Growing teamwork
Zhang Lijun

In recent years, the energy situation has increasingly become an unfavorable element in the development of China-India relations. The two countries have worked out and implemented their own energy strategies, such as expanding the development and utilization of foreign energy resources, to ensure their energy supply security, but that has to a certain extent caused competition between the two countries in this area.
The two Asian countries now face a similar energy predicament and both have sought to expand their overseas energy sources as an important way to ensure their own energy security, a result of rising energy demand and the increasing reliance on foreign energy resources.
For example, the investment in overseas energy development by the China National Petroleum Corp. (CNPC), one of the world’s leading integrated energy companies, totals more than $40 billion. India’s state-owned Oil and Natural Gas Corp. (ONGC) has spent $3.5 billion on overseas energy exploration and production.
Since most of the world’s oil and gas resources are in hands of transnational companies based in the United States and Europe, China and India have to look for and develop energy resources in some high-risk locations or in countries having icy ties with the United States, and thus a rivalry exists between China and India, two big and neighboring developing countries.
They actually have crossed swords in some cases. In Asia, the rivalry was evident in the bid to acquire Petro Kazakhstan, that country’s third-largest commercial oil producer, in August 2005. China won the competition at a cost of $4.18 billion.
An Indian oil company and CNPC also competed to acquire 38 percent of the shares of PT Medco Energi International, Indonesia’s largest listed oil and gas company.
India got the upper hand in controlling oil and gas resources in Bangladesh, based on its geographic advantage.
In Africa, oil companies from the two countries tendered bid for the development rights to an oilfield in Angola. China prevailed in that case but the country paid $2 billion more than the asking price.
In South America, the rivalry for oil between China and India was evident in Ecuador in September of last year. India’s OVL Co., an arm of ONGC, competed with a joint venture of Sinopec Group and CNPC, China’s two largest oil companies, in bidding for Canadian company EnCana Corp’s oil and pipeline assets in the South American country, and China won again.
From rivalry to cooperation
Because India set out much later than China to explore the international energy market, it is now relatively weak in the energy struggle with China, which has prevailed in most cases.
But India’s participation in the international energy market often forced China to pay more for assets. That will damage the interests of both countries. After all, there will be a loser, and the winner will always pay a much higher price. The two countries must pay attention to bilateral coordination and communication and strengthen their cooperation in the energy field, so as to create their own energy security system.
Fortunately, leaders of both countries are aware of this need. Recently, both countries have expressed a strong will to cooperate and have put that into practice.
During his visit to India in April 2005, Chinese Premier Wen Jiabao said that energy cooperation is an indispensable part of the bilateral cooperation between the two countries. The joint declaration issued by the Indian prime minister and China’s premier said that both sides agreed to cooperate in energy security and conservation, including encouraging relevant sectors to team up in exploring and developing oil and gas resources in third countries.
After the visit, the officials of the energy sectors and heads of energy companies of both countries frequently exchanged visits as a follow-up action to implement the joint declaration. The two sides also signed some memorandums of understanding on energy cooperation. The Indian side also hopes to set up a supervision mechanism for energy cooperation.
This teamwork has borne fruit. The two state-run oil companies, CNPC and ONGC, cooperated well in jointly developing oilfields in Sudan.
In February 2005, India’s GAIL Ltd. signed an agreement with China Gas Holdings Ltd. under which the Indian gas company will invest $243 million to purchase 9 percent of the shares of China Gas.
In December last year, oil companies of the two countries successfully acquired 38 percent of the shares of an oilfield in Syria, which is worth $578 million. Each side holds a 50 percent stake.
In January and February this year, China, India and the European Union held a dialogue on energy cooperation and reached a series of agreements, including the memorandum of understanding on China-India energy cooperation, which has radically altered the harmful competition between China and India in acquiring overseas oil and gas resources.
Focus in Central Asia
All of this is just a beginning, and there is room for China and India to cooperate further. They can work together in any place if the conditions are right. But the ideal and also the key area of their energy cooperation is Central Asia, one of the world’s resource centers.
First, Central Asian countries are close to both China and India, and thus transportation costs will be low.
Second, there is a good political foundation for India and China to cooperate with these countries. Russia has paid attention to developing tripartite cooperative relations, and looks on China and India as important partners in energy cooperation. From a long-term perspective, there is the possibility for China, India and Russia to build a tripartite energy alliance.
At the same time, both China and India maintain close and amicable relationships with Central Asian countries. China and Central Asian countries are members of the Shanghai Cooperation Organization (SCO). India, which has observer status in the organization, is likely to become a formal member, which will enable the three sides to carry out and strengthen energy cooperation within the framework of the SCO.
Apart from this, China and India may also align with some other Asian countries to restrain international oil prices. Actually, the two countries have reached a consensus with relevant Asian countries on jointly coping with high international oil prices. In the future, they are likely to strengthen their cooperation to maintain the rights and interests of Asian oil-consuming countries.
The possibility of joint work by China and India on Iran’s energy development is increasing. Oil imports from the Middle East account for over half of China’s total oil imports, and Iran is China’s second largest oil supplier in the region. In October 2004, China and Iran signed a memorandum of understanding on the development of an oilfield in Iran, which will make China the largest investor in that oilfield if the agreement is implemented.
India also maintains close cooperative ties with Iran. In September 2004, India and Iran signed a series of energy cooperation agreements, including one in which Iran will export liquefied natural gas to India. India also has the right to explore and develop three Iranian oilfields, while the two countries will jointly develop natural gas resources and India’s state-run ONGC will participate in expanding Iran’s oil refining facilities. Iran has become an important oil and gas producer in the Middle East.
Currently, the United States is exerting pressure on Iran in the political, economic, military and other fields. It is not impossible for President George W. Bush to launch an attack on Iran. That would be a big threat to China and India’s oil supply security, which is likely to push forward energy cooperation among China, India and Iran, and such cooperation would serve the major interests of China and India.

(The Daily Mail-Beijing Review  Articles Exchange Item)




A transparent or translucent democracy
Amjed Jaaved

The Transparency International (TI) has recently released its report titled ‘India Corruption Study, 2005’. This report is based on the largest corruption survey ever undertaken in India _ a sample of 14,405 respondents spread across India’s 20 states. The report follows the TI’s earlier report which ranked India as the world’s 88th most corrupt country out of the 158 countries surveyed (Pakistan’s position is the unenviable 144th). Another report by the World Bank ranks India forty-seventh in the list of 200 countries surveyed for the level of corruption, quality of governance and enforcement of rule of law.
The Corruption Study reflected how various classes of Indian people viewed performance of 11 public-service departments _ police, judiciary, land administration (patwari system), municipal services, government hospitals, electric supply, ration-card supplies, income tax, water supply, schools and rural-financial institutions. According to the study, Indian police and judiciary won the first and second positions.
The Study estimated that the sum of Rs 21,068 was paid by ordinary citizens to various government departments. The individual share of police (crime/traffic) was Rs 3,899 crore, judiciary Rs 2,630 crore, and land administration Rs 3,126 crore.
The Indian government was so much offended by the Corruption Study that it prompted a junior court in Kangan (Kashmir Valley) to initiate suo moto contempt proceedings against those responsible for publication of the Study. The court issued non-bailable criminal warrants against former Indian navy chief R. H. Tahiliani, present chairman of Transparency International (India chapter), and Bhaskar Rao, Director, Centre for Media Studies. However, India’s Supreme Court adjudged the non-bailable warrants as malafide’. The court stayed (September 20, 2006) execution of the warrants on the grounds that: (a) The warrants were issued in breach of the provisions of the Contempt of Courts Act and the Ranveer Penal Code. (b) The junior court encroached upon jurisdiction of the High Court by not forwarding the case to the High Court (c) The junior court bypassed the mandatory requirement of a written complaint by the public prosecutor.
The hallmark of a democracy is its transparent functioning. The media has the freedom to point out faux pas of the government, whether bonafide’ or malafide’. The knee-jerk reaction to the publication of the corruption study reflects that India’s democracy is a democracy in form only, not in substance.
To portray India as a transparent democracy, the Indian government has passed Freedom of Information Act. It appears that the Act is a hoax to mislead the world.
The Transparency-International study focuses only on the corruption experienced by the ‘Common Man’ in getting services from various government departments. This study does not cover corruption at various other levels such as where a business man pays bribes to an Income - Tax official or a Customs official to pay less dues. The transparency International is of the view that the day-to-day corruption corrodes the moral fiber of a society more than mega corruption. The organisation believes that large-scale corruption will automatically reduce as ordinary people take a stand to combat petty corruption manifested, for instance, in granting telephone-connections, and redressing petty complaints (sanitation, property-tax and the like).
It also does not cover the corruption in the form of kickbacks, ‘the grand larceny, in which hundreds, and thousands of crores of rupees are paid as bribes to corrupt functionaries or Government funds are siphoned off on large scale’.
Here is a glimpse of corruption which lies outside Transparency International’s purview: (a) BOFORS-gun case (Rs 64 crore), HDW-submarine case (Rs 32.5 crore), Taj-heritage corridor case, Purulia arms-drop case, and Telgi stamp-paper case (<http://www.transparency.no/article.php?id=121&p=>). The Indian Express dated November 11, 2003 reported that the stamp-paper co-accused assistant sub-inspector of police drew salary of Rs 9,000, but his assets valued over Rs 100 crore. He built six plush hotels during his association for six years with the main accused Abdul Karim Telgi. (b) Commissions paid out of the slush fund established by Thales Engineering and Consulting Unit (Times News Network, October 3, 2005, Slush fund charge hits Scorpene deal). (c) Justice Phukan, investigating the defence deals, himself flew in IL-76 VVIP aircraft costing Rs 18 lakh for every hour in the air. The aggregate expenditure of the free ride was estimated to be over Rs one crore. The executive class of a commercial airline would have cost only Rs 1.20 lakh. (d) Corruption of the Booze brigade (The Tribune, September 23, 2006) involving a Major General G. I Singh and 16 other officers, including four brigadiers and nine commanding officers of elite 6 Mountain Division. (e) The commission received in defence deals like the Advanced Jet Trainer, Sukhoi, Barak missiles, T-90 tanks, tank navigation systems, simulators, hand-held thermal imagers, Karl Gustav rocket and Kandla-Panipat pipeline (pointed out by Vigilance Commissioner). (f) Commission paid to Brigadier Iqbal Singh (Tehelka-sting fame (June 2006).
No action has ever been taken following India’s Supreme Court decision (November 5, 2004) that the ‘Governor of a State could independently accord sanction for prosecution of a Minister in prevention of corruption cases without the aid and advice of the Council of Ministers’. More than 50 per cent of the MLAs in the states are registered in the police files as history-sheeters, mafia dons, smugglers, murderers and kidnappers. Of the 403 central central legislators, 207 have criminal records.
World governance Survey has rightly observed that in India ‘right from birth to death nothing happens without bribery and corruption’  Surely, India’s democracy is either translucent or opaque, certainly not transparent.


Living with N. Korea's nuclear blast
DR AHMAD RASHID MALIK

The nuclear blast conducted by North Korea on 9 October sparked unprecedented condemnation and outrage. Japan and South Korea seem to be badly affected by North Korea's nuclear blast as next-door neighbours. The situation of China and Russia is different, as they are nuclear powers.
Why North Korea at this point in time went for the testing? One of the reasons that could be cited is the Indo-US nuclear deal signed this March after US President George Bush made a visit to India. Under the deal, United States decided to offer nuclear facilities 'to meet India's growing nuclear needs'.
It was argued that by signing the deal, United States accepted India as a nuclear partner. The deal gave serious setback to international anti-nuclear treaties. This also encouraged 'have-nots' of nuclear weapon States to go for their own nuclear options. Many argued that Bush's condemnation of North Korean nuclear testing, by saying that the testing was 'a threat to international peace and security', would fall short on the ground that United States itself encouraged India to expand its nuclear programme under US security umbrella.
North Korean nuclear testing endangered Japanese security all over the Asia-Pacific region. Japan is not only a non-nuclear economic power; it became a de-militarised country after 1952 under the peace treaty and clause IX of the Japanese Constitution. When North Korea tested its nuclear bomb, newly installed Japanese Prime Minister, Shinzo Abe, was holding Summit level talks with his South Korean counterpart Roh Moo-hyun. Abe warned of North Korea for initiating a 'dangerous nuclear age'. 'The development and possession of nuclear weapons by North Korea will in a major way transform the security environment in North Asia and we will be entering a new, dangerous nuclear age', he declared.
North Korean nuclear testing was being long awaited and for Japan it was not something unexpected. Japan also preferred a strong UN resolution against Pyongyang's nuclear testing as Japan already adopted unilateral measures against North Korea as a result of its ballistic missiles launching. Japanese Government also considered additional unilateral sanctions should Pyongyang carry out a second nuclear testing. Japanese Foreign Minister Taro Aso said that his country was considering the passage of a new law to make it easier to participate in UN-led inspections on cargo moving in and out of North Korea. Japan might also use an emergency law for the first time that would allow it to provide support to US forces in areas surrounding Japan.
North East Asia has a history of horrible conflicts. The former Soviet Union conducted its nuclear device in 1949, four years after the United States conducted first-ever nuclear device in 1945 and soon practically 'tested' its two high-intensity nuclear bombs on Japanese cities of Hiroshima and Nagasaki on 7 and 9 August 1945 respectively. In 1964, China conducted its nuclear testing. Therefore, only the most powerful country, Japan, did not go nuclear in North East Asia for obvious reasons.
Although North Korea's all-powerful neighbours such as Japan, South Korea, China, and Russia condemned North Korean nuclear testing, they did differ in their responses. These responses can be divided into two groups: the US-Japan group, and China, the South Korea, and Russia group. The former group wanted to impose strict measures against North Korea. While the latter group wanted to adopted prudent measures to resolve the issue. China, South Korea, and Russia do not prefer the implementation of strong economic sanctions against North Korea under UN resolution. Moreover, no country called for a military strike against North Korea. Countries that demanded harsh UN sanctions against Pyongyang opted for diplomacy to tackle the issue.
On 15 October, UN Security Council passed 1718 resolution against North Korea's nuclear testing. The UN resolution has two clear objectives: to prevent North Korea from developing a nuclear arsenal, and to bring it immediately and unconditionally back to the Six-Party Talks. Although the text of the resolution has been softened after China made intervention, the resolution still requires all countries to prevent the sale or transfer of materials related to North Korea's unconventional weapons programmes.
The resolution also asked to put a ban on trade in heavy conventional weapons and luxury goods and urged countries to freeze funds connected with North Korea's non-conventional arms programmes. The US-led Proliferation Security Initiative (PSI) was launched in May 2003 to encourage countries to interdict weapons from North Korea, Iran, and other countries of concern. In 2002, the United States and the Spanish navy had to release a seized vessel that carried 15 Scud missiles from North Korea to Yemen because there was no provision under international law prohibiting it. So PSI was launched. North Korea instantly rejected Security Council's resolution and called the resolution as somewhat 'double standard', gangster-like action', and a 'declaration of war' against Pyongyang.
North Korea is an impoverished State that has been living under harsh economic conditions for decades. Some fear that UN sanctions could be even more tempted and force North Korea to conduct additional nuclear tests in the coming days.
South Korean approach toward North Korean blast is also different from that of other courtiers including Japan. South Korea adopted a highly cautious policy toward North Korea and always preferred to engage North Korea under the Six-Party Talks that involves the United States, Russia, China, Japan, and the two Koreas. South Korea does not support any action to destabilise the regime of Kim Jong-il for fear of spillover effects of nuclear crisis on the South.
For instance, former South Korean President Kim Dae-Jung, the architect of the Sunshine Policy to engage North Korea, put the blame on US policy toward North Korea. He said that since United State does not hold direct talks with North Korea, this led it to conduct nuclear testing. In case South Korea adopts harsh economic sanctions against the North, there is a fear that a great flux of refugees would pour into South Korea.
Similar situation could also occur in China as most of North Korean trade passes through China. Many argue that key to hold the North Korean crisis lies among its close neighbours ie, China and South Korea. In case these countries, including Russia, do not implement 1718 resolution in toto, no concrete action could be taken against North Korea.
Apart from South Korea, China does not want the implementation of hard sanctions such as cargo inspection against North Korea. It wanted to adopt a responsible and prudent response to tackle the North Korean nuclear testing issue. Chinese ambassador to UN, Wang Guangya, said China did not approve of inspecting cargo to and from North Korea and urged restraint from 'provocative steps'. China would resist cutting off food and energy supplies to North Korea in order not to further create economic obstacles.
Chinese President Hu Jintao met with his South Korean counterpart in Beijing on 13 October. They reiterated the standard responses, such as 'resolving the issue through peaceful dialogues and negotiations'. Therefore, the convergence of South Korean and Chinese response may upset US-Japan response toward the crisis.
In a nutshell, as far as North Korean nuclear testing implications are concerned, they could lead to the signing of a peace treaty and leading toward the resumption the Six-Party Talks. Moreover, chances for unification on the Korean Peninsula would become more brightened and this would also force the United States to withdraw its troops stationed at South Korea.