Sunday, February 27, 2011

Political uprisings in Arab World sure to impact global economy

It goes without saying that India has inherent resilience ability. Even in the past, it has dealt well with such global and regional level challenges like the Gulf war or the more recent economic meltdown in 2008.

Today, India is held in high esteem for showing maturity in democratic functioning as well as protecting the country’s economic scene, especially the job scenario, after the economic recession.

India is today seen as a valued partner of choice by major world powers
including the likes of US, Russia and UK on one hand and even Brazil, South Africa and Japan. The successful management of the country’s democratic polity amid a hostile surrounding and the sound handling of the economy after 2008 global recession has earned it an enhanced stature.

Similar challenging phase is practically knocking the doors, and it would be befitting to India's history and pride that yet again the country can overcome the hurdles. Just as they say, when the going gets tough; it’s the tough who gets going.

There is a time-tested theory in physics that every action results in opposite and equal reaction. In geo-political and economic terms, the results for any mega event often are of much greater dimension. The wave of changes passing through the Arab world is threatening to leave such multi-dimensional impact.

The political unrest in Egypt and the subsequent political uprisings in countries like Egypt, Tunisia, Yemen, Libya and Bahrain, many fear, may alter the strategic balance in the restive region.
It is estimated that more than 1.7 million barrels a day of crude oil crosses the Suez Canal and the Suez-Mediterranean pipeline. Now, if the Suez Canal is closed completely or even, partially, oil transportation will become a difficult proposition. This could bring in bigger cause of concern for the world. It goes without saying that these developments have raised eye-brows all around as countries like the United States and even emerging influential economies like Brazil and India would soon feel the heat.
There is growing concern over the swelling budget deficit across the globe as fuel prices are subject to subsidy in several countries. Though Egypt per se has a very modest economy and oil output in global market; ever since the Egyptian crisis broke towards the end of January, the price of crude oil has been shooting up. This is just one aspect of the problem.

The fear of escalating oil price and that leaving cascading affect on the prices of other commodities would be a challenge every country will probably have to face in times to come.
There are other issues of importance too. A large number of Indian diaspora live in this region and contribute largely to the economic building in these countries. There have also been demonstrations even in Algeria, Jordan, Iraq and Morocco.

The larger Arab world comprises 22 countries and territories spread over parts of North Africa and West Asia, with a total population of 360 million. The collective gross domestic product was estimated at around 2.75 trillion US dollars.

Therefore, the focus has obviously moved to the need for taking urgent and comprehensive steps to ensure safety and security of Indian diaspora.
Accordingly, the External Affairs minister S M Krishna has already given an assurance on the matter.

Crucially, from Indian point of view another important feature that ought to be looked into is the threat to substantial economic assets in those countries. India has two oil and gas assets in Egypt. ONGC Videsh holds a 70 per cent participating interest in an offshore project in the Gulf of Suez.

Similarly, in Libya, several public and private Indian companies have made a significant presence including ONGC Videsh Limited, BHEL, Oil India, and even private sector companies like Punj Llyod and Sun Pharma.
The Government of India and public sector, private companies and business chambers are taking a closer look at the emerging challenges and are trying to get the act together to confront the disturbing situation.
Rising geo-political concerns in one of the major oil producing countries and the region has led to fears of disruption in supplies, said the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

The External Affairs minister S M Krishna has rightly said that the government has already held inter-Ministerial meetings to take stock of the situation in the region and its impact on Indian and Indian origin community in the region. Accordingly contingency plans are being worked out even as the government has put in place plans for possible evacuation by land, air and sea.

The government has also issued travel advisories Indians to avoid non-essential travel to countries like Bahrain, Yemen and Libya.
True, all these reflect challenging time unfolding. The problems ought to be dealt in totality and no piece-meal solution can be prescribed.


1 comment:

  1. The problem for India is much bigger than that you have described. Import of oils by India eat most of its resources apart from breaking the bone of the common man in making their consumable items costly. Irobny is that despite these problems recurring very regularly, India is hardly investing in alternative sources of enrgy. While Brazil is much ahead of India in Ethanol based fuel, we are nowhere and even intent seems to be missing. India is also behind China where street lights run on solar energy. At least India by now should have electrified all its Railways network, which sadly it has not done. In place of being bullish on nuclear energy, India could have laid its hands on other sources of energy whuich could have given result in short time, then dreaming of nuclear power 20 years down the line. The arabian crisis warrants India to feer itself from their resources.