Important Current Events

Model Answer

Introduction

The ongoing conflicts in West Asia, including the Syrian Civil War, the Lebanese political crisis, the Yemen civil war, and the Israel-Hamas confrontations, have profound implications for both regional and global stability.

Regional and Global Instability

1. 1. 1. Humanitarian Crisis: Military confrontations in the region, particularly the Israel-Gaza conflict, have resulted in significant loss of life and worsened humanitarian conditions. In Gaza alone, over 35,000 deaths were reported, with nearly 69% of the victims being women and children. This escalating humanitarian disaster destabilizes the region, exacerbating the suffering of civilians.
      2. Rise of Extremism: Prolonged conflicts foster environments conducive to radicalization, with extremist groups like ISIS and the Houthis gaining power in Syria and Yemen, respectively. These groups not only destabilize local governments but also pose a broader threat to global security.
      3. Disruption of Global Economic Stability: West Asia is crucial for global energy markets, with many countries relying on its oil supplies. The conflict disrupts critical shipping routes and causes oil supply fluctuations. For instance, Houthi attacks on commercial vessels in the Red Sea have forced many shipping companies to suspend operations, affecting global trade and oil prices.
      4. Geopolitical Tensions: The conflicts in the region often lead to friction between global powers. The ongoing Israel-Gaza conflict and the Syrian Civil War have seen competing interests, with countries like China and Russia opposing US-led efforts, further complicating international relations.

Repercussions for India

1. 1. 1. Energy Security: India is heavily dependent on West Asia for its oil supply, with over 40% of its oil imports coming from the region. Conflicts in West Asia threaten to disrupt this vital energy source, exposing India to price volatility and supply disruptions.
      2. Impact on the Indian Diaspora: Approximately 8 million Indians live in West Asia, contributing significantly to India’s economy through remittances, which amount to about USD 40 billion annually. Instability in the region threatens their livelihoods and could disrupt these financial flows.
      3. Strategic Relations: India’s strategic ties with the Middle East, especially through initiatives like the India-Middle East-Europe Economic Corridor, are affected by the ongoing conflicts. For instance, Israel plays a crucial role in this corridor, and the conflict has hindered its progress.

In conclusion, the escalating conflicts in West Asia have severe consequences for regional and global stability, particularly impacting India’s energy security, economic interests, and diplomatic relationships. India’s active engagement in diplomatic efforts and diversification of energy sources are essential to mitigate these risks.

Model Answer

The growing debt crisis in developing countries has significant implications for their economic stability and development. As of 2022, global public debt reached a record USD 92 trillion, with developing countries owing nearly 30% of this total. From 2010 to 2021, their public debt increased from 35% to 60% of GDP. The consequences of this rising debt burden are profound.

Impact on Welfare Policies

The increasing debt burden limits investments in essential welfare services, such as education and healthcare, affecting billions of people. In 48 countries, the lives of 3.3 billion people are directly impacted by underinvestment in these sectors due to the large portion of national budgets allocated to servicing debt. For instance, the debt servicing costs are consuming resources that could otherwise be used for public welfare.

Reduced Investment in Sustainable Development

Developing countries face much higher interest rates on their loans compared to developed nations. For example, African countries pay rates that are four times higher than the United States. This reduces their ability to invest in long-term sustainable development projects, hindering progress towards achieving the UN’s Sustainable Development Goals.

Widening the Rich-Poor Gap

The debt crisis exacerbates inequality between rich and poor countries. In 2021, one-third of the public spending of the poorest countries went toward debt service payments, while only 21% of the richest countries’ budgets were allocated for this purpose. This economic strain stifles growth and deepens global inequalities.

Social Unrest and Political Instability

In response to high debt levels, countries often implement austerity measures such as spending cuts and tax hikes. These measures increase poverty and unemployment, fueling social unrest and political instability. For example, Sri Lanka’s debt crisis triggered widespread protests against its President, highlighting the social costs of austerity.

Spillover Effects and Reversal of Socio-Economic Development

The debt crisis in one country can have regional consequences, as seen in the Latin American debt crisis (1970-89) and the Asian Financial Crisis (1990-2001). Additionally, sovereign defaults can lead to catastrophic economic costs, with affected countries losing up to 8% of GDP within three years and a significant rise in poverty rates. These defaults can reverse decades of socio-economic progress.

Conclusion

In light of these challenges, debt transparency and better management practices are essential for ensuring that developing countries can borrow sustainably and maintain long-term economic stability.