Daily Current Affairs

China-Pakistan inviting other nations to join CPEC in PoK (GS Paper 2, International Relation)

Why in news?

·         India has slammed China and Pakistan for their efforts to encourage third countries to join projects relating to their multi-billion dollar connectivity corridor that passes through Pakistan-occupied Kashmir.

·         This comes after Pakistan and China at a meeting of the CPEC Joint Working Group (JWG) on International Cooperation and Coordination, Pakistan and China decided to welcome interested third countries to join the flagship CPEC initiative.

What is Chinese Pakistan Economic Corridor (CPEC)?

·         The CPEC is part of China’s ambitious Belt and Road Initiative (BRI) which China described as a ‘transcontinental long-term policy and investment programme which aims at infrastructure development and acceleration of the economic integration of countries along the route of the historic Silk Road’.

·         The $60 billion CPEC was launched in 2013 to improve Pakistan’s road, rail and energy transportation infrastructure besides connecting its deep-sea port of Gwadar with China’s Xinjiang province.

·         The major CPEC projects underway are Bostan Industrial Zone (SEZ) near Quetta, Balochistan; Chaman district of Balochistan bordering with Afghanistan; Gwadar Port, Specially Zone-I & Zone-II; some patrolling units on CPEC’s western alignment which covers hostile areas of Balochistan like Awaran, Khuzdar, Hoshab and Turbat areas; Mohmand Marble City (SEZ) near Mohmand Agency bordering with Afghanistan and Sost Dry-Port & Moqpondass Special Economic Zone Gilgit-Baltistan.

·         China has previously outlined plans to extend CPEC to Afghanistan under its tripartite diplomatic initiative.

Why is India upset?

·         India has been consistently been critical of CPEC, which includes a network of highways, rail links, power plants, manufacturing units and massive infrastructure projects, on the ground that the projects are built on territory illegally occupied by Pakistan.

·         Much like Sri Lanka, Pakistan is caught in a debt trap due to huge investments in CPEC and has been facing down a serious economic crisis.

·         This, even as Pakistan earlier in July reached an agreement with the International Monetary Fund to revive a $6 billion bailout package.

·         Pakistan has leased some of its big industrial projects to Chinese firms, which has led to them taking on even more debt – the same vicious cycle that ensnared Sri Lanka.

·         CPEC has also been criticised for exploiting Pakistan’s natural resources without commensurate benefits to local communities.

·         This is not the first time that Pakistan has solicited third-party investments in CPEC. Its earlier bid to reach out to Saudi Arabia and the UAE did not yield results.

What did India say?

·         In a sharp reaction, External Affairs Ministry said such activities under the China-Pakistan Economic Corridor (CPEC) are “inherently illegal, illegitimate and unacceptable”, and will be treated accordingly by India.

·         India has consistently been critical of projects in the so-called CPEC projects which are in India’s territory that has been illegally occupied by Pakistan.

·         India’s grand geopolitical strategy is motivated in part by the dual goals of challenging and delegitimising China’s BRI in resource-rich regions of the world, including Central Asia and Africa.

West backs India:

·         The India-USA Joint Statement ‘Prosperity through Partnership’ released in June 2017 called upon all nations to support bolstering regional economic connectivity through transparent development of infrastructure and the use of responsible debt financing practices, while ensuring respect for sovereignty and territorial integrity, the rule of law and the environment.

·         The India-Japan ‘Prosperity through Partnership’ released in September 2017 also underlined the importance of all countries ensuring the development and use of connectivity infrastructure in an open, transparent and non-exclusive manner based on international standards and responsible debt financing practices, while ensuring respect for sovereignty and territorial integrity, the rule of law and the environment.

·         The European Commission issued a Joint Communication in September 2018 titled ‘Connecting Europe and Asia – Building blocks for an EU Strategy’, which highlighted that the European Union promotes an approach to connectivity, which is sustainable, comprehensive and rules-based.

·         US president Joe Biden and other G7 leaders unveiled ambitious plans to mobilise $600 billion in funding by 2027 to deliver transparent and game-changing infrastructure projects in developing countries like India in a move seen as a counter to China’s BRI.

How has Pakistan responded to India?

·         Pakistan termed India’s stand as “baseless and misguided” and said  attempts to cast aspersions over the multi-billion dollar connectivity corridor show India’s “insecurity and pursuit of a hegemonic agenda.”

·         The CPEC is a transformational project and a harbinger of stability, mutual cooperation and shared development for the region.

·         As a flagship of the Belt and Road Initiative and hallmark of the Pakistan-China All-Weather Strategic Cooperative Partnership, CPEC provides a vehicle for the people of the region to break from zero-sum approaches.

Tensions between China &Pakistan:

·         Recently, China pressed for Chinese firms to take over the security of thousands of workers from China employed in dozens of CPEC projects.

·         The all-weather ties “currently appear under deep stress because of growing terrorist attacks on Chinese citizens”.

·         The Chinese had demanded permission for deployment of private Chinese security guards for the protection of Chinese personnel and installations. Though Pakistani authorities did not allow that, the issue remains very much on the table.

·         Pakistan in recent months has been witnessing a spate of attacks against Chinese workers employed in projects under the CPEC.

·         China in July asked Pakistan to “get to the bottom” of the April suicide attack that killed three Chinese nationals at the Karachi University, a day after authorities in Sindh province claimed to have arrested the mastermind and pointed finger at an unnamed “neighbouring country”.

Unfinished projects:

·         Meanwhile, Pakistan over the past seven years has completed only three CPEC projects in Gwadar while one-dozen schemes costing nearly $2 billion remain unfinished including those of water supply and electricity.

·         The big projects under the project were having problems raising the required funds and the completed projects were shut down, a media portal previously reported, adding that the government of Pakistan also abolished the CPEC authority, which was set up for smooth and rapid development.

·         Chinese companies also stopped generating electricity in CPEC projects demanding payment of arrears.

·         High-interest rates on CPEC loans, rising project costs, weak projects, and attacks on CPEC infrastructure are major issues in what has become a white elephant dream.

Google Street in India

(GS Paper 3, Science and Tech)

Why in news?

·         Google announced the launch of its popular ‘Street View’ feature in India, after failing to bring the experience to India at least twice in the past decade following security concerns raised by government agencies over collection of data.

·         As per the National Geospatial Policy, 2021, local companies can collect such data and foreign firms can license the data from Indian entities to serve their customers in the country.

Supreme Court upholds ED’s power to arrest under Prevention of Money Laundering Act

(GS Paper 2, Judiciary)

Why in news?

Recently, the Supreme Court upheld the provisions of the Prevention of Money Laundering Act (PMLA) and retained the powers of the Enforcement Directorate (ED).

Judgement:

·         The apex court said that the provisions pertaining to arrest and bail are reasonable and have direct nexus to the objectives of the Act.

·         A three-judge bench, comprising Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar, ruled that supplying the Enforcement Case Information Report (ECIR) copy of the complaint to the accused is not necessary.

·         The court clarified that it is enough to inform the accused about the grounds on which he or she is being arrested.

·         ECIR cannot be equated with FIR and ECIR is an internal document of the ED. Supply of ECIR to accused is not mandatory and only disclosure of reasons during arrest is enough. Even the ED manual is not to be published since it is an internal document.

Enforcement Case Information Report (ECIR)

Ø  Section 50: The bench held that proceedings under Section 50 are an inquiry, not a criminal investigation. ED officers are hence not police. CrPC rules for investigation do not apply to the ED.

Ø  Section 45: Deals with bail conditions. The court held that this provision is necessary to achieve the purpose of PMLA.

Ø  Section 24: Reverses the usual burden of proof in criminal law. In a PMLA case, the judge must assume that the accused person is guilty until he disproves it. The court found this provision valid.

Ø  Section 19: This section gives the ED powers of arrest. The court upheld its constitutionality.

Ø  Section 17: This section gives ED powers to enter and search suspected property without judicial permission. The SC rejected this argument and upheld the provision.

Ø  Section 5 and 8(4): Under this, the ED has discretionary powers to attach property of the accused. The bench rejected the argument and held that there are enough safeguards to protect the accused.

Ø  Section 3: States the offence of money laundering. The court held that generating black money is also money laundering, even without proof of actually laundering it or converting it to white money.

Key provisions of the Prevention of Money Laundering Act (PMLA):

·         Natural gas prices jumped to their highest level since early March, according to Europe’s TTF benchmark, and more than five times what they were a year ago.

·         The energy ministers approved the compromise legislation a day after Russian energy corporation Gazprom said it would cut gas flows through the Nord Stream 1 pipeline to Germany to 20 per cent of capacity.

Background:

·         EU energy ministers approved a draft European law designed to lower demand for gas by 15 per cent from August 2022 through March 2023.

·         Recently, the European Union governments agreed to reduce consumption of natural gas to protect themselves against any further supply cuts by Russia amid its invasion of Ukraine, although the measure contains exemptions for some countries.

Why in news?

(GS Paper 2, International Relation)

EU plans to reduce gas use by 15% amid threat of Russia

·         However, the court held that the question of enactment of amendments in 2019 to the PMLA as a Money Bill has to be decided by a larger bench of seven judges before whom the same question is already pending.

What’s next?

·         Pertinently, acquittal or discharge of a predicate offence or quashing of such an offence will lead to the offence of money laundering also falling.

·         The authorities, under the 2002 Act, cannot prosecute any person on a notional basis or on the assumption that a scheduled offence is committed unless it is so registered with the jurisdictional police and/or is pending trial before a competent forum, the court held.

·         The court made it clear that the offence under Section 3 is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It relates to the process or activity connected with such property that constitutes the offence of money laundering.

Predicate Offence:

·         It is a proven fact that international criminal network that support home grown extremist groups relies on transfer of unaccounted money across nation, thus, by any stretch of imagination, it cannot be said that there is no compelling State interest in providing stringent conditions of bail for the offence of money-laundering.

·         Money-laundering is one of the heinous crimes, which not only affects the social and economic fabric of the nation, but also tends to promote other heinous offences, such as terrorism, offences related to NDPS Act, etc.

·         It cannot be the basis to undermine the seriousness and gravity of this offence. The quantum of sentence is a matter of legislative policy. The punishment provided for the offence is certainly one of the principles in deciding the gravity of the offence. However, it cannot be said that it is the sole factor in deciding the severity of offence as contended by the petitioners.

Quantum of punishment:

·         Enforcement Directorate, Serious Fraud Investigation Office (SFIO), Directorate of Revenue Intelligence (DRI) officials, and not ‘police’, statements recorded during an inquiry are valid evidence.

·         It is not open to the Court to have a second guess at such a policy.

·         The fact that some of the offences may be non-cognizable offences under the concerned legislation or regarded as minor and compoundable offences, yet, the Parliament, in its wisdom, having perceived the cumulative effect of the process or activity concerning the proceeds of crime generated from such criminal activities as being likely to pose threat to the economic stability, sovereignty and integrity of the country and thus, grouped them together for reckoning it as an offence of money laundering, is a matter of legislative policy.

·         On the issue of twin bail conditions under the PMLA, the court ruled that the stringent conditions for bail under the Act are legal and not arbitrary.

Issue of Twin Bail:

·         So long as the person has been informed about the grounds for his arrest that is sufficient compliance of mandate of Article 22(1) of the Constitution.

·         There is force in the stand taken by the ED that ECIR is an internal document created by the department before initiating penal action or prosecution against the person involved with a process or activity connected with the proceeds of crime.

·         Considering the mechanism of inquiry/investigation for proceeding against the property (being proceeds of crime) under this Act by way of civil action (attachment and confiscation), there is no need to formally register an ECIR, unlike registration of an FIR by the jurisdictional police in respect of a cognizable offence under the ordinary law.

·         There is force in the stand taken by the ED that ECIR is an internal document created by the department before initiating penal action or prosecution against the person involved with a process or activity connected with the proceeds of crime.

·         So long as the person has been informed about the grounds for his arrest that is sufficient compliance of mandate of Article 22(1) of the Constitution.

Issue of Twin Bail:

·         On the issue of twin bail conditions under the PMLA, the court ruled that the stringent conditions for bail under the Act are legal and not arbitrary.

·         The fact that some of the offences may be non-cognizable offences under the concerned legislation or regarded as minor and compoundable offences, yet, the Parliament, in its wisdom, having perceived the cumulative effect of the process or activity concerning the proceeds of crime generated from such criminal activities as being likely to pose threat to the economic stability, sovereignty and integrity of the country and thus, grouped them together for reckoning it as an offence of money laundering, is a matter of legislative policy.

·         It is not open to the Court to have a second guess at such a policy.

·         Enforcement Directorate, Serious Fraud Investigation Office (SFIO), Directorate of Revenue Intelligence (DRI) officials, and not ‘police’, statements recorded during an inquiry are valid evidence.

Quantum of punishment:

·         It cannot be the basis to undermine the seriousness and gravity of this offence. The quantum of sentence is a matter of legislative policy. The punishment provided for the offence is certainly one of the principles in deciding the gravity of the offence. However, it cannot be said that it is the sole factor in deciding the severity of offence as contended by the petitioners.

·         Money-laundering is one of the heinous crimes, which not only affects the social and economic fabric of the nation, but also tends to promote other heinous offences, such as terrorism, offences related to NDPS Act, etc.

·         It is a proven fact that international criminal network that support home grown extremist groups relies on transfer of unaccounted money across nation, thus, by any stretch of imagination, it cannot be said that there is no compelling State interest in providing stringent conditions of bail for the offence of money-laundering.

Predicate Offence:

·         The court made it clear that the offence under Section 3 is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It relates to the process or activity connected with such property that constitutes the offence of money laundering.

·         The authorities, under the 2002 Act, cannot prosecute any person on a notional basis or on the assumption that a scheduled offence is committed unless it is so registered with the jurisdictional police and/or is pending trial before a competent forum, the court held.

·         Pertinently, acquittal or discharge of a predicate offence or quashing of such an offence will lead to the offence of money laundering also falling.

What’s next?

·         However, the court held that the question of enactment of amendments in 2019 to the PMLA as a Money Bill has to be decided by a larger bench of seven judges before whom the same question is already pending.

EU plans to reduce gas use by 15% amid threat of Russia

(GS Paper 2, International Relation)

·         Recently, the European Union governments agreed to reduce consumption of natural gas to protect themselves against any further supply cuts by Russia amid its invasion of Ukraine, although the measure contains exemptions for some countries.

                Why in news?

·         Natural gas prices jumped to their highest level since early March, according to Europe’s TTF benchmark, and more than five times what they were a year ago.  

·         The energy ministers approved the compromise legislation a day after Russian energy corporation Gazprom said it would cut gas flows through the Nord Stream 1 pipeline to Germany to 20 per cent of capacity.

Background:

·         EU energy ministers approved a draft European law designed to lower demand for gas by 15 per cent from August 2022 through March 2023.

·         Recently, the European Union governments agreed to reduce consumption of natural gas to protect themselves against any further supply cuts by Russia amid its invasion of Ukraine, although the measure contains exemptions for some countries.

How will it work?

·         Under the ministerial agreement, the EU’s member nations are free to decide how best to meet the target of cutting 15 per cent of their average annual gas use over the last five years.

·         France, for example, wants to save energy by turning down office thermostats in winter and ensuring that air conditioners in public buildings and shops are used more efficiently.

·         EU president said a 15 per cent reduction in would save 45 billion cubic metres (bcm) of gas, Russia delivered about 150 bcm of gas to the EU in 2021 and that it would enable the bloc to "make it safely through the winter" in case of a complete cut-off from Russia.

·         It would also avoid the need to impose forced curtailment measures that could see some industries compelled to slow down production to save energy.

Mandatory provision:

·         The energy ministers scrapped a provision in the draft law that would have given the European Commission the power to decide on any move from voluntary to mandatory actions. Instead, the ministers ensured any decision on mandatory steps would remain in the hands of national governments.

·         However, if that does not yield enough savings, mandatory actions in the 27-member bloc would be triggered.

·         The European Commission, can ask members to consider triggering a mandatory system of cuts if it still fears a supply shortage in the next eight months. Any five member countries could also trigger a vote if they declare a gas supply alert at the national level.

·         Although the EU has agreed to embargo oil and coal from Russia starting later in 2022, the bloc has refrained from sanctioning Russian natural gas because Germany, Italy and some other member states rely heavily on imported gas.

Why is this happening?

·         This comes amid worries that the EU will struggle to meet gas storage capacities ahead of winter as well as fall short of securing additional supplies to fill in the gaps during the colder months.

·         EU has estimated that the EU’s GDP could take a hit by as much as 1.5 per cent in the event of a cold winter and if preventatives energy saving measures are not taken.

Which countries are exempt?

·         The three island nations not connected to the EU gas network, Cyprus, Ireland and Malta  are exempt from the compulsory energy savings.

·         Only Hungary, a close ally of Russia, came out against the EU’s decision with its foreign minister saying the decision was against its interests.

How disruptions in Russian energy trade with the EU is affecting the region?

·         Since Russia invaded Ukraine in late February and the West moved to punish Russia by imposing economic sanctions, 12 EU countries have faced halts to, or reductions in, their Russian gas deliveries.

·         Russia supplied about 40 per cent of Europe’s natural gas before the war, but that has dropped to about 15 per cent, sending prices through the roof and straining energy-intensive industries. Companies warn that they often can’t switch overnight to other energy sources.

·         The disruptions in Russian energy trade with the EU already are stoking inflation to record levels in Europe and threatening to trigger a recession just as the bloc was recovering from a pandemic-induced slump.

·         The energy squeeze also is reviving decades-old political challenges over policy coordination. While the EU has gained centralized authority over monetary, trade, antitrust and farm policies, national sovereignty over energy issues still largely prevails .

Centre to amend Warehousing Act(GS Paper 2, Governance)