Sree Iyer: Namaskar, good morning and welcome to Daily Global Insights. This is episode number 120. Today is March 17 2021 and I have with me Sridhar Chityalaji. Namaskar Sridharji and welcome to PGurus Channel.
Sridhar Chityala: Namaskar and good morning to everybody.
Sree Iyer: In our main points today, China Russia Iran did not interfere in the 2020 election according to the Department of Justice and the Department of Homeland Security.
India to set up a new bank to exclusively fund infrastructure projects.
The quad leaders hand Australia a big stick to fend off China.
Russia gives Twitter a month to delete banned content or get blocked.
The FED must walk a fine line Wednesday as financial markets hang in the balance.
In America news, China, Russia, Iran did not manipulate 2020 election results. I’m trying to make some head or tail of this. We all know that we have two extreme views on what happened in these 2020 elections and I’m trying to make sense of what happened? Didn’t the Director of National Intelligence say that there was interference?
Sridhar Chityala: Well, I think we need to go back to the 2016 elections. In the 2016 elections, there was this constant and persistent threat that was made by the Democrats and they used the FBI to say that the Russians interfere in the elections and as a consequence, President Trump won the 2016 elections. As you probably know that Saga continued all through his presidential term. And then we got into 2020 and they have been allegations or there has been what you call positions taken by the Republican side, especially which is to say that this whole election was fraudulent. Now, you need to look at this report within the context of two things, one is there was this Washington Post Errata, which was published much much later. As it related to your telephone call that took place between secretary Raffensperger and President Trump, which alleges that President Trump asked Raffensperger to use his influence and judgment to basically allocate few seats. This is the allegation that was made. And then today it turns out that that was not the case after listening to the released voice recording. So, immediately Washington Post corrected with an Errata which is to say Hey, you know, we were reliant on a wrong source so much about journalism, right. So, in the morning you have this which is to say that the Department of Justice report coming out as you point out right throughout the course of the elections, we have pointed out that there are various instances, which anecdotally point out that there was interference and there were malpractices. The Democratic side took a position, all the court case has been dismissed. So therefore there was no maleficence. The question is there was no investigation carried out.
A conclusion is on a procedural or non-procedural matter or for unknown reasons Supreme Court says, we’re not taking up the case. They never said there was no fraud, Okay, they never said that. So what happens today the report comes up from President Trump makes a statement and then by evening, you have CNN making a report which is to say, well it is believed that there was a whole set of people whom President Trump may have used within the Russian intelligence to malign President Biden to interfere in the elections. So this is the whole kind of architecture and your point, the Department of Homeland Security and Department of Justice which in the first instance should have investigated at that point of the time chose not to do it, if you remember, William Barr was consistently bar being pushed which is to say why you guys not investigating this. This is the political satire that is playing out in the oldest democracy in the world. So, we never going to get to the truth unless and until we have a thorough and complete investigation. Some states are planning to for example state of Georgia is going to release the Fulton County or whichever country, you know appropriate, you know, those declassify and release those documents, which is the voter balance. So same thing in Wisconsin and Michigan and so on they’re trying to do but at the end of the day unless and until there is a thorough investigation, Sreeji, there is not going to be truth coming out. So, therefore we’re going to be continuously in this situation for some more time or through the presidency of Biden as well the acclimation fly on either side.
Sree Iyer: 50 House Democrats call on Biden to slash the defence budget. The defence budget is still being computed, isn’t it? And why do they want to slash it?
Sridhar Chityala: The defence budget is that is always provisioned as you probably know because if you have incurred 550 billion dollars last time, you know, you’re going to be incurring 550 billion dollars. So just to you know, those numbers, you know, plus or minus if you remember that they were some small cuts made by the number is still big. 750 to 780 million dollars in that in that specific range, it toggles between 550 to 700 billion dollars kind of a range. Lloyd Austin has asked, David S had asked as vice-admiral that budgets need to be increased because the reason is we have not enough money to combat the Chinese threat. So, the question, therefore, is who are these 50 house Democrats who want to weaken the United States by cutting the defence budget. When actually the defence budget needs to increase given the imminent threat that the United States and its allies face in the Asia-pacific Indo-pacific, South China and the Indian Ocean regions.
Sree Iyer: Now senator Manchin calls the border search a crisis as scrutiny grows. The Border situation makes the immigration bill much harder, according to Senator Lindsey Graham. And Biden says that he has no plans at the moment to travel to the southern border. Can you please summarize for us what has changed in the last few days and why suddenly everybody is waking up to this reality? This was a self-inflicted, well I don’t know wound may be that the Democrats did to themselves.
Sridhar Chityala: Well, this whole border issue and as the phrase that is basically used is not retain which is namely capture and release policy ever since that was done. We have had an abnormal kind of inflow and the influx of illegal aliens into the country. What is the synopsis? The synopsis of this is an abnormal increase and the number is quite staggering anything between 100,000 to 200,000 especially the last kind of a couple of months. This number has a kind of alarmed people number one.
Number two, both Department of Homeland Security as well as the DOJ, which has conducted finds that there are people with even terrorists and other types of people like, you know, criminals, illegal. People with you know less integrity and crimes are making their way into the country that’s number two. The third thing that is even worse is that one number says 10% another number says 25% because the reason is that these people are not being tested for covid. So there is a tremendous influx of covid-19 infected people coming into the country. Four they call it a surge that means that there is an abnormal flow on certain days where the Customs and Border Patrol have not been organized to take care of it. If you remember that the CBP order was changed from what you call immigration control enforce( ICE) to now what you call most of these officers have been directed to Crime detection activities within the same kind of precincts. So, therefore, there is no what you call immigration control enforcement, there is no ICE process either. So all this is now coming to the surface to the extent that the Department of Homeland first raised its alarm then the Biden Administration called it as you know, the Federal Emergency Management Act. And so they invoke the FEMA send the FEMA volunteers into the border. So what has happened is this has now reached a stage, it has reached both Chambers in Washington DC.
So now one after the other including Schumer has come out, Chuck Schumer has said Biden must act otherwise, this could become an uncontrollable disaster. Nancy Pelosi thinks it’s an opportunity for another stimulus. So we will call this a crisis and that means the next step is more money to be kind of putting to deal with this, rather than coming to the core and addressing the issue this whole border situation has become a daily chore in the United States again in the political satire.
Sree Iyer: Trump reclaims case of large-scale voter fraud in Georgia after the Washington Post correction. You can’t blame him. Sir, one last thing about this influx of immigrants. I remember an Obama Rant in the white house where he said that gerrymandering is completely skewing the way people are getting voted and elected to Congress and Senate. I think mostly Congress. He went on a rant for a few minutes on that. I’m wondering if this is the net effect of all that.
Sridhar Chityala: Look, I think if you look at the voter registration act which is called as you know, HR1 you will find that the whole House Resolution one, this whole thing is around who should vote and who should not vote and the numbers anecdotally without making conspiracy theories without any investigation. We have no idea on this, you know, 154 million people which is a record number and record both were President Trump in terms of 74 million and then for Biden 80 plus million votes these record numbers. So, nothing has been done and you know, everything a vast amount of it is the postal balance right which was pre-populated and prefilled etc., the vast amount of that is this. So, this whole immigration is not immigration but, to what you call to make the borders porous, make the borders open people from Central Asia have already alerted to the fact. Mr Biden. You said the borders will be open and we can come in, we can come in, we can come in and people came in from Guatemala and so on. They called it the caravans from Guatemala, El Salvador and I can’t remember the other country the three countries from Central America, not Central Asia. I stand corrected. Central America came in and you know, some of them were sent back from the Mexican border. They got back in and then there was also this whole issue around the child rejoining, people are left on either side of the border and they should be somehow brought into the reunions and then there were the Shelters that was built up that was again kind of critiqued by the progressive group within the Democratic party in the House. So the net result of what you are alluding to is the gerrymandering or the rant that is going on is basically to say that we should be far more compassionate. We should be this and we should therefore be accommodative in bringing these people on board, but with no checks and balances. While they want to have gun control enforced with lots of checks and balances on both sides. They feel the immigration should be with no checks and balances. We should be this and we should therefore be accommodative in bringing these people on board, but with no checks and balances. While they want to have gun control enforced with lots of checks and balances on both sides they feel that immigration should be with no checks and balances.
Sree Iyer: Now. What about Trump’s reclamation that there was voter fraud in Georgia. So your thoughts, sir?
Sridhar Chityala: I think that he has been consistent about it and he is basically standing by his word and he is saying investigate, why do you believe me, investigate and come out. We know that he has extensively used Peter Navarro, as well as the other resources within the Republican party, and could have looked into this.
Sree Iyer: In India news, Bengaluru scientist discovered a new state of materials useful to create controllable Quantum Technologies. What is this new material that they have discovered, sir?
Sridhar Chityala: No, no what they mean by this New State is, suppose you expose certain materials to nature and use kind of laser and other types of external interferences or intrusions environmentally you can change the properties or there is a phrase that is used, that they can change the properties of these materials which in turn can be used in Quantum Technologies. So that is the Discovery. So in other words, the materials exposed to the environment but interfered with an influence through external forces such as laser does provide a mechanism for them to build a Quantum technology. ‘Controllable Quantum Technologies’ is the word that is used. We probably may hear more about it. But given the scientific discovery around this one and its implications; potential implications to both commercial and defence use, it is quite an important kind of a breakthrough.
Sree Iyer: On the new infrastructure bank, is it going to be a private bank or is it a public-private partnership or is it going to be a public bank, any thoughts on it?
Sridhar Chityala: It should be a PPP type of Public-Private Bank partnership. So there will be some Capital infusion coming from the external parties. What is the percentage, we probably will come to know shortly. But I think the cabinet just passed… Why I highlighted it is, there are three areas where we have identified that you need a vehicle something like this so that you don’t get caught in this NPA issue in the conventional kind of the large public sector and private sector Banks. That’s number one. Number two is that the capital allocation principles and the gestation period for recovery of these loans should be different for infrastructure projects, different for MSME and different for even alternate energy technologies or green energy technologies. We may see progress/developments around such entities in at least in these three domains.
Sree Iyer: The covid phase two which was expected to end by mid-June is now expected to end much earlier than that. So it looks like India is well on its way to vaccinating its population and getting things under control.
Sridhar Chityala: Yeah, mid-September to mid-June. So the original schedule was mid-September. They moved it to mid-June, ahead of the schedule. That’s as one. The second is, I have heard anecdotally and I haven’t shared that India on one day injected three million vaccines. Three million people were injected on one give one single day. That’s a very big number, if that number holds, I know I’ve seen a 2 million number but I gather that it is a 3 million number. So on this basis, I think India is rapidly moving towards the evolution of this vaccination program.
Sree Iyer: The United Kingdom prime minister Boris Johnson is going to be visiting India in mid-April to renew the ties. I think he was supposed to have come for the Republic Day Celebrations and he had to put it off. So now he is he’s coming, three months later. What do you think will be the main focus of that visit?
Sridhar Chityala: Three things; trade, covid, arms, because Britain feels now with a little bit of a gap in what is happening with President Biden they probably want to leverage that. Remember that Boris Johnson has also taken a very strategic position in the QUAD. So, therefore, I think this is overdue on three fronts which are trade, security and I think they’re also some controversial issues which raked up in the British Parliament, not in January, but now. January 26 as it turned out was the day when there was this big farmer agitation, which made the whole thing ugly and then that has cascaded its way and then you had this discussed by virtue of the specific number of votes and the British Parliament was able to pass to discuss the issue which was wildly critiqued by the Minister for External Affairs which was covered by us in PGurus.
Sree Iyer: Yes indeed. If you go back and look at how the Dehli riots happened exactly on the day President Trump was in Delhi. The farmer agitation may have also been triggered to have a maximum impact on January 26th when the UK press a prime minister Boris Johnson would have come. So all this looks like the same playbook being played over and over again, but we won’t know exactly what happened. We leave it at that and let’s hope that the ties become stronger and that the UK Parliament uses its time wisely to discuss issues that concern its own country’s problems, not about India.
Now, India’s maiden Solar Mission Aditya-L1 set for launch by 2021. This satellite will be travelling 1.5 million kilometres to study the Sun. So is it going to go orbit around the Sun? How close can it go to the sun?
Sridhar Chityala: I think that’s probably the nearest point at which it can reach before it becomes uncomfortable or before it becomes safe from its objectives, from its orbital objectives. So I think yes it is likely to go around and actually and much of those details are not yet available as to how exactly this mission will be conducted. I think this is part of a briefing that was given by Mr Sivan, head of ISRO on a wide range of programs that ISRO is embarking on. So one of these programs is this mission to the sun or the Proximus to the sun to actually study the various properties.
Sree Iyer: Now, I want to talk about a few things that are happening in and around Asia. QUAD leaders hand Australia a big stick to deal with China. What is this big stick, sir?
Sridhar Chityala: Well, I think that basically, Australia is going to be given a sweeping responsibility between the Indian Ocean to the Pacific seas to put more resources and form a defence offensive proposition. The reason why that is the case is that if you recall that this whole Coast Guard; CCP passed legislation in its Parliament that the coast guard will act like a Navy. It was not is not meant to be monitoring and maintaining enforcement. It can fire at any vessel that is coming by including those which are Fisher crawlers. So I think Australia is being told, ‘Okay, now your logistical facilities, your support capabilities in the event, you have to now move from an offensive type of capabilities to manage and monitor and enforce making sure that the maritime gateways are clear and clean and not included by the Chinese vessels.
Sree Iyer: In news around Russia, Europe, the Middle East and Africa; Russia gives Twitter a month ultimatum to delete Bank content or get blocked. So what got Russia’s goat?
Sridhar Chityala: Navalny agitation in Russia that’s being covered. Twitter is an unofficial vehicle of the Left and the Progressives, who are the people who are on the target, the people who are on the target in Russia, very much Vladimir Putin is on the target. The only problem, the only challenge that Twitter is going to face is he is not like the rest of the leaders. He will enforce. Australia has also enforced. To a great extent, you will find that Russia is going to say you have no business to come here. If you want to act here then behave. If you don’t want to follow our rules, get out.
Sree Iyer: In covid-19 news, German cases are going up exponentially. So Europe is looking at again locking down. So we will wait and give you an update in the next few days as things come along. Kosovo follows the US and Guatemala in moving its consulate to Jerusalem. This is significant news. This is the third country out of 197.
Sridhar Chityala: I think Kosovo is raising its head and saying that in this resurgence of West Asia, Israel, Iran, Iraq, Turkey, Pakistan, Syria, Lebanon, Palestine etc you find that certain countries are pulling away and becoming much more proactive with Israel and Kosovo is one of them.
Sree Iyer: At least five rockets hit the Iraqi military base at Ballard, which is located north of Baghdad. So, is this again a continuation of what has been happening?
Sridhar Chityala: Yes, it is the same area. We put up a map which showed around Tigris Erbil type of areas where there has been also Turkish Army crossing over, where you have had the rebels crossing over which is the pocket where you also have the Kurdish rebels fighting. It is in the same spot where the Iraqi rebels are firing at the US Base which is there to protect the resources and as well as to some extent the population.
Sree Iyer: In markets news, tomorrow is when the FED will release its minutes of the latest meeting that it had and markets are waiting with bated breath what the FED is going to decide especially in terms of the interest rates. What do you expect, Sridharji?
Sridhar Chityala: Already there’re some early indications, we expect the interest rates to remain zero until 2023 not even 2022. I think he’s going to make an announcement that basically says ‘look my matrix and scorecard is different. I’m not using the conventional, I’m using the labour metric card, the labour market here. I’m not referring to the conventional labour market and referring to those who are deeply unemployed. That’s why we have all these social programs going on. Some of these people are deeply depressed, that could be anything from 9 to 20 million people if you include the 12 million illegal immigrants who may be normalized to the process that’s coming up. This is an eight-year journey that Biden and Co have said. So that’s a big number in terms of the population which is still below the poverty line. So there are specific programs. As you are aware that they are our welfare programs. They’re going to use child tax credits as a platform to do it. Then Janet Yellen has already indicated that the infrastructure is needed, Biden has indicated infrastructure is needed. Nancy Pelosi has indicated infrastructure is needed. You cannot have interest rates going up. We are adding more debt because the cost of the balance sheet comes up quite significantly.
Sree Iyer: That’s all we have for today and will be back again tomorrow, same time, same location. Thanks for watching. Please do subscribe to the PGurus channel. Sridhaji, Namaskar, thank you once again. We’ll be back tomorrow. See you, sir.
Sridhar Chityala: Namaskar and thank you so much and have a wonderful day.
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