The Aakhya Weekly #39 | A new tenant for Roosevelt House
The Aakhya Weekly #39 | A new tenant for Roosevelt House
In Focus: A long journey for the American Ambassador
Along New Delhi’s lush, wide, tree-lined Shantipath lies a stunning off-white mansion. Its façade is adorned with striking grill-work that many a scampering child has attempted to scale, which is obscured, slightly, by towering golden pillars. It is simple and yet majestic; its design is clean though not austere. Befittingly, for the stature of those that have walked its halls, the building projects power. Since January 20, 2021, however, it has lain barren.
This is the “Roosevelt House”, which has served as the residence of the American ambassador to India for sixty years. The last person to hold the coveted post was the veteran diplomat, Kenneth I. Juster, an appointee of former US President Donald Trump who tendered his resignation once Joe Biden took the Presidential office. For the twenty six months since, the post has remained vacant. In the interim, the world has shaken off a pandemic, Europe has taken to the battlefield and a new cold war has descended upon the world. And yet, America has been unable to send an envoy to an “indispensable partner,” leaving an incessant parade of Chargé d’Affaires to manage its diplomatic mission in the country.
American ambassadors are either career diplomats or political appointees. While career diplomats are preferred for routine missions, in countries where the United States has vital stakes, the White House is understood to call the shots. Prestigious postings, such as that to India, are doled out to those favoured by the political dispensation. This presents an advantage for the host country, for political appointees allow a direct line to the American President, side-stepping the US State Department bureaucracy. To Biden, the young and energetic Eric Garcetti, a long-time friend and political aide, seemed the perfect choice for the role. He would soon become embroiled in a brutal, two year-long political slugfest, however, that would threaten to derail his political career.
Three years ago, Garcetti was a rising star in Democrat circles. The Rhodes scholar started his career as an academic working on diplomacy and international affairs, with an eye towards politics. As he began to scale the ladders of local government, in 2001, he came across the consultant Rick Jacobs. Jacobs, though new to the world of politics, was already storied as a deal-maker. He would soon become Garcetti’s right hand man, finding him funding and political support in clutch moments. In 2013, Garcetti became the youngest mayor of Los Angeles in a hundred years, with Jacobs becoming his deputy. Jacobs would sometimes even be referred to as the city’s “Executive Vice Mayor” – a post that does not exist – to better communicate his importance in international quarters.
Over the years, Garcetti’s political star continued to rise. Briefly, he even toyed with the idea of running for President himself. For the 2020 Presidential elections, he threw his weight behind Joe Biden, co-chairing Biden’s electoral campaign. Once Biden won the Democratic primary, Garcetti became a part of the committee vetting his running mate. As a reward for his loyalty, in November 2020, he was named the candidate for the Secretary of Transportation in Biden’s campaign.
Things would soon take a dark turn. A former aide publicly claimed that Jacobs sexually harassed several men and women, with Garcetti’s tacit knowledge. One of Jacobs’ long-term bodyguards, too, came out with allegations of improper conduct. The allegations were disputed heavily, but Garcetti’s career was tainted. With these allegations, combined with protests by the Black Lives Matter movement (which painted him as an opponent of police reform), his shot at Secretary of Transportation was scuttled. He was instead nominated for ambassadorship to India, but his chances appeared slim after the process was stalled by Republican senators. Senator Charles Grassley launched an investigation into the allegations against him, concluding that he knew, or at least should have known, of the sexual harassment being perpetuated under his nose.
Under the American Constitution, the Senate must confirm all ambassadorial appointments. Back in early 2022, the Democrats had a tenuous hold over the US Senate, with 48 Senators and two sympathetic independents, against 50 Republican Senators. In the partisan quagmire of American politics, the two parties usually stood on diametrically opposite sides of each issue. With many Democrats themselves unsure of Garcetti’s innocence, the party thought it too risky to let his appointment go to the Senate floor for a vote. His nomination lapsed. Roosevelt House still lay empty.
The pressure, meanwhile, grew. While the United States directly managed diplomatic relations with India from Washington, some in New Delhi perceived the vacant ambassadorial office as a slight. How was it, many wondered, that the United States had confirmed ambassadors to Pakistan, Nepal and Sri Lanka, but was unable to do so for India? While the two countries shared increasingly strong relations, with the absence of an ambassador, it was difficult to have regular conversations that allowed for nuance and mutual understanding, in a time when they were solely needed. Indians were also expected to wait for 800+ days for visa appointments, which seemed to reflect poorly on how America saw its relationship with India. Prime Minister Narendra Modi was slated to visit the United States in 2023. Something had to be done before he arrived.
Late in 2022, the United States held its mid-term elections. Many expected a Democrat rout. While the party did lose the House, in a result that shocked many, it managed to upset the Republicans and take the Senate. At long last, an opportunity had presented itself, and Garcetti pounced. He was soon found calling on senators of both parties. Supporting him was the lobbying firm, McGuireWoods Consulting, that his parents had previously hired to advocate for his cause. Meanwhile, Naomi Seligman, one of those that had allegedly been harassed by Jacobs, began lobbying against his nomination.
In an ironic end to a bitter political saga, it was cooperation across the aisle that won Garcetti the ambassadorship. Last week, he was re-nominated for the post by the Senate Foreign Relations Committee by a 13-8 vote. The very next day, Senate majority leader Chuck Schumer passed a ‘cloture motion’, blocking off any attempts to derail or filibuster the process. Finally, on Wednesday, March 15, the Senate voted for him to be the next ambassador to India by a 52-42 majority. Six senators abstained. Three Democrats voted against him. Seven Republicans voted in his favour. After a long, torrid struggle, the Roosevelt House finally has a new tenant.
Top Stories of the Week
Govt brings VDAs under PMLA in a bid to bring regulation
With money laundering through cryptocurrencies rapidly becoming a major cause for concern worldwide, India has stepped up regulatory scrutiny by extending the stringent Prevention of Money Laundering Act, 2002 (PMLA) to crypto assets. Exchanges, wallet operators and NFT platforms will all be required to register as reporting entities and comply with know-your-customer (KYC) obligations. In addition, the move will open up crypto entities to investigation by the ED in cases where financial wrongdoing is detected.
There is no doubt that this was necessary. According to reports by Chainalysis, a whopping $23.8 billion was laundered through cryptos in the year 2022, with a significantly increased use of DeFi protocols. A majority of jurisdictions have introduced some form of compliance for crypto businesses under anti-money laundering (AML) regulations. While no time frame has been given to crypto entities to comply with the PMLA norms, it is also true that most crypto entities had proactively introduced requirements like KYC on their platforms, months before this notification was issued.
Increased scrutiny by regulators and the benefit of real-time monitoring of transactions in this sector is bound to generate greater trust and accountability for investors in the crypto industry in time. In addition, this move (if implemented using the proper tools) could have the effect of sifting out entities operating in bad faith from the legitimate businesses that have taken a genuine interest in providing Web3 products and services.
SC refers same-sex marriage recognition case to 5-judge bench
In the year 2018, the Supreme Court of India decriminalised section 377 of the Indian Penal Code in a landmark judgement, legalising homosexuality in the country. This ruling still serves as one of the very few legal safety nets for the Indian LGBTQ+ community.
After years of seeking legal recognition of same-sex marriages through innumerable pleas, a three-judge bench, headed by Chief Justice D Y Chandrachud, referred these petitions to a five-judge Constitution Bench on March 13th. In the view of Article 145(3) which states that a minimum of five judges should hear cases that involve “a substantial question of law as to the interpretation”, the hearings will commence from April 18th.
In an affidavit submitted to the Supreme Court, the government responded by arguing that the notion of marriage “necessarily and inevitably presupposes a union between two persons of the opposite sex”. With the supposed fear of a complete breakdown of societal values looming above its head, the opposition is loud and incessant.
In a country with a modestly estimated population of 2.5 million gay people, all eyes are now set on the SC as it shoulders the responsibility of defining another watershed in India’s history.
This Week in Policy
Macroeconomics and Taxation
Retail inflation dropped marginally in the month of February, to 6.44% from 6.52% in January. Inflation is back to being above RBI’s tolerance limit of 6%, however. Wholesale price inflation, on the other hand, has dropped significantly to 3.85%, from 4.73% in January.
India’s Index of Industrial Production has increased to 5.2% in January, from a revised 4.7% in the preceding month. However, manufacturing fell in 10 out of 23 sectors.
India’s merchandise imports fell to an 18-month low in February, contracting by 8.8% to $33.88 billion. Imports, too, fell by 8.2% to $51.31 billion, resulting in a trade deficit of $17.43 billion for the month.
Labour
India’s unemployment rate has inched up to 7.45% in February, from 7.14% in January 2023, due to a rise in rural unemployment. The month also saw a slight increase in the size of the workforce, from 440.8 million to 442.9 million.
Agriculture and FMCG
During the ongoing state budget session, Maharashtra announces that it would provide a compensation of ₹300 per quintal to onion farmers, amid the recent fall in onion prices.
Trade through the electronic National Agriculture Market (e-NAM), a government initiative aimed at digitally integrating wholesale markets has seen an increase in recent times. After seven years since its launch, inter-state through the facility is growing in several commodities including apples, saffron, and ragi among others.
Healthcare
The central government plans to create a framework for the regulation of online pharmacies, through a new draft of the Drugs, Medical Devices, and Cosmetics Bill. E-pharmacies have been in a continuing tussle with brick and mortar pharmacies, prompting the Government to take several steps to reign in the former.
After a sharp uptick in COVID-19 cases, the Union Health Ministry has sounded the alarm, directing six states to follow a risk-based assessment approach to containing the disease.
Foreign affairs
The Ministry of External Affairs has released its Annual Report for the year 2022-23.
The Trilateral Commission, a non-governmental international organisation aimed at fostering cooperation between North America, Europe and the Asia-Pacific, conducted its first plenary meeting in New Delhi from 10-12 March 2022.
Technology, Media and Telecommunications
MeitY has set up a task force to work on a draft roadmap for the artificial intelligence ecosystem by the end of April, and has also announced the launch of and India AI platform to boost research and facilitate startups.
Nitin Gadkari is set to inaugurate the 8th Convergence India Expo featuring over 1,000 participants and discussions between government, industry, think tanks and academics on the future of India’s digital revolution.
International trade and commerce
India has reportedly asked banks and traders to avoid using the Chinese yuan for settlement of payments for imports from Russia.
US Trade Secretary Raimondo has announced signing of the India-US Semiconductor Supply chain and Innovation Partnership MoU in New Delhi. Both sides have agreed to set up a semiconductor task force which will address trade concerns between the two countries, and shall locate opportunities for the Indian semiconductor ecosystem to grow.
Banking, Finance and Insurance
In a recent decision, SEBI imposes restrictions on the placement of bids, price and volume for the companies undertaking share buyback through the stock exchange route.
SEBI plans to cut down mutual fund incentives paid to distributors by redefining B30 (beyond top 30) cities to B45. Post the official announcement, the additional incentive of 0.30% paid to distributors for getting investments of up to ₹2 lakh into mutual funds from 15 small cities will be stopped.
Manufacturing
In a plan to reduce its import dependence on Russia, China and European countries for forged wheels for its trains and locomotives, Indian Railways opened a tender for setting up a plant for the manufacturing of 80,000 wheels per annum over the next 20 years.
On 10th March, Union Minister for MSME, Narayan Rane launched the MSME Competitive (LEAN) Scheme which aims to improve quality, productivity & performance, but also the capability to change the mind-sets of manufacturers and transform them into a world class manufacturers.
Union Electronics and IT Minister Ashwini Vaishnaw hints at the likely announcement of India’s first semiconductor fabrication unit within the next few weeks.
Retail and e-commerce
The Ministry of Commerce and Industry is reviewing the existing Foreign Trade Policy as it seeks to handhold MSMEs to build their financial capabilities, set up special zones for ecommerce exports and develop new mechanisms to support services related to artificial intelligence and Internet of Things.
Logistics and Infrastructure
In a boost to develop roadways and highways across the country and boost connectivity and tourism in the region, Union Minister of Road Transport and Highways, Nitin Gadkari has approved multiple road infrastructure projects in West Bengal and Telangana.
The government has now set up a committee of secretaries to fast-track infrastructure projects along the northern borders with China amidst the continuing almost three-year-long military confrontation in eastern Ladakh.
Sustainability and Energy
In a push to reform and modernise the sewage disposal system, all upcoming housing societies and commercial complexes in the country will soon mandatorily have to ensure net zero waste and have their liquid discharge treated. This directive by the Ministry of Housing and Urban Affairs will be sent to all State governments by the end of March.
As one of the world’s largest greenhouse gas emitters, state-run refiners in India are setting up projects to produce 30.8 kilo tonnes a year of green hydrogen by 2030.
Tracking the G20
Amritsar occupies front and centre position this week as the Indian Institute of technology Ropar under the Ministry of Education hosted a seminar on ‘Strengthening Research and Promoting Innovation through Richer Collaboration’ for delegates from the G20 Education Working Group. The seminar focused on bridging the gap between government-academia-industry linkages for designing solutions for addressing global challenges. A consensus was reached on the need for research collaboration and that countries need to break out of their silos and promote traditional research for achieving sustainable development goals.
The third B20 Conference (starting this week) takes us to the city of Gangtok, nestled in the misty mountains of Sikkim, whose vibrant culture of organic farming will be on display. This conference is part of the ongoing efforts by Department for the Promotion of Industry and Internal Trade (DPIIT) to showcase the potential of India’s North Eastern States and opportunities in the region. Dr. Chintan Vaishnav (NITI Aagyog) gave a presentation on Startup20, the new engagement formed under India's presidency. He expressed his optimism for the initiative as “the voice of the global startup ecosystem bringing together varied stakeholders on a common platform.”
Upcoming Events
Digital India: Empowerment and Transformation
March 25, 2023 | India International Center, New Delhi
Policy Circle is hosting an event, in view of India’s G20 presidency, on the possibilities that underlie ‘Digital India’. The event shall include two panels - the first on the transformation potential of digital technologies, and the second on empowerment of the populace through digital public goods. Dr. Arvind Virmani, member, NITI Aayog shall be the guest of honour at the event. Attendance is by invitation only. More information
FICCI Global Young Leaders Summit
March 21, 2023 | The Lalit, New Delhi
The Federation of Indian Chambers of Commerce and Industry is hosting the ‘FICCI Global Young Leaders Summit’. The annual flagship event of the FICCI Young Leaders Forum, the event seeks to gather the top young minds of India and the world, over several plenary sessions and fireside chats. Prominent heads of Indian industry shall mentor the event. More information
Roadmap for an ‘Aatmanirbhar’ EV Battery Ecosystem in India
March 22, 2023 | India Habitat Centre, New Delhi
WRI India is hosting a closed door roundtable discussion, which aims to bring together stakeholders from India’s battery sector to explore ways in which India may create a sustainable, secure and cost effective battery ecosystem. The event seeks to explore effective mechanisms for cross-sectoral collaboration towards this end. More information
A Few Good Reads
The era of easy money has ended, and the Silicon Valley Bank was perhaps its first casualty. One must prepare for a turbulent year ahead, warns Neelkanth Mishra.
As we celebrate the step-up in Apple and Foxconn’s India presence, Patrick McGee’s sobering piece highlights the challenges they face in moving away from China.
Tyler Cohen questions if non-profit organisations actually drive social change.
Paul Krugman concludes, looking at the COVID-19 pandemic and the Ukraine war, that modern economies are more inflexible than one imagined.
Ken White takes a scathing, no holds barred look at the recent brouhaha around Judge Kyle Duncan’s Stanford speech and the subsequent backlash, in the process drawing out what does and does not make for free speech.
Tweets of the Week
From where do national political parties receive their funding? Some figures:
Tamal Bandopadhyay puts the Silicon Valley Bank and Signature Bank collapses in perspective:
SIPRI’s findings on global arms imports, simplified:
Key Notifications
The new allocation of responsibilities of the Delhi cabinet has been announced.
Bar Council of India in a major policy shift has announced that foreign law firms are permitted to open offices in India, subject to certain reasonable restrictions such as prohibition on appearing before courts and statutory tribunals.
Ministry of Road Transport & Highways has amended the Central Motor Vehicles Rules,1989 to include hybrid electric vehicles in its definition of “battery operated vehicles”. Suggestions to this draft can be sent to the Additional Secretary (MVL), email: comments-morth@gov.in within the next 30 days.
A new bill before the Lok Sabha seeks to empower those commanding an inter-services organisation to maintain discipline and ensure the discharge of duty by those from other armed services.