Saturday, July 3, 2010

The course in Australia (July 4, 2010)

As the Americans hit their independence day, their biggest friends and partners in crime in the South Pacific have hit yet another sharp turn in their political battles over the last fortnight. The resignation of the Kevin Ruud government can eventually seen to be a blessing in disguise for India as Rahul Mishra argues in this IDSA report:

I highlight a few subtle and not-so-subtle points:

Rudd’s vision and approach towards India had many problems as well. During his tenure, India-Australia relations reached an all time low. Rudd reversed the Howard government’s decision to supply Uranium to India. The Australian Labour party has been instrumental in shaping and implementing the nuclear non-proliferation and uranium mining issues. In fact, its stated position was the key factor in Australia’s denial of Uranium to India. Yet, Rudd went on to give approval for a new uranium mine in July 2009, which went against Australia’s much celebrated ‘three mines policy’ - heralded by the Labour Party in 1984 and which maintained support for only three operational mines from which exports were to be permitted and which had determined to call off all further projects. One may add that the gap between Rudd’s theory and practice on climate change issues also proved costly for him. Before coming to power Rudd had advocated a massive cut down in greenhouse gas emissions (60 per cent by 2050), signing of the Kyoto Protocol and the introduction of Carbon Pollution Reduction Scheme, all of which he saw as right steps in the right direction. Subsequently, however, he deferred the CPRS until 2013.

While Rudd’s proposed ‘super profit tax’ on mining, to generate more revenue was seen as a disincentive for foreign investments, it also tended to go against Indian interests. It is to be noted that Reliance Industries Limited, the biggest Indian private sector company, is investing in a big way in Australia’s mining sector. According to media reports, RIL Australia recently paid $3.45 million to acquire a 49 per cent stake in four exploration licences of Uranium Exploration Australia Ltd.

The new Julia Gillard government has immediately abandoned the super profit tax, very much endearing herself to the mining industry, and a big fraction of the Oz middle-class that had been skewed in its understanding of the issues by the propaganda from the mining industry. That said, Julia Gillard was not at all far from the policies of Kevin Ruud. In fact, being the super-minister for education and workplace relations, she went far ahead into territory not her bastion.

But she still has some baggage - it's reported she was one of those arguing to delay the climate change plan, the decision which started all this. And Wayne Swan has been central to the mining tax debate, so his role in the future could be subject to easy attack from the Opposition if Julia Gillard wins and if there's a backdown on that plan.

At this time, India needs to watch the Julia Gillard government for changes in policy as much as it has a big responsibility for being bipartisan with the Liberals. There is no change expected in the Uranium policy in the short-run. However, with John Howard still having enough pull in the Liberal chamber, the ICC fiasco is not expected to last a long period even though short-term Liberal irritation with India is bound to happen. At this point, betters are batting for a Labor win with a 10-seat majority, but as we know, this is down under baby. Anything can happen as we saw the magic downfall of the high-flying KR. It has something to do with the rarefied air in the Southern Hemisphere, I think.

Other article of interest: SwamyG has sent the following paper on India-Burma relations:
Interesting read.

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