MARITIME SECURITY AND ECONOMY: STUDY OF INDIA’S NEIGHBORING COUNTRIES BY - RADHIKA MAHESHWARI
MARITIME SECURITY AND
ECONOMY: STUDY OF INDIA’S NEIGHBORING COUNTRIES
AUTHORED
BY - RADHIKA MAHESHWARI
Research
Assistant
School
of Integrated Coastal and Maritime Security Studies
Rashtriya
Raksha University, Gandhinagar
SRI LANKA
PIRACY
AND ARMED ROBBERY
To
understand the economic effects of maritime piracy in Sri Lanka, several
reports and sources shed light on this issue
1.
The crisis in Sri Lanka has led to
significant economic challenges, including high prices, limited access to
essential goods, and a collapse of the economy, prompting the country to seek a
bailout from the International Monetary Fund. The impact extends beyond Sri
Lanka's borders, affecting Indian Ocean security and trade [1].
2.
Maritime piracy has substantial economic
implications on international trade due to increased insecurity in the delivery
of goods. Studies have shown that piracy imposes significant costs on
international commerce and taxpayers, hindering trade. The research focuses on
the impact of piracy on intra-regional trade in Southeast Asia, highlighting
the negative effects on bilateral trade flows among Southeast Asian countries. [2]
3.
This study delves into maritime security
issues, emphasizing the importance of protecting sovereignty, maritime
resources, and countering piracy, terrorism, and other illegal activities in
the maritime domain. It discusses the challenges posed by maritime piracy and
the need for comprehensive maritime strategies to ensure security in the region
and safeguard national interests.[3]
4.
The waters off western India and Sri
Lanka are identified as critical chokepoints in the world's maritime oil trade.
Disruptions to maritime trade, including piracy incidents, can have significant
economic implications, leading to increased insurance premiums for oil tanker
companies and affecting the flow of goods through key maritime routes.[4]
Based
on the provided sources, particularly the information from Sri Lanka's
representative and the impact of maritime piracy on global trade, it is evident
that maritime piracy has significant economic implications. The economic
effects of maritime piracy can be seen in various ways:
1.
Global Trade Impact: Maritime piracy
disrupts international trade by increasing costs, hindering the flow of goods,
and affecting the security of shipping lanes that are vital for global trade.
This disruption can lead to economic losses for countries heavily reliant on
maritime transport[5]
[6]
.[7]
2.
Insurance Costs: One of the major
economic impacts of maritime piracy is the increase in insurance premiums for
oil tanker companies. This increase can be substantial, with war risk premiums
potentially reaching up to 10% of the market value of the vessel. Such costs
add financial strain to the shipping industry and contribute to the overall economic
burden caused by piracy.[8]
3.
Regional Trade Effects: In Southeast
Asia, maritime piracy has been shown to impose considerable costs on
international commerce and taxpayers, inhibiting trade flows among countries in
the region. Studies have indicated that piracy attacks are associated with a
decrease in exports, highlighting the negative impact on GDP and trade numbers.[9]
In
conclusion, the economic effects of maritime piracy on countries like Sri Lanka
and globally are significant, impacting GDP, trade numbers, insurance costs,
and overall economic stability. The disruption caused by piracy not only
affects individual nations but also has broader implications for international
trade and economic growth.
Armed
robbery at sea has had implications for Sri Lanka's GDP and economic growth.
According to a report by the Naval Postgraduate School, Sri Lanka faces maritime
security challenges that impact its economic stability. The report suggests
that to counter transnational organized crime, Sri Lanka should establish
effective security measures, implement strict maritime laws, and draft bilateral
agreements with India. [10]
Additionally, the Carnegie Endowment for International Peace highlights the
importance of regional cooperation in addressing piracy and armed robbery at
sea, emphasizing the need for initiatives like joint maritime patrols and
information fusion centers to enhance maritime security in the Indian Ocean
region.[11]
Furthermore,
the ‘United Nations Office on Drugs and Crime (UNODC)’ [12]
underscores the impact of piracy on the region, particularly in the Indian
Ocean. The UNODC report mentions that piracy and armed robbery incidents
endanger maritime navigation, leading to risks such as collisions or grounding
of ships, which can have economic repercussions. [13]
Moreover, Scholar Hub Universities Indonesia discusses the seriousness of
piracy in Indonesian waters and coastal areas, emphasizing that piracy is a
significant crime punishable by imprisonment or even death in Indonesia. The
report highlights the economic challenges associated with protecting maritime
spaces and resources, indicating the need for substantial resources to combat
piracy effectively.[14]
TERRORISM
According
to the International Monetary Fund (IMF), the economic reform program in Sri
Lanka has shown signs of recovery, with positive low inflation, increased
revenue collection, and a build-up of external reserves following the country's
economic challenges. [15]
The IMF emphasizes the importance of sustaining the reform momentum for
stabilization to evolve into broad-based and stable growth, highlighting the
need for continued progress in meeting key commitments under the IMF-supported
program.[16]
Moreover,
the Asian Development Bank (ADB) forecasts a rebound in Sri Lanka's economy,
projecting economic growth to rise to 4.1% in 2021 and moderate to 3.6% in
2022. The growth is expected to come from increased private consumption,
recovery in investment, and various reforms planned by the government. The ADB
also mentions that Sri Lanka's economy is showing signs of recovery after a
severe recession, with an expected growth rate of 1.7% in 2024 after contracting
by 3.8% in 2023.[17]
ILLEGAL
TRAFFICKING AND WEAPONS OF MASS DESTRUCTION
These
issues contribute to instability, insecurity, and hinder economic progress in
the country. According to the ‘United Nations Programme of Action to Prevent,
Combat and Eradicate the Illicit Trade in Small Arms and Light Weapons’ [18],
Sri Lanka is a transit country for heroin trafficking, which is a major concern
as heroin abuse is widespread in the country. [19]Additionally,
the illegal arms trade, extortion, and protection racketeering are prevalent in
Sri Lanka, leading to economic challenges and hindering growth.[20]
Furthermore,
conventional weapons, described as "weapons of limited destruction,"
have caused immense suffering and loss of life globally, impacting economies and
societies. The illegal arms trade, which underpins malicious actions,
contributes to instability and poses a threat to economic development. The
presence of these weapons, along with the trafficking of small arms,
exacerbates conflicts, hampers peace efforts, and perpetuates violations of
civilian rights, especially affecting young people and women.[21]
In
conclusion, the illegal trafficking of drugs and weapons, along with the
presence of weapons of mass destruction at sea, have adverse effects on Sri Lanka's
GDP and economic growth. These activities contribute to instability, violence,
and hinder the country's progress towards sustainable development.
DRUG
TRAFFICKING
The
country's GDP is primarily influenced by illicit activities like drug trafficking
and gold smuggling, leading to economic challenges. Drug trafficking,
especially involving heroin from Afghanistan, Pakistan, and India, has made Sri
Lanka a key destination in the global drug trade. Recent open-ocean seizures of
heroin indicate a rise in maritime trafficking of drugs sourced from the
Afghanistan-Pakistan region. Additionally, Sri Lanka serves as a transit
country for cocaine trade, with the market being smaller compared to other
criminal activities but still impacting the local economy.[22]
Furthermore,
the involvement of criminal actors, including state-embedded individuals and
loose criminal networks, has contributed to the country's challenges. These
actors collaborate with criminal networks, impacting security and economic
stability. Criminal gangs have been involved in masking cocaine shipments to
Australia and Europe in Sri Lankan containers,[23]
highlighting the extent of organized crime in the region.[24]
The
impact of drug trafficking on Sri Lanka's economy is further emphasized by international
sources. The UNODC highlights drug trafficking as a global illicit trade with
significant financial and social costs, affecting communities worldwide. The
campaign against transnational organized crime stresses the need for
coordinated international action, education, intelligence enhancement, and
assistance to combat these threats effectively. [25]
SMUGGLING
AND TRAFFICKING OF HUMANS AT SEA
According
to the ‘United Nations Office on Drugs and Crime (UNODC),’ [26]
Sri Lanka is a source area for people smuggling and human trafficking, with
these activities posing a large-scale threat to the country. The UNODC and the
US State Department label Sri Lanka as a major source country for human
trafficking and people smuggling. These illegal activities
involve different kinds of irregular people movements, such as smuggling
foreign migrants into Sri Lanka and then onto other countries, smuggling asylum
seekers and economic migrants from within Sri Lanka to developed countries or
transit locations, and smuggling Sri Lankans to different locations for sex
work or indentured labour.[27]
The
impact of these activities on Sri Lanka's economy is multifaceted. The
involvement of corrupt elements within the Sri Lanka Navy in facilitating these
trades has been noted. Additionally, the trade involving Tamil asylum seekers
and economic migrants has received significant attention internationally. This
trade includes direct maritime journeys to Western countries like Australia and
Canada or movement via commercial airlines to third countries before a maritime
crossing. There have been allegations that former members of the LTTE are
involved in these activities for fundraising purposes.[28]
Furthermore,
the lack of accurate statistics on the magnitude of these phenomena in the East
Asia and Pacific region contributes to challenges in fully understanding their
economic impact. The absence of systems to collect data about smuggling of
migrants and varying definitions of smuggling and trafficking across countries
in the region hinder efforts to quantify the economic repercussions accurately.[29]
In
conclusion, while specific data linking human smuggling and trafficking at sea
directly to Sri Lanka's GDP and economic growth may not be readily available
from government or international sources, the broader implications on security,
social stability, and potential economic ramifications are evident from reports
by organizations like the UNODC and insights from various studies on transnational
crime in Sri Lanka.[30]
IUU
FISHING
The
lack of transparency and traceability in the tuna industry, attributed to IUU
fishing, has contributed to near-shore overfishing and the threat of
overfishing of some species in Sri Lanka's waters. [31]This
has led to challenges in the fisheries sector, affecting the country's economy.
The
seafood industry in Sri Lanka plays a crucial role in supporting food security
and livelihoods, with fish being the main source of animal protein for the
population. [32]
However, IUU fishing practices can undermine the sustainability of fish stocks,
impacting both food security and economic stability.
In
terms of sources, reports from the World Bank document the contribution of fish
to Sri Lanka's economy and its importance in providing livelihoods for a
significant number of people. [33]
Additionally, the Seafood Watch report highlights the risks associated with IUU
fishing in Sri Lanka and its broader implications on labor conditions and economic
stability. [34]These
sources provide valuable insights into how IUU fishing practices have affected
Sri Lanka's GDP and economic growth, emphasizing the need for sustainable
fisheries management practices to ensure long-term economic prosperity.
CLIMATE
CHANGE
According
to the World Bank, Sri Lanka is facing an unsustainable debt and severe balance
of payments crisis, leading to a negative impact on growth and poverty. The
real GDP of Sri Lanka is expected to fall by 9.2 % in 2022 and a further 4.2 % in
2023. The country's economic outlook is uncertain due to fiscal, external, and
financial sector imbalances, with risks including slow debt restructuring,
limited external financing support, and challenges in recovering from the
economic crisis. [35]
Moreover,
the recent El Niño events have exacerbated the situation, affecting over 2
million people in Sri Lanka between 2016 and 2017. The impacts included
flooding, landslides, and severe droughts, leading to water scarcity for
agriculture, drinking, and household use. The current El Niño phase is
forecasted to peak by the end of 2023, with potential impacts on water
availability and communities, especially in the context of climate change and
biodiversity loss.[36]
BANGLADESH
PIRACY AND ARMED ROBBERY
According to a study published in the
Journal of East Asian Studies, maritime piracy has affected trade in Southeast
Asia, including Bangladesh, due to its strategic location for international
trade. [37] The research highlights that maritime piracy
undermines security and economic stability in the region, impacting trade
volumes among Southeast Asian countries.
Furthermore, an article from The
Diplomat emphasizes the global implications of piracy, noting that Southeast
Asia had the second-highest incidence of piracy globally in 2016, with
Indonesia being the state with the highest incidence. [38]
This poses a direct threat to maritime trade routes crucial for Bangladesh's
economy.
These sources underscore the
importance of addressing piracy and armed robbery at sea to safeguard
Bangladesh's economic interests. The impact on GDP and economic growth is
evident through disruptions to trade routes and increased security risks
associated with maritime criminal activities.
TERRORISM AT SEA
The country has faced challenges due
to maritime security issues, impacting its economic stability. The effects of
terrorism on Bangladesh's economy have been significant, with concerns raised
about dwindling foreign reserves and the need for an International Monetary
Fund loan to address financial difficulties. The government's efforts to combat
terrorism through a "zero tolerance policy" have aimed to create a
peaceful environment conducive to economic development.[39]
Bangladesh's economic stability has
been questioned following terrorism-related challenges. These sources highlight
the country's transition from a war-hit poor economy to one of the
fastest-growing economies, emphasizing the importance of political stability in
attracting foreign investments and fostering economic growth. [40]Additionally,
reports from reputable international organizations like the Asian Development
Bank can offer further analysis on how terrorism at sea has impacted
Bangladesh's GDP and economic performance.[41] [42]
ILLEGAL TRAFFICKING OF WEAPONS OF
MASS DESTRUCTION
According to sources, Bangladesh is
affected by illicit financial transfers, including the smuggling of goods,
small arms sales, drugs, counterfeit currency, and money laundering, which
contribute to funding terrorist activities within the country. [43]These
activities, which are linked to the trafficking of weapons of mass destruction,
impact the country's economy negatively.
The funding methods of Bangladeshi
terrorist groups involve tapping into illegal money flows, with an estimated $1
billion in taxable goods smuggled into the country from India, some of which
ends up financing terrorist organizations. [44]Money
laundering, accounting for a significant portion of the country's GDP, along
with remittances from expatriates and illegal financial transactions, further
exacerbate the issue.[45]
Moreover, the 1540 Resolution
emphasizes the importance of controlling exports and borders to prevent weapons
of mass destruction from falling into the hands of terrorists. Bangladesh, as
part of its commitment to implementing this resolution, faces challenges in
curbing illicit activities that impact its economic stability.[46]
These findings are supported by
various sources, including the State Department's South and Central Asia
Regional Overview, which highlights the impact of illicit financial flows on
governance and economic development in the region, and reports on Bangladesh's
struggle with terrorist financing. Additionally, insights from the Asian Export
Control Seminar shed light on the economic implications of trafficking weapons
of mass destruction and the need for stringent measures to address these
challenges.
DRUG TRAFFICKING
Drug trafficking at sea has had a
significant impact on Bangladesh's GDP and economic growth in recent times.
According to the ‘United Nations Office on Drugs and Crime (UNODC)’, drug
trafficking is a global illicit trade estimated to be a $32 billion industry,
affecting communities globally. [47]
Bangladesh serves as a transit point for heroin and cocaine trafficking, with
international cartels using the country's ports for smuggling drugs into Europe
and Southeast Asia. [48]
This illegal activity contributes to corruption among border security and law
enforcement officials, further fueling the drug trade's profitability in the
region.
The impact of drug trafficking on
Bangladesh's economy is multifaceted. The illicit drug trade not only poses
risks to public health and safety but also undermines economic and social
development, contributing to crime, instability, insecurity, and the spread of
HIV. The ‘UNODC’ emphasizes the need for coordinated international action to
combat transnational organized crime like drug trafficking, highlighting the
importance of intelligence, technology, education, awareness-raising, and
assistance to counter these threats effectively.[49]
In terms of government and
international sources, the reports from the ‘United Nations Office on Drugs and
Crime (UNODC)’ provide detailed insights into the impact of drug trafficking on
Bangladesh's economy and society. Additionally, reports from organizations like
the OECD (Organization for Economic Co-operation and Development) can offer
valuable information on economic transformations and challenges faced by
countries like Bangladesh due to illicit activities such as drug trafficking.[50]
SMUGGLING AND TRAFFICKING OF HUMANS
AT SEA
The smuggling and trafficking of
humans at sea have had significant implications for Bangladesh's GDP and
economic growth in recent times. These activities, particularly affecting
vulnerable populations like women, children, and refugees, have led to various
economic challenges in the country. According sources:
The ‘United Nations Office on Drugs
and Crime (UNODC)’ has highlighted that human trafficking poses a significant
challenge to Bangladesh's economy and security, impacting both the source and
transit country dynamics.[51]
The Global Organized Crime Index
report emphasizes that Bangladesh is a source and destination country for human
trafficking, with a focus on sex trafficking. It mentions how these criminal activities
exploit men, women, and children seeking work in other regions, affecting the
country's economic landscape.[52]
The USAID Bangladesh Country
Development Cooperation Strategy report points out that human trafficking and
child marriage occur at high rates within vulnerable populations like the
Rohingya refugee community, further complicating economic development efforts
in Bangladesh.[53]
These sources collectively underscore
the detrimental effects of smuggling and trafficking on Bangladesh's GDP and
economic growth, highlighting the urgent need for comprehensive interventions
to address these issues.
IUU FISHING
The practice of Illegal, Unreported,
and Unregulated (IUU) fishing not only affects the marine ecosystem but also
has detrimental effects on the economy. According to the FAO, IUU fishing
across the world's oceans amounts to around 11–26 million tonnes of fish
annually, with a value of $26 to 35 billion. This practice leads to
overfishing, the collapse of vulnerable fisheries, exploitation of developing
countries, seafood fraud, criminal activities, and endangered seafood safety.[54]
In the context of Bangladesh, IUU
fishing has been a pressing issue. The Department of Fisheries in Bangladesh
has been actively working to combat IUU fishing within its Exclusive Economic
Zone (EEZ). The FAO has highlighted that IUU fishing in Bangladesh's waters can
have a direct impact on the country's GDP and economic growth. The FAO
emphasizes the importance of avoiding subsidies to companies, vessels, or
persons engaged in IUU fishing to prevent further economic losses and
environmental damage.[55]
CLIMATE CHANGE
According to a report by the World
Bank, the average tropical cyclones cost Bangladesh about $1 billion annually,
and by 2050, one-third of agricultural GDP may be lost due to climate
variability and extreme events. [56]
Additionally, a study published in the International Journal of Water Resources
Development highlights that climate change has led to a decrease in
Bangladesh's average GDP by -6.17% and a decline in investment by -7.76%. The
impacts of climate change on the rice sector have been particularly intense,
with prices increasing by 5.82% and 8.11%, and output decreasing by -3.08% and
-3.7% collectively in 2030 and 2050.[57]
These findings underscore the severe
economic consequences of climate change on Bangladesh, affecting various
sectors and leading to significant declines in GDP, investment, and
agricultural output. The sources from the World Bank and the International
Journal of Water Resources Development provide credible insights into how
climate change has affected Bangladesh's economy, highlighting the urgent need
for climate action and adaptation measures to mitigate these adverse effects.
MAURITIUS
PIRACY AND ARMED ROBBERY AT SEA
According to the ‘United Nations
Conference on Trade and Development (UNCTAD)’, the impact of piracy and armed
robbery at sea has been significant, affecting the maritime security and trade
routes of African nations, including Mauritius. [58]
This has led to concerns about the safety and security of sea lanes, impacting
the region's economy due to the disruption of key maritime routes.
Furthermore, the European
Parliamentary Research Service (EPRS) highlights that maritime piracy and armed
robbery at sea pose a threat not only to regional but also to the global
economy. Over 80% of world trade is conducted through maritime transport, and
Africa heavily relies on sea transport for imports and exports. The cost of
piracy globally is estimated to be around US$24.5 billion annually, affecting
various sectors such as fisheries, food security, and tourism.[59]
In the context of Southeast Asia, The
Diplomat reports that armed robbery incidents have been on the rise,
particularly in the Straits of Malacca and Singapore, Indonesia, and the
Philippines. These incidents, although involving the theft of relatively minor
items, have raised concerns about the safety of sea lanes and the need for
enhanced security measures in the region.[60]
TERRORISM
According to a study analyzing the
effects of terrorism on tourism demand in Mauritius, it was
discovered that because of travellers’ reactive psychological perceptions about
travel, terrorist acts had a short-term effect on the demand for tourism.
Long-term effects on tourism demand are, however, lessened because Mauritius is
seen as a safe location with no significant history of terrorist occurrences.[61]
Furthermore, the World Bank's
assessment of Mauritius highlights that the country's economic outlook remains
subject to downside risks, including competition from other destinations,
potential negative effects from global conditions, and the impact of events
like the war in Ukraine. The report emphasizes the importance of strengthening
macroeconomic resilience by rebuilding fiscal buffers, raising revenue, and
lowering the public debt-to-GDP ratio to support economic growth and stability.[62]
ILLEGAL TRAFFICKING OF ARMS AND
WEAPONS OF MASS DESTRUCTION
According to the ‘United Nations
Office on Drugs and Crime (UNODC)’, the illicit trade of firearms is a global
issue with significant variations between countries, impacting peace and
security globally. The UNODC's Global Study on Firearms Trafficking in 2020
highlighted that pistols are the most seized type of firearm globally, with
wide variations in quantities seized among countries, ranging from less than 10
to over 300,000 firearms.[63]
Furthermore, Control Arms, an
organization focusing on arms control in Africa, emphasizes efforts to combat
illicit arms trafficking in the region. The AU-EU project aimed at fighting the
illicit accumulation and trafficking of small arms and light weapons resulted
in the establishment of National Commissions on SALW in several African
countries like Congo, Central African Republic, Chad, and Cameroon. These
initiatives demonstrate a concerted effort to address the challenges posed by
illegal arms trafficking.[64]
DRUG TRAFFICKING
According to the World Drug Report
2023 by UNODC, the presence of drug trafficking has led to the laundering of
profits into various sectors, including land speculation and infrastructure,
posing a growing danger to the environment and communities. This convergence of
crimes, such as money laundering and corruption, has created violent hotspots
in tri-border areas, affecting indigenous peoples and minorities
disproportionately.[65]
Furthermore, the CIA World Factbook
highlights that Mauritius faces challenges in combating drug trafficking,
leading to negative consequences on its economy. The country's efforts in
expanding its anti-trafficking capacity have been minimal, with officials not
prosecuting suspected traffickers or initiating investigations effectively.
This has resulted in Mauritius being downgraded to Tier 2 Watch List for
trafficking in persons.[66]
The ‘Prime Minister of Mauritius, Mr.
Pravind Kumar Jugnauth’, has reiterated the government's determination to fight
drug trafficking and ensure maritime security. This commitment underscores the
recognition of the detrimental effects of drug trafficking on the country's
security and economic well-being.[67]
SMUGGLING AND TRAFFICKING OF HUMANS
AT SEA
According to the ‘2023 Trafficking in
Persons Report by the State Department’ [68],
Mauritius faces challenges in securing its extensive coastline and ports, with
drug smuggling being a major concern due to its coastal position and proximity
to major drug trafficking routes. The report highlights that the lack of prior
knowledge of the sea among many recruits in the coast guard service and the
suspected involvement of local fishermen in drug transportation intensify this
issue.[69]
Furthermore, the Global Organized
Crime Index report on Mauritius [70]
mentions that one prevalent tactic to get over labour restrictions
in several Arab regimes is to smuggle domestic servants, primarily from
Madagascar, to the Arabian Peninsula via Mauritius. Compared to other countries
on the continent, the islands are more difficult to enter, even though there
are generally very few occurrences of human smuggling.[71]
IUU FISHING
According to a report by Seafood
Source, Mauritius derives 1.5% of its GDP growth from the fishing industry,
with the country experiencing a decline in marine capture of 11%, accounting
for up to 92.5% of the total fish production. [72]
However, there has been a 6 % growth in aquaculture fish production since 2003.
This decline in marine capture due to IUU fishing has affected the country's
overall fish production and economic performance.
Furthermore, efforts to combat IUU
fishing in the Western Indian Ocean region, which includes Mauritius, have been
intensified. Blue Ventures Conservation Madagascar, in collaboration with the
U.S. Embassy in Madagascar and Comoros, is working on a project funded by the
United States Department of State to combat IUU fishing and increase public
awareness to reform policies for better results. IUU fishing poses a
significant threat to marine biodiversity, the livelihoods of coastal
communities, and the potential for a sustainable and equitable Blue Economy in
the region.[73]
CLIMATE CHANGE
The change in climate has had a
significant impact on Mauritius' GDP and economic growth in recent times.
According to the World Bank, Mauritius experienced a GDP growth rebound of 3.5%
in 2021 and accelerated to an estimated 8.3% in 2022, supported by a strong
recovery in tourism despite challenges from external supply shocks due to the
war in Ukraine. [74]
However, inflation reached 10.8% in 2022, driven by these external supply
shocks, which increased the prices of energy and food products, impacting the
economy.[75]
Furthermore, the African Development
Bank Group reports that Mauritius is particularly vulnerable to climate change,
and addressing shocks and crises arising from climate change is crucial to
counter economic volatility and enhance inclusive growth. [76] ‘The
country aims to reduce overall greenhouse gas emissions by 40% by 2030 compared
to the Business-as-Usual scenario’, emphasizing the importance of sustainable
development and transitioning to a greener economy.[77]
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