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Nuclear winter in Korea will cost India 100’s of billions of dollars, says Imagindia

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Calls upon India to help prevent the MADness in Korea – in self-interest

The Imagindia Institute, a leading independent think tank, today put out a dire warning for India in case of a full-scale military flare-up in the Korean peninsula.

“We shudder to even contemplate the loss of life and humanity that will ensue if the Korean peninsula spirals downwards into a nuclear conflict. We, at Imagindia, have friends, brothers, sisters, and business partners in both South Korea and Japan, and we pray for a peaceful resolution of conflict. We are sharing our analysis below with a heavy heart,” said Robinder Sachdev, president, Imagindia Institute.

“World leaders must find solutions to prevent a situation that could lead to mutually assured destruction (MAD) in case of any nuclear conflict. Along with other world leaders, India too must act to help prevent this nuclear MADness and a dark winter in the Korean peninsula. India must do so in solidarity with humanity, peace, and non-violence. And, even in economic self-interest, as detailed below,” he added.

According to the think tank, in case of a dark winter in North-East Asia, India will face five direct costs in its bilateral economic relations with Japan and South Korea:

1)      Cost 1 = 50 billion dollars – No new soft loans to India from Japan and South Korea. Japan has committed 40 billion dollars in soft loans for projects in India, and South Korea has committed 10 billion dollars of a credit line to India through its EXIM bank. If there is a dark winter in the peninsula, India can say a good-bye forever to this soft-money – including for flagship projects, like bullet train, railways, metros. In any destructive scenario, Japan and South Korea will need to use any money for their own reconstruction, rather than in any foreign investments.

2)      Cost 2 = 100 billion dollars – No entry of new private companies from Japan and South Korea. Presently there are less than 1,500 Japanese, and less than 1,000 Korean companies in India. In contrast, China has over 20,000 Japanese, and over 15,000 South Korean companies.

This miniscule number of Japanese and South Korean companies in India is expected to grow rapidly in coming years, said the press statement by the Institute.

It also said that in next 10-15 years these numbers are estimated to be about half of that of China.

Assuming a conservative number of even 5,000 new companies from each, Japan and Korea, entering Indian market in next ten years, with average private capital investment and generation of $10 million each, it means a sum of over $100 billion. In case of a dark winter in North-East Asia, any such growth will zero out, warns the Delhi-based think tank.

Above two direct costs add up to over $150 billion.

Additionally, the statement said there are three other direct costs  which are difficult to estimate, as below:

a)      Cost 3 = no new PE funds, and no FII from Japan or South Korea. In case of a dark winter in the Korean peninsula, the Private Equity / Pension Funds / and Financial Institutional Investors from Japan and South Korea will dry up for the next 10 years.

b)      Cost 4 =  melt-down of existing Japanese and Korean companies in India.  With their headquarters impacted grossly, the subsidiaries in India will stumble, and melt-down – leading to loss of jobs and cancellation of any expansion plans.

c)      Cost 5 =  hit to Indian exports and imports with Japan and South Korea. With both the Japanese and South Korean economies shattered, export and import with these two countries will come to a standstill, plus hopes of growth in trade will be wiped out.

“Apart from the above 5 direct costs that have been estimated on bilateral basis, there shall also be additional costs that are indirect which will ripple into the Indian economy due to global reverberations, including:

1) Disruptions of inward bound global supply chains of Indian manufacturing industry, and of Indian exports that are outward bound and plugged into global supply chains;

2) and, Other un-known costs that result from disruptions that ricochet around the world. ”

“Thus, above and beyond the un-imaginable loss to humanity and human life and more that may ravage North-East Asia, there will also be severe costs to the Indian economy. Direct bilateral costs plus the indirect global costs of a dark winter in North-East Asia will run into hundreds of billions of dollars for India,” said Sachdev.

Imageindia said this is a crucial juncture in world history and it is imperative that tensions must be de-escalated in North-East Asia.

It called India to urgently explore how it can work with the global community to help achieve a peaceful stand-down to the current crisis.