Topic 1 : Let Pakistan be
Introduction: As Shehbaz Sharif takes charge as the Prime Minister of Pakistan this week, the focus inevitably turns to the prospects for ending the current freeze in bilateral relations with India. However, the expectations for a new beginning must be tempered for several reasons.
Improving bilateral ties is not a priority for both countries
- For Delhi and Islamabad, bilateral engagement is a high-cost and low-reward exercise.
- In addition, the higher the ambition for a productive bilateral relationship, the greater the political costs of organising it.
- The costs are higher in Pakistan, where the new government is weak and hobbled by multiple domestic challenges.
- PM Narendra Modi, expected to begin a third term at the end of May following the general elections, is in a much better position to take risks in engaging Pakistan.
- Still, he also insists on terms of his own.
The importance of Pakistan is degraded for India
- Under Modi, Pakistan has dropped down the list of India’s foreign policy priorities.
- He has demonstrated that India can live with the freeze in bilateral relations.
- He has also helped India break free from the terms of engagement with Pakistan that were negotiated in the early 1990s when India was at one of its most vulnerable moments.
Pakistan is still fixated with India
- Pakistan continues to be obsessed with India but has tied itself in knots over bilateral relations.
- It has put pre-conditions on the engagement.
- In public, Pakistan insists that India must roll back the 2019 changes in the constitutional status of Kashmir.
- This is asking for the impossible from the Modi government.
- There might be some room for finesse here; but not too much.
Pakistan has taken a maximalist position
- In essence, any resumption of talks would need Pakistan to get off the high horse it had climbed onto in August 2019.
- In February 2021, the then Pakistan army chief, General Qamar Jawed Bajwa, when negotiating the ceasefire on the border, was signalling some flexibility on Kashmir.
- But Imran Khan had vetoed any steps towards the normalisation of relations without Indian concessions on Kashmir.
- It is unclear if General Asim Munir and PM Sharif have enough political capital to move forward with India amidst their bitter battle with the immensely popular Imran Khan.
- Any positive movement in Pakistan on relations with India would involve swallowing the bitter pill that Kashmir cannot be the main focus of engagement with India.
- In his first speech, Sharif talked about improving ties with neighbours but also referred to “freeing” the people of Kashmir.
The power gap between India and Pakistan
- India’s aggregate GDP at $3.7 trillion is now 10 times larger than Pakistan’s, struggling at barely $350 billion.
- This gap will continue to expand in the coming years.
- If success breeds success, failure tends to beget failure.
- While India celebrates its status as the fastest-growing major economy, Pakistan is brooding over its relative economic decline.
Pakistan’s economy needs systematic reforms
- In his first address after being elected as Prime Minister, Sharif underlined the need for “deep systemic surgery” in Pakistan.
- According to Sharif, the stark choice is to “get rid of the life in debt” or forever keep the head down “in shame”.
- He insisted that the new government will help Pakistan rise and stand on its own feet.
- But talk is cheap; serious economic reform is hard even in the best of circumstances.
- India, which began its reform and opening up at the turn of the 1990s, took over a decade to stabilise and grow its economy.
Whether Pakistan capable of bringing systematic reforms at this moment?
- Imran Khan’s supporters, who form the largest bloc in the National Assembly, brand the government as a “mandate thief”.
- The populist Pakistan People’s Party, one of the coalition partners, wants to dissociate itself from the pain-inducing reforms.
- Army Chief Munir is all in favour of reform.
- But the army-led deep state in Pakistan is arguably at one of its weakest moments, and questions remain about its ability to persist with reform.
- History does not offer much reassurance — Pakistan has rarely completed reform programmes negotiated with the International Monetary Fund.
- But there is always a first time, and Pakistan may get it right this time.
- There will be consequences — intended or unintended — whether Pakistan succeeds or fails in its internal reform plans.
Pakistan’s Goldilocks position in terms of geopolitics is not helping it
- In the past, external geopolitics often created enough space for Pakistan to defer and delay serious internal reform.
- Today, Pakistan finds itself in an unfavourable situation.
- Rawalpindi is struggling to navigate between China and the US — Pakistan’s two long-standing friends — now at each other’s throats.
- Its traditional friends in the Gulf — Saudi Arabia and UAE — are now best friends with India.
- Four decades of Pakistan’s investment in controlling Afghanistan has gone awry, with the US withdrawing from the country and the Taliban returning to power.
- Put starkly, Pakistan’s problems with Khorasan are a lot worse and more immediate than its historic grievances against Hindustan.
What are New Delhi’s options at this moment?
- Pakistan has headaches other than those generated by India.
- Delhi, then, has no option but to continue with a minimal engagement with Pakistan.
- What Delhi could build on, though, is a very counter-intuitive development in Pakistan — the grudging admiration for PM Modi.
- Reconnecting with the divergent social, political and economic formations of Pakistan could serve India well if and when Rawalpindi is ready to try out a positive approach to Delhi.
Conclusion: Bilateral engagement is a high-cost and low-reward exercise. The costs are higher in Pakistan, where the new government is weak and hobbled by multiple domestic challenges.
Topic 2 : Why minerals are critical?
Introduction: A mineral is critical when the risk of supply shortage and associated impact on the economy is (relatively) higher than other raw materials. Keeping their economic significance in view, the government of India is going all the way to extract or import it.
Recent developments in India regarding critical minerals
- Two important steps have been taken by the government in the past year on the subject of critical minerals.
- The first was to identify a list of 30 critical minerals (apart from rare earths, which are clearly identified in the periodic table) in July 2023,
- And the second was to amend the existing mining laws in November 2023 to allow private sector participation in the auction of 20 blocks of critical minerals/rare earths.
The criteria to define critical minerals
- Critical minerals have no particular definition and countries identify the minerals critical to them using their own criteria.
- The US has identified 50 minerals while Japan has identified 31.
- Critical minerals and rare earths should not be used interchangeably as is done very often.
- India has identified 30 critical minerals depending upon their disruption potential, substitutability, cross-cutting usage across different sectors, import reliance, recycling rates etc.
- The states/UTs which house these 30 identified critical minerals are Bihar, Gujarat, Jharkhand, Odisha, Tamil Nadu, Uttar Pradesh, Chhattisgarh and Jammu and Kashmir.
The significance of critical minerals
- Though one needs critical minerals for decarbonisation, it is not limited to just that.
- They are also required for fertilisers, construction, magnets for industries, transport, consumer electronics, defence, etc.
- As far as decarbonisation is concerned, one may note that when it comes to building a solar PV plant or a wind farm or electric vehicles, they require more minerals than their fossil fuel counterparts.
- An electric car needs six times the mineral input when compared to a conventional car and an on-shore wind plant requires nine times more mineral resources than a gas-fired plant.
- The International Energy Agency (IEA) has estimated that in order to meet the Paris Agreement targets, the share of clean energy technologies in the total demand for critical minerals over the next two decades would be over 40 per cent for copper and rare earths, 60-70 per cent for nickel and cobalt and 90 per cent for lithium.
- In general, mineral demand for clean energy technologies would rise by at least four times by 2040 to meet the climate goals.
Few countries are now fulfilling the global critical minerals demand
- These resources are concentrated in a few countries and, in the case of lithium, cobalt and rare earths, the world’s top three producing nations control well over three-fourths of global output.
- Specifically, Australia has 55 per cent of lithium reserves, China has 60 per cent of the rare earths, Democratic Republic of Congo (DRC) has 75 per cent of cobalt, Indonesia has 35 per cent of nickel, Chile has 30 per cent of copper reserves.
- When it comes to critical minerals/rare earths, China needs a special mention.
- Not only does it have a major share of rare earth reserve, it has also completely monopolised the processing capacity of these minerals.
- China processes 35 per cent of the world’s nickel, 50-70 per cent of lithium and cobalt and nearly 90 per cent of rare earths.
- Not just that, Chinese companies have made investments in Australia, Chile, Indonesia and the DRC, among others, to source those minerals which it is not endowed with sufficiently.
- China has also monopolised the manufacture of finished products as it supplies 78 per cent of cathodes, 85 per cent of anodes, 70 per cent of battery cells and 95 per cent of permanent magnets made from rare earths.
- It would be pertinent to add that the Mountain Pass Mine, a rare earth mining company based in the US, exports a major part of their output to China since they do not have processing capacity within the country.
- In the past, the US was happy to have the processing done in China since it was cheaper and because processing is very energy intensive and leads to a lot of carbon emissions.
China’s arm twisting using the supply of critical minerals
- China, incidentally, has been using its monopoly position on rare earths to settle political scores with countries like the US and Japan by restricting their exports and also the related technology.
- China’s dominant position in the business of critical minerals and its willingness to arm-twist other countries has clearly rattled the world community.
The Minerals Security Partnership (MSP)
- China’s use of critical mineral supply for its geopolitical motive has led to the formation of the US-led Minerals Security Partnership (MSP).
- India, too, has joined the MSP. The aim of the MSP is to bolster the critical minerals supply chain.
- The MSP includes countries like Australia, Canada, Sweden and Norway, which have deposits of critical minerals, and also countries like Japan and South Korea which have access to processing technology.
- It would, however, be interesting to note that the MSP does not include countries like Chile, DRC, Indonesia etc. (which are rich in certain critical minerals), raising concerns about its effectiveness.
- The basic premise of MSP is “friend shoring”, meaning moving manufacturing away from authoritarian states (read China) to allies.
Why does India need the critical minerals?
- As far as India is concerned, the availability of critical minerals (and rare earths) is crucial as it has massive plans for decarbonisation and to become net-zero by 2070.
- By 2030, India wants to set up 500 GW of non-fossil fuel power generating capacity.
- It also wants 30 per cent of private cars, 70 per cent of commercial vehicles and 80 per cent of two/three wheelers to go electric.
- All this will not be possible without a steady source of lithium and other minerals required to manufacture batteries.
- As of now, India is completely dependent on imports for most of the critical minerals.
- India has signed an agreement with Australia to jointly explore for lithium and cobalt assets in Australia.
Conclusion: The availability of critical minerals and their processing is the biggest problem for India. What we are looking at is a gestation period of about 15 years or more. There is a big fear that lack of access to critical minerals may be the biggest roadblock to India’s march towards decarbonisation.