Sunday, August 14, 2016

Not a full-fledged State- Delhi crisis

In maintaining that Delhi is just a Union Territory, the Delhi High Court has answered some major and unresolved questions about the constitutional status of the National Capital Region. The Court has held that the special provisions incorporated for Delhi, under Article 239AA of the Constitution, do not negate the effect of Article 239, which empowers the Lt Governor to act independently of his Council of Ministers; in other words, the concurrence of the Lt Governor is mandatory for administrative decisions. Unless the Supreme Court adopts a diametrically opposite view, the Aam Aadmi Party, which has engaged in a turf war with the Centre over who rules Delhi, will have to abide by the categorical ruling that the Lt Governor is not bound to act on the aid and advice of the Council of Ministers. Given that the Supreme Court had taken a similar position in the NDMC vs State of Punjab case, the Delhi High Court judgment is no surprise. But the popular debate will continue about whether the right balance has been struck between the Union government’s responsibility in exercising control over an area in which Parliament, other key central institutions, and foreign missions are located and the democratic principle that people are ruled by a representative government.

At the political level, one may read into the developments a political setback to Delhi Chief Minister Arvind Kejriwal, whose AAP enjoys a massive majority in the Delhi State Assembly. Mr. Kejriwal had been locked in a power struggle with Lt Governor Najeeb Jung and had championed the cause of making Delhi a full-fledged State. As for the Bharatiya Janata Party, it may read the judgment as a vindication of its position that Mr. Kejriwal must accept the constitutional limitations of his office. The AAP has questioned the relevance of holding elections if the winning party is not going to run the territory. It is also a fact that such a tussle for supremacy arises from personality clashes and particularly when rival parties are in power at the Centre and in the NCT. However, in the public perception, some questions will remain. Is it wise to put in place structures that are open to multiple interpretations about who really runs what aspect of the administration? Is it necessary to have an ‘aid and advice’ clause when the LG has a virtual veto, and the Union government the final say, over matters concerning Delhi? Would it also not be prudent to have a much less ambiguous legal and constitutional framework?


Turkey talks tough with the EU- Syrian refugee crisis

Turkey’s European Union Affairs Minister, Omer Celik, has yet again said his country cannot overhaul its counter-terrorism laws in return for visa-free travel facilities for Turks. The much-derided quid pro quo forms part of the deal reached in March to stem the influx of Syrian refugees into Greece. Mr. Celik’s tough talk, coming in the wake of the failed coup in Turkey last month, will comfort nobody and surprise none. Many elements of the agreement between Brussels and Ankara on the deportation back to Turkey of large numbers of Syrian refugees who get to European shores already remains suspended de facto following the crushed rebellion, as noted by the UN High Commissioner for Refugees. This suspension is obviously of concern to the EU. For the March deal had led to a substantial reduction in the flow of migrants, falling from a daily average of about 1,700 prior to the agreement to as few as 48 by June, according to official figures. Mr. Celik’s reasoning against any relaxation of counter-terrorism provisions is that the exiled cleric, Fethullah Gulen, whose followers allegedly masterminded the coup attempt, is a terrorist in the eyes of Turkey’s government. Even assuming the allegations against the cleric are merited, the argument that protection against extremism can be enforced only through repression is a disingenuous one.

Such an assertion at best gives a handle to the potent politics of anti-immigration that has fed into the already toxic atmosphere of euroscepticism in parts of the 28-country bloc. Its most serious ramification was felt when Britain recently voted in a referendum to leave the EU, emboldening right-wing parties in France and the Netherlands. Against this backdrop, hard-line right-wing resistance against the grant of visa-free travel facilities for those holding Turkish passports was perhaps to be expected. The EU’s Schengen visa-free travel area, covering more than 20 countries, made it possible for migrants reaching European shores to move to destinations of their choice with ease. One of the fundamental principles of the bloc thus became a bone of contention among some of the founding-members and more recent entrants. Some among the latter began to barricade their borders, much to the chagrin of EU leaders. In the absence of a concerted approach to deal with the refugee crisis, the move to allow Turks to travel without visas was always going to be controversial. The EU continues to drag its feet over the issue. Turkey’s President Recep Tayyip Erdogan, long reviled by Europe for his authoritarian inclinations, is clearly in no mood to be deterred by pious sermons after the failed coup.


The crisis over Crimea

Russia’s claim that it had blocked attempts by Ukraine-backed saboteurs to carry out terror attacks in Crimea is the new flashpoint between the two countries. Ever since the annexation of Crimea from Ukraine in 2014, Moscow has had a heavy military presence in the peninsula. Russian President Vladimir Putin has now issued a stern warning to Ukraine against “supporting terrorists”, while Kiev has put its army on combat alert. It is not clear who is actually behind the latest flare-up. There are two theories afloat. One is that Mr. Putin is talking up the attack in Crimea to up the ante against Ukraine. The episode allows him to portray Ukrainian President Petro Poroshenko, an ally of the West, as a supporter of “terrorists”. The other theory, the official Russian version, is that militants and Ukrainian special forces were indeed involved in the sabotage attempt, and two Russian soldiers were killed in exchange of fire. For now, there are independent reports confirming that there was a firefight on the Crimea-Ukraine border on Saturday night. Militants had targeted Crimea earlier as well. Last November, anti-Russian saboteurs had blown up electrical pylons, plunging Crimea into darkness. The real question is whether such militant groups have the direct support of the Ukrainian government. If so, Ukraine may be committing a major mistake. Retaking Crimea from Russia using force is simply not practical. What it could possibly do is to destabilise Crimea by violent means. But even this won’t serve Ukraine’s interests as violence in Crimea by external forces is likely to prompt Moscow to step up proxy wars in Eastern Ukraine, destabilising the country further.

Russia sees Ukraine as a front of the West in a larger geopolitical game, and is unlikely to make major compromises unless there is a deal between itself and Western countries over Ukraine. Kiev is but a small player caught in a great power game. It should make its choices carefully as ties with Russia could be pivotal for its survival as a stable, peaceful nation in the long term. The West has to realise that its belligerent response towards Moscow over the annexation of Crimea, including sanctions, has only complicated the crisis further. It should rethink its policies and enter into meaningful talks with Moscow to dial down tensions over Ukraine. Restoring trust between Russia and the West is crucial in tackling several other global challenges as well, including the Syrian civil war and the fight against the Islamic State. For its part, Russia has to get its priorities right. What is it gaining from destabilising a tiny neighbouring country and damaging its own position as a global power when its economy is bleeding? There is room for all actors to make compromises in their mutual interest.


Friday, August 5, 2016

Giving India a global-scale bank-merger of SBI and associate banks

The proposed merger of the State Bank of India with its five associate banks and the Bharatiya Mahila Bank is a long-delayed and welcome move on the path to banking consolidation, especially among state-owned lenders. SBI’s takeover of its five subsidiaries and the three-year-old niche provider of banking services for women will, once consummated, vault the merged entity higher up the rankings ladder on the global banking stage. The resultant benefits to the lender and the economy are evident. The increased balance sheet size will enable the bank to obtain better pricing on both internationally sourced funds and domestic deposits, thus helping it lower lending rates and improve profitability. The added branch network and customer base will also help it expand reach and enable the lender to rationalise resources across the board. There are various estimates of the potential cost savings, with one projection putting the possible reduction in cost-to-income ratio at 1 percentage point. The lender’s increased size, in terms of assets, will also give it the requisite muscle to take on new competition from larger banking entities that are likely to be created by consolidation in the banking industry. The Bank Board Bureau has been tasked with overseeing a restructuring among public sector banks in keeping with the government’s aim of reducing the number of state-owned lenders and improving their financial health.

The merger will, however, pose its unique set of challenges. The scale of the task is substantial given the total staff strength. With more than two lakh employees, the parent will add close to one-fifth that number by way of additions posing a huge test in terms of integration of roles, salary, perquisite and pension structures and, no less importantly, work cultures. Much of the opposition from the bank unions stems from concerns relating to these issues. Customers of the smaller, community or regional market-focussed subsidiaries such as the State Bank of Travancore may be discomfited by having to deal with a larger, more impersonal lender, one where the size of their accounts may be viewed as comparatively marginal. For regulators, the new entity will throw up interesting oversight issues. Already identified by the Reserve Bank of India as the country’s key Domestic Systemically Important Bank, or too big to fail in simple terms, the enlarged SBI’s capital adequacy norms will climb and may require far more by way of infusion of funds than the Centre has committed so far. But such challenges must not be used to undermine the obvious benefits of merger.

Source:The Hindu