THE
HINDU (LUCKNOW)-SUNDAY, MARCH 6, 2022
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Commodity crunch Will sanctions against Russia impact long- term supply of wheat,
oil, metals and other goods? PRASHANTH PERUMAL Why are commodity
prices shooting up? - The military conflict between Russia and Ukraine
has led to disruptions in the global commodity supply chain. Commodity
traders have been unwilling to purchase oil may be unable to sell them in the
global market due to sanctions imposed by Western governments. The United
States and European Union have been taking measures to debilitate Russia’s
economy by cutting Russian banks off the SWIFT payment massaging system and
freezing Russia’s foreign reserves. There are also
logistical difficulties in transporting commodities from war zones. Exports from the region have already been
affected and are likely to be further hit going forward, and this risk has
been priced in by traders. It should be noted that in 2020 Russia produced
about 12% of the world’s oil and about 16% of the world’s natural gas. It also
produced nearly half of the world’s palladium (the shiny white metal which is
a critical component in catalytic converters- a part of car’s exhaust system
that controls emissions, for example). Ukraine, on the other hand, supplies
about 12% of global wheat exports and 13% of global corn exports. In fact,
the country supplied almost 90% of China’s corn imports in 2019. Disruptions
in such significant commodity supplies can affect global commodity prices. At the same time,
suppliers in other parts of the world have failed to increase their
production to make up for the loss of output in Russia and Ukraine. The
Organisation of the Petroleum Exporting Countries (OPEC), for instance, has
made no effort to increase its output despite repeated calls by various world
leaders to ensure energy security. In fact, the OPEC meet last week was
wrapped up in minutes. Is commodity
inflation just about the Russia-Ukraine war? -No. Commodity
prices have risen significantly since at least 2021 when lockdowns were
slowly lifted by governments and economies were allowed to open up. It should
be noted that, owing to various frictions in the global economy, it took a
while for supply chains disrupted by lockdown to return to normalcy. The
supply of goods was limited and this scarcity was reflected in the form higher
prices. Some analysts have also blamed policies in several countries to
replace fossil fuels with renewable energy as a possible reason behind the
increase in commodity prices. The emphasis on renewable energy, they argue,
has discouraged investors from investing in the production of traditional
fossil fuels. Meanwhile, the pandemic also witnessed major global central
banks such as the U.S. Federal Reserve and the European Central Bank
injecting massive amounts of fresh money into their economies. This led to an
increase in the demand for all goods and services and caused their prices to
rise. In short, too much money printed by central banks chasing too few goods
has led to a rapid increase in commodity prices. Global commodity
prices, as measured by the Bloomberg Commodity Index, have risen by over 60%
since the start of 2021. Meanwhile, the price of an essential commodity like
oil has risen even more. What lies ahead? -The course of
the Russia-Ukraine war, which is unpredictable at the moment, will naturally
affect the price of commodities going forward. The hit to commodity supplies
could be greater the longer the war lasts and the uglier it gets. It should
be noted that cutting off Russia’s economy from the rest of the world can
affect not just Russia but also affect businesses and consumers that depend
on the Russian economy. Countries like Germany, for instance, rely heavily on
energy supplies coming from Russia. This could be why the West is yet to
impose sanctions on Russia’s export of crude oil and natural gas. It is not
just Russia that will suffer from the war and sanctions but also the rest of
the world. Also, as the global economy struggles to grow while prices rise
fast, analysts have warned about the risk of stagflation, which is marked by
high price inflation and low growth. |
Mission creep: on NATO expansionism Why did the North Atlantic Treaty
Organization accept former Warsaw Pact states into the alliance? NARAYAN LAKSHMAN What are the
origins of NATO and why does it matter to Russia? -The self-declared mission of NATO
when it emerged on April 4, 1949, had three prongs: “deterring Soviet
Expansionism, forbidding the revival of nationalist militarism in Europe
through a strong North American presence on the continent, and encouraging
European political integration.” Clearly the legacy of the Nazi scourge and
World War II weighed heavily on the minds of the founding members of NATO.
Although NATO claims that it is only “partially true” that its very creation
was to counter the threat from the erstwhile Soviet Union, there was a strong
emphasis on military cooperation and collective defense in its clauses. For
example, Article 5 of the Treaty proclaims that “an armed attack against one
or more of them… shall be considered an attack against them all” and that following
such an attack, each ally would take “such action as it deems necessary,
including the use of armed force” in response. The broader context at the time was
that in 1955, a time when the Cold War was gaining momentum, the Soviet Union
signed up socialist republics of Central and Eastern Europe to the Warsaw
Pact, including Albania (which withdrew in 1968), Bulgaria, Czechoslovakia,
East Germany, Hungary, Poland, and Romania. The Pact, essentially a
political-military alliance, was viewed as a direct strategic counterweight
to NARO, and its focus at the time was the fact that while East Germany was
still part of the Soviet occupied-territory of Germany, the Federal Republic
of Germany had joined NATO by May 1955, and Moscow began to worry about the
consequences of a strengthened and reamed West Germany at its border. As a
unified, multilateral, political and military alliance, the Warsaw Pact was
aimed at tying Eastern European capitals more closely to Moscow, which it
effectively did for several decades through the worst hostilities of the Cold
War. Indeed, the Pact even gave the Soviet Union the option to contain civil
uprisings and dissent across the European satellite states, including in
Hungary in 1956, Czechoslovakia in 1968, and Poland in 1980-1981. All that began to unravel by the late
1980s, when the sheer downward pressure of inevitable economic slowdown in
most Eastern European Pact allies reduced the potential for military
cooperation to make any real difference strategically across the region.
Thus, it hardly came as a surprise in September 1990 that East Germany quit
the Pact to be reunified with West Germany, and soon Czechoslovakia, Hungary,
and Poland withdraw Pact military exercises. The Pact was officially
disbanded in early 1991 after the dissolution of the Soviet Union itself. What were the
rounds of expansions carried out by NATO? -Even as the Soviet Union was dissolved into Russia and former
Soviet republics, NATP, emboldened by circumstances and optimism that the
global balance of power was tipping in its favor embarked on a path of
expansion. During the term in office of U.S. President Bill Clinton, NATO
began, in office of successive rounds of negotiation and expansion, to pull
former Warsaw Pact states into its membership. After reunification, while
Germany retained membership of NAO, the Czech Republic, Hungary, and Poland
joined the alliance in 1999. But it did not end there- in 2004, Bulgaria,
Estonia, Latvia, Lithuania, Romania, Slovakia, Slovenia joined the treaty
organization. In 2009 Albania and Croatia signed on, in 2017 Montenegro
entered the bloc and in 2020 it was North Macedonia’s turn. Why is Russia sensitive to NATO
expansion? -In 2008, in the week leading up to
NATO’s Bucharest Conference, “NATO Allies welcomed Ukraine’s and Georgia’s
Euro-Atlantic aspirations for membership and agreed that these countries will
become members of NATO.” They went on to announce a period of intensive
engagement with both countries at a high political level to address the
questions still outstanding regarding their Membership Action Plan
applications. This set off alarm bells in Kremlin,
because even the very concept of Ukraine, a nation considered to hold strong
historic ties first to the Soviet Union and then Russia, was anathema. This
development prompted Mr. Putin to warn erstwhile U.S. Undersecretary for
political affairs William Burns that “no Russian leader could stand idly by
in the face of steps toward NATO membership for Ukraine. That would be a
hostile act toward Russia.” This was only among the more recent of a long
list of actions by NATO leaders that Russia considers a political betrayal. However, it is not necessarily the
case that Russia is right to believe that-and to understand this, it is
important to grapple with the history of NATO expansion and its consequences. Did NATO violate
a promise to avoid expansion? -An oft-quoted line in this line of
enquiry is the comment by U.S. Secretary of State James A. Baker to Soviet
leader Mikhail Gorbachev in February 1990, that “there would be no extension
of NATO’s jurisdiction for forces of NATO one inch to the east.” While Moscow
seized upon his comment to fuel its ostensible outrage at NATO expansion into
the Baltic states region, it is a fact that in early 1990, the locus of the
diplomacy for the Two Plus Four- including East and West Germany plus the
United States, France, the Soviet Union, and the United Kingdom- agreement
was whether a unified Germany would be part of NATO. Indeed, Mr. Baker’s aim
in making that comment was to reassure Moscow that NATO command structures and
troops would not be transferred to the territory of the former German
Democratic Republic. Yet it was a difficult time in Russia
politics, domestically, because in the aftermath of the Soviet Union’s
dissolution, there was a failure to institutionalize democratic practices, a
stable market economy, and a robust law and order system. Facing all manner
of chaos at home, erstwhile Russian President Boris Yeltsin Began to
interpret- many argue deliberately falsely- the Two Plus Four Treaty as a ban
on NATO expansion east of Germany. He wrote to Mr. Clinton in September 1993,
that Russia ruled out “the option of expanding NATO territory eastward.” Through the 2000s, Mr. Putin carried
on in this vein, speaking with increasing alarm and anger at NATO’s steady
expansion into Eastern Europe, and saying in Munich in 2007 that “it is
obvious that NATO expansion does not have any relation with the modernization
of the alliance itself or with ensuring security in Europe. On the contrary,
it represents a serious provocation that reduces the level of mutual trust.” In 2008, following NATO announcement
of its intent to admit Georgia and Ukraine into its alliance, Russia invaded
Georgia and took control of several of its territorial regions; and in 2014,
with Ukraine drifting closer towards an economic alliance with the European
Union; Russia marched into Ukraine and seized Crimea. Why do Indians go
abroad for medical studies? What prompts students to pick
countries like Russia, Ukraine and China? Will setting up more private
colleges help? RAMYA KANNAN Which countries
do Indian students prefer? -For about three decades now, Indian
students have been heading out to Russia, China, Ukraine, Kyrgyzstan,
Kazakhstan, and the Philippines to pursue a medical degree. The medium of
education for these student is English, a language they are comfortable with,
and the amount spent on living and the medical degree are far more affordable
than paying for an MBBS seat in private medical colleges in the country. The desire to study medicine still
holds a lot of value in the Indian community. While it retains the prestige
of an honorable profession, there is a great deal of aspirational zeal in
taking up medicine. The lack of equal opportunities exacerbated by the caste
factor in the India context, has a great deal of impact on the prestige still
associated with being a doctor, says G.R. Ravindranath, of the Doctors, Association
for Social Equality. “For years, certain communities were denied the
opportunities, and finally they do have a chance at achieving significant
educational status. People still think it is good to have a ‘Dr.’ attached to
their name, even if they do not specialize. In many rural areas, people still
look at doctors as god’s incarnate.” Doesn’t India
have enough colleges? -There are certainly far more MBBS aspirants than there are MBBS
seat in India. In NEET 2021, as per a National Testing Agency press release,
16.1 lakh students registered for the exam, 15.4 lakh students appeared for
the test, and 8.7 lakh students qualified. Barati Pravin Pawar, Union
Minister of State for Health, told the Lok Sabha in December 2021, that as
per data from the National Medical Commission (NMC), in 2021-22, there were
596 medical colleges in the country with a total of 88,120 MBBS seats. While the skew is in favour of Government
colleges, it is not greatly so, with the number of private medical
institutions nearly neck-to –neck with the state-run ones. That means over
50% of the total seats are available at affordable fees in Government
colleges. Add the 50% seats in the private sector that the NMC has mandated
must charge only the government college fees. Assuming each one of these
seats is also available at this reduced fee structure that could be another
20,000 odd seats. In effect, roughly 65,000 seats are available within the
affordable fee segment. Additionally, these colleges are also
not distributed evenly across the country, with States such as Maharashtra,
Karnataka, Tamil Nadu and Kerala having many more colleges. What about costs? -The cost factor on both sides of an
MBBS degree is significant. The costs of and MBBS degree in a Government
college tot up to a few lakh of rupees for the full courses, but in a private
medical college, it can go up to 1 crore rupees for the five-year course. In
case it is a management seat, capitation fees can inflate the cost by several
lacks again. Whereas, an MBBS course at any foreign
medical university in the east and eastern Europe costs far less. Students
from Tamil Nadu who returned from Ukraine said on an average they had to
spend close to 30 lakh-40 lakh, rupees inclusive of lodging and boarding. A
majority of the students had written NEET at least twice, and only decided to
move after they could not get an MBBS seat. On return, the requirement is to
clear the Foreign Medical Graduates Examination, a licensure examination held
for students who have studied medicine abroad, and for most countries, also a
house urgency stint. Dr. Ravindranath explains that in
India the disparities in income of doctors, and others, like nurses and
allied health professionals, is also a key factor in making an MBBS degree
alluring. People are willing to leave their home to study far away in much
colder places and with completely alien cultures and food habits. They
ability to practice as a doctor, in Government and private sectors
simultaneously, and the scope of earning a life-long income are also powerful
incentives, in addition to the social status it confers. Is the solution
more private medical colleges? -While Prime Minister Modi emphasized
that more private medical colleges must be set up in the country to aid more
people to take up MBBS, medical education experts have called for pause on
the aspect. If the aim is to make medicine more
accessible to students of the country, the path ahead is not in the private
sector, but in the public sector, with the Central and State governments’
involvement, they point out. From 2003, the Centre’s Pradhan Mantri Swasthya
Suraksha Yojana has been working to augment facilities for quality medical
education in the country. “Starting private medical colleges by
reducing the strict standards set for establishing institutes may not
actually be the solution to this problem, if we think this is a concern,”
says Dr. Ravndranath. Going oversea to study does have advantages, it could
broaden students’ mind and thinking, expose them to a whole range of
experiences, and their approach to issues and crises is likely to be far
better. However, creating
more medical colleges will be beneficial for the country, if access and
availability can be ensured. This will not be possible by resorting to
private enterprise only. He adds that State and Central governments can start
more medical colleges, as recommended by NITI Aayog, by utilizing district
headquarters hospitals, and expanding the infrastructure. This way, students
from the lower and middle social-economic rung, who are otherwise not able to
access medical seats, will also benefit. |
