The Economist - UK (2019-06-29)

54 Asia The EconomistJune 29th 2019

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tantly agreed to do. (Oil is the biggest con-

tributor to India’s trade deficit and the Ira-

nian oil comes at a discount to world

prices.) America also wants India to reverse

plans to purchase Russian anti-aircraft

missiles and telecoms equipment made by

Huawei, a Chinese company—steps that

India is resisting.

The Indian government seems to have

been pleased by what it perceived to be

American support in its recent stand-off

with Pakistan. In the days preceding Mr

Pompeo’s visit, it announced a large order

of long-range patrol planes made by Boe-

ing—a gesture that was presumably in-

tended in part to mollify Mr Pompeo’s boss,

Donald Trump.

But even as the strategic co-operation

between the two countries deepens, the

row over trade is gathering strength, too.

India was one of the countries America hit

with tariffs on steel and aluminium last

year. It is also the subject of several com-

plaints America has made at the World

Trade Organisation in the past year. And on

June 5th America evicted India from a

scheme that offers tariff-free access to cer-

tain goods from poor countries as a spur to

development. India, Mr Trump com-

plained, was not providing “equitable and

reasonable access to its markets”, a condi-

tion of the scheme. There are even mutter-

ings in Washington about launching a for-

mal investigation into India’s unfair trade

practices—the same step that initiated

America’s trade war with China.

Both sides would prefer to avoid a full-

blown conflict. Since 2002, when Ameri-

ca’s ambassador to India called Indo-Amer-

ican trade and investment “as flat as a cha-

pati”, it has grown rapidly (see chart on

previous page), making America India’s

biggest export market. Moreover, India’s

economy is slowing, which will presum-

ably make the government even warier

than it otherwise would be of a trade war.

Although India accounts for only a

small fraction of America’s trade, there are

plenty of big American firms that would

lobby against tit-for-tat tariffs. And hawk-

ish American trade officials have their tal-

ons full at the moment. The fact that it was

Mr Pompeo who visited, rather than Robert

Lighthizer, America’s top trade negotiator,

suggests that the administration’s geopoli-

ticians have the upper hand for now.

Yet both countries have leaders with

protectionist instincts. India also has a

growing trade surplus with America—not

something that will endear it to Mr Trump.

He has called India the “tariff king” and of-

ten cites its 50% duty on Harley-Davidson

motorbikes as a textbook example of the

unfair treatment of American exports. Mr

Pompeo and his Indian counterpart, Sub-

rahmanyam Jaishankar, insist that the two

countries will find a way to resolve their

differences—but it is not up to them. 7

E

nvironmentalists have been cam-

paigning against it for the better part of

a decade. For a time, it seemed they had

won. But in mid-June the government of

the state of Queensland cleared the way for

construction to start on the Carmichael

coal mine, owned by Adani, an Indian com-

pany. The project will open up the Galilee

Basin, one of the world’s largest untapped

reserves of thermal coal, the type used in

power plants. Adani has already started

work. It claims it could export its first coal

to India within two years.

Activists had expected a different out-

come. At a federal election in May they

tried to rally voters against the conserva-

tive coalition government, which has pre-

sided over rising emissions of greenhouse

gases. To some extent they succeeded. Con-

cerns about global warming played a big

part in the defeat of Tony Abbott, a former

prime minister and dogged opponent of

curbs on emissions, who lost his seat in a

posh part of Sydney. But even as well-to-do

urbanites embraced greenery, voters in

Queensland, where the economy has strug-

gled since the end of the mining boom,

warmed to the idea of the mine. Labor, the

main opposition, shilly-shallied over its

future, and was walloped in the surround-

ing marginal constituencies, delivering an

unexpected victory to Scott Morrison, the

prime minister, who once cradled a lump

of coal in parliament.

The result terrified Queensland’s Labor

government, which faces its own election

next year. It won the most recent state elec-

tion after refusing to subsidise a railway

which Adani will need to transport its coal

400km to the coast, and had since knocked

back the firm’s plans to conserve local fau-

na, notably the black-throated finch, an en-

dangered species. But four days after the

federal election the state’s premier, Annas-

tacia Palaszczuk, conceded that locals had

“had a gutful” of delay and insisted that the

necessary approvals should be hurried

through. Within a month, the state had giv-

en its final assent to a plan to conserve a

vast aquifer and a set of springs held sacred

by local indigenous groups.

This is “a disgrace”, complains David

Ritter of Greenpeace, a pressure group,

showing “Adani’s unholy grip on our politi-

cians”. In its first phase, the group would

dig up 10m tonnes of coal annually, a tiny

fraction of global consumption. But the

mine’s full capacity is six times that

amount. Moreover, six more mines are

proposed in the Galilee Basin. With Adani’s

going ahead, the others may follow more

easily. Together, their coal could produce

more carbon dioxide each year than the

rest of Australia, according to the Climate

Council, a research group.

Many Australians feel queasy about ex-

porting dirty fuel to poorer countries. They

worry about the Great Barrier Reef, a na-

tional treasure which provides employ-

ment for more than 60,000 people through

SYDNEY

A giant mine gets the go-ahead, in a huge defeat for environmentalists

Coal in Australia

Black in business