons by its adversaries against it.

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Fourth, even the most sophisticated and expensive nuclear weapons will not take India into the ranks of great powers. Mindless obsession will only push India into a ruinous path.

Fifth, a paranoid reading of external threats to security and an over-determination of the role of nuclear weapons in national strategy will drive India into a needless confrontation with most nations and upset India's efforts to expand its regional influence and global standing.

Finally, it is in India's strategic interest to quickly resolve the outstanding differences with the global nuclear order. It was the reluctance of India to press ahead with the nuclear tests in December 1995 that forced New Delhi into hardening its rhetoric against the CTBT and argue that the treaty stood in total opposition to India's national interests. It is time now for India to adopt a more realistic line towards international arms control treaties.

No treaty in the world can eliminate the unequal distribution of power among nation-states. India has to move beyond Pokhran-II by locating its nuclear policy in the larger context of its pressing national objectives.

It is high time that India makes clear its stand about its nuclear policy. It has to solve its differences with the superpowers on this issue. It has to understand (i) time is of great importance, hence avoid delay, be bold and decisive, (ii) India can never become a nuclear superpower, so do not have obsession for it, (iii) its hold on nuclear weapons is only to safeguard itself, (iv) technologically improved, modern weapons have to be acquired with due recognition of growing information technology in warfare, and (v) a paranoid reading of external threats have to be done away.

Hence it is time now for India to adopt a more realistic line towards international arms control treaties and make its position clear regarding (CTBT) the Comprehensive Test Ban Treaty and similar other treaties.