Indo – Russian tango

Freezing cold Soviet Union was India’s best friend during the Cold War. India imported a lot from Moscow, from wheat to fighter jets. Times changed, Cold War came to an end with the collapse of the Soviet Union, India ushered into green revolution and later into an economic revolution. What remained unchanged all along was the love between India and Russia. There are many reasons why the cosy relations never soured. Bitter experiences with the western countries (especially America) in the past and common strategic interest in the region were the two main forces behind the strong bonding in the past. In recent years, India’s growing defense market and booming economy are the main reasons for the Russians to maintain status quo. Some where the shared values of clinging on to power and big ticket state corruption too bind the two countries together.

Mr. Singh at the Kremlin

The doors are open, but what is on offer?

December witnessed yet another flurry of activities in the South Block secretariat (where the ministry of external affairs is based). Prime Minister Singh was on a three day state visit to Moscow. The visit did not generate much interest in Indian media due to lack of any significant development or announcements. The 36 point joint statement on Ministry of External Affiars’ website is bland. Most of the points talk about “expressing satisfaction” on status quo. The only thing worth a mention is the deal offering licensed production of 42 Sukhoi – MKI 30 jets by Hindustan Aeronautics Limited in India.

Prime Minister Singh also assured his counterpart about starting operations at the Kudankulam nuclear power plant in a couple of weeks. The power plant is being built with Russian collaboration. Ironically, Mr. Singh also congratulated Mr Putin (president in waiting) on winning the Duma elections by his United Russia Party. The election results (widely believed to be heavily rigged) prompted widespread protests by Russians in Moscow and other major cities. Mr Putin ordered the army into the main city square to stop the protests. International observers have complained of widespread fraud in the elections, which gave just under 50% of the votes to the ruling United Russia Party. Observes say that the figures may be inflated by as much as 20%. Mr Singh has undoubtedly embarrassed the Indian democratic values by his gesture.  

The other things the tow countries discussed were of mere ornamental value. Russia’s support to India’s candidature of permanent membership of the United Nations Security Council, countering terrorism, encouraging people to people contact, space collaboration, etc were reiterated for the umpteenth time. In the context of the situation in the Middle East and North Africa, the countries reaffirmed their commitment to the principles of searching the way to overcome crises in the region in compliance with law, exclusively through peaceful means, avoiding violence and outside intervention, through broad, inclusive national dialogue on democratic reforms, taking into account the legitimate rights and aspirations of the peoples of the region. This effectively means being a bystander and watching from the sidelines, without contributing to the cause.

Opportunities passing by

What India should focus on apart from the ornamental details are some serious issues like finding synergies post Russia’s entry into WTO, leveraging the Shanghai Cooperation Organisation (SCO) to get a strong hold in the fast emerging Central Asian market and closer cooperation in filed of energy. Kazakhstan has suddenly found itself flush with unexpected oil and gas reserves in the North Western oil field of Karachaganak and yet to be commissioned offshore oil field Kashagan in north Caspian Sea. The proposed comprehensive economic cooperation agreement between India and Belarus-Kazakhstan-Russia Custom Union will greatly help the Indian energy needs for its growing economy. The SCO in recent years has gained importance in Central Asian business and strategic affairs. China’s undying hunger for natural resources and energy has got the countries in the region closer to it. Oil pipelines now traverse the harsh terrain to enter China and trade has increased seven folds in as many years. China is aggressively pushing for a free trade agreement for the six member trade bloc.

It is time India revived its own Regional trade bloc, the South Asian Association for Regional Cooperation and aggressively look for a foothold in activities in its near abroad.

Too much on my plate

Train tracks in Persia

Afghanistan’s recently rediscovered mineral wealth has attracted many eyes on this restive region for altogether a different purpose. Companies from west and east have bid for the mining rights in Hajigak region. Of the twenty two companies shortlisted fourteen are Indian, including a consortium of a state run company, Steel Authority of India Limited. The mineral wealth of Afghanistan is valued at between 1 – 3 trillion US dollars, more than the valuation of Indian economy at 1.6 trillion US dollars (at nominal prices). The situation looks rosy, with many Indian companies lining up for the contracts a few would definitely get lucky. India’s appetite for commodities will only rise in the future and a source so close to the country will only make things easy. However, on ground the picture is rather bleak.

Proposed train connection between Afghanistan and Iran

Though Kabul is just around 600 km from the Indian border, transporting minerals from Afghanistan to India is a tough task. With no transit agreement in place with Pakistan and Afghanistan being sandwiched between Iran and Pakistan, with no access to the shipping lanes, the only way out is using Iran’s sea ports. India has embarked upon an ambitious plan to link Hajigak with the port of Chabahar in southern Iran by a rail link. This train track will by-pass Pakistan completely and give India the advantage of easy access to Afghanistan. This arrangement will also help Afghanistan reduce its dependence on Pakistan for supplies and trade. However, the track record of Indian state owned companies building large scale infrastructure projects abroad have not been impressive. Construction of a power plant in Sri Lanka has finally started after many years of agreement. It will be interesting to see how quickly things move on this project.

On a multi lateral level the Istanbul conference concluded in Istanbul on 2 November 2011. The joint declaration did not come up with any strategic plan and merely reiterated what every one has been saying so far. However, mockingly though the declaration calls for promoting of tourism activities in the country. India was part of the process this year. Pressure from India and the US has worked and Turkey extended the invitation to India. Still the Istanbul process remains only one of many in a string of conferences being organised across the world.

Pakistan’s Yes – No – Maybe and Iran’s dirty bomb

Pakistan has decided to bestow India with the long pending “Most Favoured Nation” (MFN) status. This is mandatory under the SAFTA (South Asian Free Trade Agreement). The MFN status helps the countries to open up trade and shift to a state of “negative list” from that of a “positive list”. This essentially means that trade under MFN status will restrict only a small number of items mentioned in the negative list, as compared to the positive list system which only allows trade in a few items in positive list. The going has not been easy for Pakistan. It took Pakistan almost fifteen years to reciprocate the status after India granted it in 1996. The recent announcement has lead to a frenzy of activities in the Pakistani defence establishment and there has been going back and forth on the commitment from the civilian government. It is believed that Pakistani military is against any kind of close cooperation with India.

The MFN status in itself will not be enough; it calls for a major overhaul and coordination between the eight member states of SAARC (South Asian Association for Regional Cooperation). A possible integration of roadways, waterways and railways in the SAARC region is being discussed. This might prove to be a path breaking move to boost regional integration and development.

Where will this lead?

With the Afghanistan – Iran rail link and the MFN status offered Pakistan, things should look bright on the bilateral trade front. However, the growing concerns over Iran’s nuclear programme and safety of Pakistan’s nuclear weapons it will be a tough task to achieve all this. A report by the UN agency IAEA (International Atomic Energy Agency) is expected within days this week (7 – 13 Nov, 2011). It is widely believed that the report will say that Iran has reached the critical stage where it can acquire capabilities to induce nuclear chain reaction required for a nuclear weapon. There have been reports of both the US and Israel warning Iran to stay away from developing its nuclear capabilities. It is difficult to guess the outcome of the report, however what is plausible is even stricter UN sanctions on Iran. Given such a situation India will be in a tight spot with its ambitious Afghan – Iran rail link. Getting itself involved in the project might be counted as violation of the UN mandated sanctions and would definitely upset the Indo – US relationships.

Will Jasmine blossom in China?

Another growing concern lies across the eastern borders of India in China. A string of reports suggest that China is undergoing a sort of social movement. In the past China managed to gag media and stop unwanted news items from being shared with people. In recent years that trend has changed. Internet has proved to be much more difficult to control than the traditional media. Micro blogging sites like Weibo have made flow of information swifter. Taking a cue from the Arab spring the Chinese tried to organise a Jasmine uprising, which was brutally crushed before it could blossom. Internet proved to be a handy tool in organising the scattered jasmine protests in the country (despite strict control by the government). State owned media too has started pointing fingers at the government with editorials and news stories in Xinhua (the largest state owned English language daily) and other dailies. Other reports in international media paint a grim economic picture of China. Rising interest rates, increasing labour cost, fleeing entrepreneurs, unpaid construction workers, slumping property prices, crack down on dissidents and forceful land acquisitions by the government are widely talked and discussed.

Ai Weiwei, a celebrity dissident kept in illegal detention,
is now being slapped with a tax fine of 2 million US dollars 

India needs to take some time out to think about the possible fall outs of a revolution in China (which is not unlikely given the situation). Bilateral trade between India and China is expected to reach 100 billion US dollars in the next four years. China is already India’s largest trading partner and any upheaval in China might have serious consequences for Indian business environment.

With too much on the plate the fear is always that some tasty food will get ignored. The current situation might be a little overwhelming for Indian foreign affairs ministry, given the lack of personnel. The way events are developing in India’s neighbourhood, one thing it can not afford is lack of focus. This is a situation where every thing comes at the top of the priority list.

Winds of change in India’s east

Indian summer

Changes in Myanmar are often glacial if not unheard of. Politically isolated by international sanctions and heavily guarded by its generals, Myanmar has virtually closed its doors to the world. Extreme poverty and rampant corruption has put lives of ordinary Burmese in the slow lane. The 8888 uprising (pro democracy movement lead by Ms Aung San Su Kyi on 8^th August 1988) was brutally crushed by the junta. Since then Ms Kyi has been languishing under house arrest. She was released in November 2010 with limited freedom to her movement.

Things have started changing ever since. Ms Kyi’s release came six days after a stage managed general election, which she and her party refused to recognise. The government is still controlled by ex-generals including the current president Mr Thein Sein (inaugurated in March 2011), who served four decades in the armed forces. But it is civilian in its appearance. Mr Sein has discarded his military uniform in favour of a democratic government. However, a change in constitution in 2008 vests immense powers in the military. But in Myanmar any change is a welcome step.

There have been instances in the past when things looked bright on the banks of the Irrawaddy. In the mid 1990s and then in late 2002, the generals and Ms Kyi seemed to make some headway towards reconciliation. Sadly nothing came out of the efforts. It will be interesting to see if 2011 proves to be Burma’s Indian summer.

Spring in India

India’s relationship with Myanmar has been cold at the best. The last time Myanmar was discussed widely in India was during the twilight days of the Second World War. Japanese army was in Myanmar hoping to control Assam and later Calcutta (now renamed Kolkata). Once the World War came to an end, Myanmar slipped into a corner in Indian foreign policy. A second, Myanmar wave struck India during the prodemocracy 8888 uprising, but pragmatism won the day. Economic changes of the 90’s and rise of an assertive China put an end to India’s support for democracy in Myanmar.

India maintained its distance from sensitive topics of democracy and human rights in Myanmar, while it still engaged with the Junta keeping an eye on its natural resources. Myanmar has a huge potential to serve India’s growing demand for minerals and energy. It is also a link between India and economically successful ASEAN trade bloc. India was however left behind in its efforts to harness the potential Myanmar has to offer. Long period of military rule and international sanctions pushed Myanmar closer to China. With dictatorships like North Korea and coup prone countries like Pakistan as close friends, it did not bother China to have another member in its club.

China made huge investments in Myanmar’s infrastructure with an eye on its vast natural resources and strategic location close to India. But the winds of change are blowing now. Like every where else Chinese presence is being seen as a threat. Earlier this month Myanmar announced that it will suspend construction of Myitsone dam, a $3.6 billion Chinese hydro electric power project (due to environmental concerns) in north east of the country. The project had a capacity to generate 6,000 MW electricity and almost all of that was supposed to be sold to China’s energy hungry grid. Another ambitious plan to link Myanmar’s north eastern state of Shan to the port city of Kyauk Phyu on the Bay of Bengal (at a cost of $ 20 billion) was supposed to start in December 2011. After the scrapping of the power project, the project might get delayed if not stalled.

With Chinese relations souring, Myanmar is looking at India. President Mr Thein Sein is visiting India (12 – 15 October 2011) and will hold talks on increasing bilateral trade and matters of cross border security. This visit has the potential of transforming the cold relations between India and Myanmar into a spring of opportunities.

The shining pagodas

Things are looking up in Myanmar (or at least appearing so). A quasi democratic government, increased political freedom for opposition, setting up of labour unions and release of political prisoners are all steps in the right direction by Myanmar. Rest of the world will soon recognise these efforts and the sanctions might be rolled back in a phased manner. India’s proximity to Myanmar and Myanmar’s strategy of counter balancing China can spell boon for both the countries.

India’s north eastern states have huge potential to engage in trade activities with Myanmar. In the long run as and when the transit corridors with Bangladesh become operational an extension can be offered to Myanmar, giving it easy access to sea ports and a larger market to India. Closer relation between India and Myanmar will also help in handling the insurgency in north east India. There is a whole new spectrum of opportunities to be explored by India and Myanmar to forge closer and deeper ties. What remains to be seen is how long the pagodas can retain their shine.

Incredible India Diplomacy

A new avenue

India has tried aid diplomacy, back channel diplomacy and the much talked about cricket diplomacy. These might have worked at a government to government level with different success levels. What is still lacking is India’s effort to establish people to people contact, not just with its immediate neighbours but also with its near abroad. India’s relationship with its neighbours has not been smooth. Wars, political tensions, illegal crossing over, etc have kept India away from its neighbours (it is slowly changing of late).

Attempts like SAARC hardly helped in increasing people to people contact. India has its overseas cultural unit known as the Indian Council of Cultural Relations (ICCR). It provides scholarships, organises cultural events and institutionalised chairs in various countries across the world. Awareness about India has increased in the past few years (more because of its economic fortunes than ICCR), flow of people into India and is still limited. Tourism statistics available for the year 2009 suggest that India received under a million tourists from the SAARC countries. That is just 17% of its total tourist arrivals. India’s near abroad has not been any better, contributing a mere 10% of India’s total tourist arrivals (see chart).

Is India listening?

So what is wrong with India? In the past couple of years India ran the most successful ad campaign abroad. The “Incredible India!” campaign proved immensely popular in western countries and won several awards. It also helped boost India’s tourist arrivals in the years followed by the campaign. Having done so much, India’s immediate neighbourhood has largely ignored it. Attracting its neighbours will serve dual purpose for India. An increase in tourist arrivals will give a boost to the industry in terms of higher foreign exchange receipts and increase people to people contact.

Buddha and places associated with his life can be the key to India’s potential to attract its neighbours. There are several sites in eastern Indian states of Bihar, Jharkhand & Uttar Pradesh, which are significant due to various important incidents in Buddha’s life. India’s Buddhist tourism if developed properly has the potential to attract 1.4 billion people from Bhutan to Japan. Countries like Indonesia and Thailand practice a religion, which is a mix of Buddhism and Hinduism. That makes all of India available for them to explore.

India’s ministry of tourism needs more than just feasibility reports to develop Buddhist tourism. The three states (Bihar, Jharkhand and Uttar Pradesh) where Buddha spent most of his life are the least developed in modern India. Basic infrastructure like surface and air connectivity, utilities like water and electricity and good hotels are conspicuous by their absence. Given the deep religious affiliation of the eastern countries a marketable product from India will be appreciated by Buddhists in East Asia. The potential is huge but there is no political will to extract it. Private investments can quickly create infrastructure and put the region on the international tourism map.

Given the cultural and linguistic differences between India and rest of East Asia, Buddhist tourism can be one common link, which can connect the people. Once people get to know a country better, it opens a lot of doors. Cultural exchanges, identifying common ground, increased confidence due to familiarity of a country will go a long way in indirectly attracting investment in India and exporting products and services to East Asia. It is time India uses tourism diplomacy to win over the neighbours.

SAARC – The untapped potential

The poor cousin

The year 2011 marked thirty years* of existence of SAARC (South Asian Association for Regional Cooperation). After all these years, SAARC has little to show to its flourishing cousins like the ASEAN (Association of South East Asian Nations) or the SCO (Shanghai Cooperation Organization). Both regional associations have transformed themselves into globally respected trade blocs and are far more active compared to their South Asian cousin. SAARC on the other hand has proved no more than an alternate (and perhaps less controversial) venue for Indian and Pakistani ministers and bureaucrats to talk. So what really went wrong? 

Partly the timing of the association is to be blamed. The idea was mooted in late 70s by Sheikh Mujibur Rehman, the first Prime Minister of Bangladesh. However, the formal incorporation of the association did not happen till 1981, when the heads of the states of seven countries (Afghanistan joined in 2007) met in Colombo. This was the time when India witnessed a tide of insurgency in Punjab which later transformed into a full blown terrorist movement. The insurgency in Punjab was followed by a similar unrest in the northern most Indian state of Jammu & Kashmir. India blamed Pakistan for the terrorist activities in both the states. India’s involvement in Sri Lanka’s civil war and the subsequent fall out was another reason for India to go slow on SAARC. Domestic politics in the respective countries prevented them from actively engaging in trade dialogues with India.

As a result intra SAARC relationship went into a deep freeze even before it could mature into a meaningful dialogue. The very fact that the SAARC has barely met for sixteen times during its thirty years of existence is a proof of it being neglected by the member states. Meanwhile India, the largest member in terms of population, size and economy was looking at off shore forums like the ASEAN and SCO where domestic politics played little role and economic dividends were substantial. Regional politics had taken its toll, reducing SAARC to the status of a poor cousin among the Asian trade blocs.

Spring cleaning

Much has changed in the past couple of years, especially on the security front. The twenty six year old civil war in Sri Lanka has come to an end, militancy in the Indian state of Punjab has faded away from public memory, Jammu & Kashmir is witnessing lowest level of terrorist activities in two decades and India – Bangladesh are making tremendous progress to mend their relationships. However, Pakistan is still shrouded by the war against terrorism and its complex domestic politics. It will be some time before Pakistan returns on the path of growth.

Time has come when India should take the initiative to resurrect SAARC. According to 2009 estimates the SAARC region has a total population of 1.6 billion in an area of 5.1 million sq km and the total GDP amounts to USD 4.3 trillion (PPP). These statistics are exciting for any organisation looking at a business venture in the region. Sadly intra SAARC trade reached USD 687 million in 2009, a fraction of its global trade. On the other hand other regional organisation registered significantly high trade volumes among their member countries. ASEAN registered total intra regional trade to the tune of USD 387 billion in 2009 and SCO registered USD 8.4 billion in 2010. For a region which accounts for almost a quarter of the global population, the trade figures come as a shame. The proposed India – Bangladesh transit agreement will be a major step towards cleaning the mess hindering SAARC integration.

The extra mile

Will SAARC move beyond a photo opportunity?

Various global agencies including the European Union, Asian Development Bank, the World Bank, etc and countries like the United States show active interest in SAARC. These organisations publish working papers & statistical analysis to gauge the progress. However, the real job has to be done by the member countries. India being the largest country in the region should walk that extra mile to revive SAARC. Other SAARC members too should shed their inhibitions and take some bold steps (as Bangladesh has taken) to address concerns of India and enter into a relationship on equal footing.

SAARC needs a giant step forward. That would mean significant changes in current tariff regulations. Despite SAFTA (South Asian Free Trade Area) being in force since 2006, no substantial trade movements have happened with in the region (though intra SAARC trade jumped from USD 14 million to USD 687 million in 2009, it still remains dwarfed by its rivals like ASEAN and SCO). The member countries fail to understand the benefits of a real free trade area where goods and services can be exchanged without tariff or non tariff barriers. Such arrangements have immensely helped countries of ASEAN. India as a country too benefited from liberalisation of its economy. These are living examples of modern day economies harnessing benefits of increasingly globalised trade.

Lesson should be learnt from India – Bangladesh transit agreement which will help not just India but Bangladesh, Nepal and Bhutan to better their international trade by using Indian and Bangladeshi roads and ports. Physical integration of infrastructure of the region will pave way for smooth transit of goods across borders and will save time and wastage during transit. The challenge will be to integrate the two unstable western members in the folds of SAARC.

*The foreign secretaries of the seven founding countries met in 1981 in Colombo, Sri Lanka for the first time

Of encirclement and counter-encirclement

Look! the dragon is coming

In the past few years India has constantly expressed its deep concern for what is termed as the “string of pearls”. A term coined by the US defence department with reference to China’s active involvement in ports across the Indian maritime borders. China has engaged in developing ports in Sittwe in Myanmar, Chittagong in Bangladesh, Hambantota in Sri Lanka and Gwadar in Pakistan. This has given China access to India’s maritime boundaries and a future where China might have its naval bases at these ports. This is indeed alarming for India, especially when China is also building up its military capabilities with Intercontinental ballistic missiles and a refurbished aircraft carrier. China’s cosy relationship with Pakistan is another eye sore.

China is also becoming aggressive in the South China Sea with maritime disputes with all its neighbours (and in East China Sea with Japan). If all the disputes were to be resolved to China’s satisfaction it will virtually claim sovereignty over the entire South China Sea, hence controlling the shipping lanes vital for trade among South East Asian countries and between South East Asia, Far East and India.  Western countries including America have shown their concern over the increasing China presence in Asian region.

And look what the elephant was up to

This all looks extremely serious and at times worrying. But if seen from a neutral point of view, there is nothing alarming in the present situation. China is the second largest economy of the world (although a distant second to America), is a permanent member of the United Nations Security Council and has grown in the global pecking order in last few decades. It is only natural for an emerging country (and in some areas emerged) to expand its influence in its neighbourhood and near abroad. America has done this after the second world war, the UK did it till it came under sever financial strain after the two world wars and India is doing its bit post liberalisation.

Stop encircling me

While India’s concerns may sound valid, a deeper look reveals that most of this is self inflicted. India has played cold to the opportunities arising in its immediate neighbourhood. The state owned enterprises of India are inefficient and struggle to perform on the home front (barring a few like ONGC, an oil exploration firm). Expecting them perform abroad will be naïve. India after months of delay and going back and forth on a joint venture power plant in Northern Sri Lankan city of Trincomalee, has finally agreed on the terms and conditions of an agreement which it intends to sing later this month. The first power plant went to China.

Hambantota, the much talked about strategic foothold of China was initially offered to India. Lack of interest by India proved to be China’s gain and it is now developing an integrated project including a sea port, an airport, a city centre, a stadium and a convention centre. If every thing goes well Hambantota will welcome its first ship six months before the deadline. Meanwhile a USD 300 million project of Colombo port expansion has been awarded to another Chinese company (no Indian company bid for the project). Given all the inefficiencies the Indian system has and does little to eradicate, can China really be blamed for encircling India?

The counter circle

Across the border, China too has its own concerns about India trying to encircle it, especially in its strategic neighbourhood. The first and oldest issue is of Tibet. India has given refuge to Dalai Lama ever since he fled to India following the Chinese annexation of the kingdom. India has also allowed Dalai Lama to establish a Tibetan government in exile, which virtually undermines Chinese sovereignty (however India officially maintains one China policy). More recently India has become extremely active in Afghanistan by means of its non military aid to rebuild the country. This has upset Pakistan, which sees Indian presence as an attempt to encircle it. Deep running friendship between China and Pakistan has prompted China to share Pakistan’s vision on Indian involvement in Afghanistan.

In the past decade India has refreshed its Look East Policy and has forged closer relationships with its South East Asian neighbours. The most important regional force in the region is the Association of South East Asian Nations (ASEAN). India has rapidly risen to a summit level partner in 2002 from a sectoral dialogue partner in 1992. India’s bilateral trade with ASEAN has increased dramatically from a paltry USD 2.9 billion in 1993 to USD 40 billion in 2009 (ASEAN forecasts bilateral trade to cross USD 70 billion by 2012). India also entered into a free trade agreement with ASEAN in 2009, giving it greater economic access in the region.

In 2000 India along with five other South East Asian countries (Myanmar, Thailand, Laos and Vietnam) formed the Mekong Ganga Cooperation (MGC). MGC was formed as a group of six countries, focusing on tourism, culture, education and transportation. The bloc failed to take off and in 2003 was replaced by Thailand initiated Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy or ACMECS, essentially the same countries as in MGC minus India. Not withstanding the fact, China might still see it as Indian entry into its backyard.

India has improved its bilateral relationships with Japan and South Korea in the past few years. India is increasing its naval footprint by conducting joint exercises with Japan, South Korea, Singapore, Vietnam, The Philippines, New Zealand, etc. It also carried out an exercise with America and Japan in the Pacific in 2007. In 2008, India and Japan signed an agreement on joint patrolling of the Asia – Pacific region.

Whose circle is it anyways?

The situation might look worrying when seen through the patriotic lenses; however both India and China seem to do their bit to secure their economic and strategic interest in the region. On 25^th August Times of India (http://timesofindia.indiatimes.com/india/India-develops-cold-feet-on-talks-with-Japan-US/opinions/9726482.cms) reported that India has developed cold feet on a planned joint naval exercise with Japan and America. Undisclosed officials in the establishment say that India does not want to antagonise China. However, China has not lodged a formal protest regarding the planned exercise. Such an approach by India can be interpreted as being intimidated by a superior military neighbour.

Pre empting a non existent crisis should be replaced by confidence building measures. Both India and china are a growing power in their own right and have significant interest in each other’s affairs. Imagining a conventional war between the two is far fetched, if not hysterical. Both countries are busy fighting domestic problems and expanding their business interests. A war will set both countries back by a few decades. India and China should shed some of their fears (more in case of India) and enter into closer relationship by more people to people contact. In 2010 a paltry 600,000 tourists were exchanged between India and China. It is a shame for neighbours whose combined population is above 2 billion.

India’s improving Bangla relations

Out from the cold storage

Prime Minister Manmohan Singh will breathe a little easy on September 6^th and 7^th. He will be on a state visit to Bangladesh, away from heat of the anti corruption movement back home. Prime Minister Singh’s visit is closely watched by many in India and Bangladesh (more closely by Bangladesh media). After a long period of hostile and unfriendly governments in Bangladesh, Prime Minister Sheikh Hasina has come as a welcome change. Relationships between the two countries have improved significantly with a state visit by Prime Minister Hasina in early 2010. The current visit by India is expected to further strengthen the relationship.

After the first military coup in Bangladesh which eliminated the entire family of its first Prime Minister Sheikh Mujibur Rehman (from which Sheikh Hasina escaped), India lost interest in its neighbour. Domestic issues, Pakistan and an escalating cold war kept India busy. Lack of active Indian interest and successive regimes hostile to India were used by China and Pakistan to nurture insurgency in North Eastern states of India. Matter got worse with thousands of Bangladeshis migrating illegally into India for economic reasons. In effect India Bangladesh relations were strained.

Off late it has dawned upon India to actively involve Bangladesh and forge a mutually beneficial relationship. India sees a great prospect of connecting its North East with rest of the country by means of transit corridors. Currently it is extremely difficult to connect its North East through the existing Siliguri corridor (also known as ‘chicken neck’), which is barely 20 km wide at some points. For people living in India’s North East, transportation is a major issue and is often expensive. Air travel is the only means to travel quickly. Other critical matters like disaster management, health services, food supply, etc proves to be difficult owing to long distances to be covered and wastage in transit.

Bring it to the table

With Bangladesh doing its bit to curb anti India activities on its soil, India wants extend the deal and include infrastructure to connect to its remote region. India and Bangladesh together have identified transit corridors which will help not just India and Bangladesh, but Nepal and Bhutan too will be able to make use of transit corridors to connect to the ports in Bangladesh. India has extended a credit line worth $ 1 billion on concessional terms to implement the project.

Let the barbed wire not stop the dove

India and Bangladesh are also working hard to resolve their border issues. The two countries share the longest international border in the world (4,100 km) and also have a unique situation of enclaves and counter enclaves in each other’s territories. A solution is expected to be arrived at before Prime Minister Singh visits Dhaka early next month. Available information suggest at a possible land swap to firm up the border. This will be a first complete border settlement case for India.

One of the most sensitive issues between India and Bangladesh was of shooting of illegal migrants (most of them are Bangladeshis). India’s Border Security Force (BSF) killed 33 Bangladeshis in 2010, while they were crossing over illegally into India. This had not gone down well with the government and common man in Bangladesh. Killing of Felani, a teenage girl by the BSF was widely criticised by Bangladesh and international media and human rights agencies. A meeting between home ministers of the two countries has resolved the issue with India promising not to shoot any one crossing the border.

On the trade front India and Bangladesh did trade worth $ 2.6 billion, which is close to 0.58% of India’s total trade. This can definitely be improved. Prime Minister Singh should take this opportunity to foster closer business ties with Bangladesh, offering greater private investment in the country. Taking advantage of India’s strengths in information technology, companies like TCS and Infosys should be encouraged to set shops in Bangladesh. Active involvement in Bangladesh’s economy will ally fears of a sell off to India. India and Bangladesh should eventually move towards a free trade agreement where there is no list of negative trade items.

For all this to happen, both countries should upgrade their surface transport. A road or train trip to Dhaka from Indian state of West Bengal can take as long at 12 hours, to cover 400 km. To ensure more people to people contact, a convenient transport system is very important. A swift system will ensure more cross border movement and hence closer cultural ties. India and Bangladesh share a lot in common, from Rabindra Nath Taogre who wrote the national anthem of both countries to a common language (in West Bengal) to culinary habits and of course the love for cricket. Bringing the two countries closer will not be difficult provided India plays its cards wisely. 

India and its global ambitions

Yes, no, maybe…

The weeks that followed the fall of Mr Dominique Strauss-Kahn as the chief of International Monetary Fund and the subsequent world tour by Ms Christine Lagarde to drum up support for her election to the office, India joined the chorus of developing countries to have adequate representation. The bloc of developing countries (India, China, Brazil, Mexico, etc) was challenging the tradition where IMF was always headed by a European. Briefly Mr Agustin Carstens, governor of Mexico’s Central Bank tried to rally support from developing countries including India. However, none of the developing countries managed to arrive at a consensus and Ms Lagarde, was eventually elected to the office. In the mean while China decided to support Ms Lagarde’s candidature in return of a larger responsibility for China in the IMF.

India is often viewed as unprepared when it comes to multilateral decisions which have global implication. We have seen this in case of the EU-India free trade agreement, WTO’s Doha round and more recently the climate change summit. Long winded processes which seem to take for ever, due to lack of preparedness or vested interests or some time misplaced sovereign pride. India which has done remarkably well on bilateral fronts is severely lacking on multilateral fronts. That being the case, India’s global ambitions are only growing. For the past two decades India has been pressing for a reformed United Nations Security Council (UNSC) with a permanent seat for itself. India along with Brazil, Germany and Japan formed an interest group known as G4 to push for the reform and subsequent expansion of the UNSC. All countries on the permanent council support India’s candidature; however any reform in the near future is a remote possibility.

Running the extra lap

It is a well acknowledge fact that India has arrived on the global scene in the past two decades. It has acquired an enviable position of upholding democratic values and churning out a fast growing large economy from a country which was on brink of sovereign default. Most of the recent global initiatives of India have been largely trade and commerce centred. The world is yet to see India take an assertive and sustainable step in global diplomacy, some thing that the established and emerging world powers have already shown. India has traditionally shied away from any matters which can potentially (some times falsely assumed) upset its diplomatic equilibrium.

In the past India has given the excuse of having its hands full with housekeeping activities and establishing order with in the country. In the past two decades much has changed, both within India and outside. Indian diaspora is now much more active around the world, Indian trade and commerce has spread to once far off countries and Indian views are listened to around the world. India’s inclusion in the G-20 has further raised its profile. India’s contribution towards handling of the recent financial crisis has proved its abilities as a mature economic power to the world. Both the developed and the developing world see India in a different light now. It’s no longer an aid seeking and famine struck country of the 60s.  

The tiger sleeps on

With so many changes, India has surprisingly lagged in international diplomacy. It has always taken a reluctant and meek stand on matters of international importance. The latest being the abstention from the UNSC resolution 1973 approving a no-fly zone over Libya. India’s excuse was that armed intervention should be the last resort after the efforts of UN appointed envoy fail, which was not yet implemented. In a situation where a despot is hell bent on killing his own countrymen an armed intervention is more of a humanitarian effort than military one. People opposed to UNSC resolution can argue that past military interventions (Iraq and Afghanistan) have proved anything but useful. For every person sighting Iraq or Afghanistan there is Rwanda and Srebrenica where armed interventions have brought an end to genocides. No-fly zone over Libya was the best possible action at a time when Mr Qaddafi was killing his own country men. India missed the boat.

On other sensitive issues like nuclear proliferation too India has no consistent stand. India’s concern on nuclear proliferation ends at Indo-Pak border. To some extent India’s reluctance stemmed from sanctions imposed by the west after its operation “Smiling Buddha” in 1974. But in the aftermath of international recognition of India as an official nuclear power (in shape of Indo-US nuclear deal) it should now take a firm stand on the issue. It should have a clear policy on Iran and North Korea. So far nothing has come forth.

One thing that India has failed to leverage to its benefit is its unparalleled achievement in nurturing and maintaining democratic standards. India should play its democratic card at international forum to establish itself as a mature country, which believes in fair play and respects public involvement. This will help it balance against its biggest rival, China. While the Tibetan government in exile has its seat in New Delhi, India does not use it like China uses stapled visas for people living in Indian states of Jammu & Kashmir and Arunachal Pradesh.

Its time India metamorphose itself into a country which has more than just cheap labour, growing auto market and consumers hungry for foreign products. Time has come that it takes on the world stage with confidence. It should stop bothering itself with myopic electoral gains while shaping its foreign policy. India has already lost time in catching up on the lost opportunities. The present reactive policy of India should shift to proactive and a widely thought through policy, which can support India’s claim to international institutions like UNSC, IMF or possibly G6 (G5 + 1). 

The Afghan roadmap

Roles reversed

India has pledged to spend $ 1.2 billion as non military aid in Afghanistan between the years 2002 - 2013. This comes as a surprise for a country which is a major recipient of international aid. One might choose to consider India’s aid as a tool to assert its influence (some like to phrase it as strategic foothold) in Afghanistan. India has involved itself in a big way in rebuilding the war torn country. In past nine years it has got its foot in virtually every aspect of Afghan redevelopment, be it the Zaranj – Delaram road connection on Heart – Kandahar highway, Salma dam power project, setting up schools or building the new parliament. Apart from infrastructure projects India is also running medical care and child nutrition programmes in many Afghan cities. On a small scale India is also providing skill enhancement programmes (mostly vocational training) to Afghan youth to help them get into mainstream economy.  After nine years and pumping in 40% of the pledged aid what does India stand to gain?

Love thy neighbour 

India’s involvement in Afghanistan has not gone down well with Pakistan. It sees Indian presence as a threat in its backyard. Some hawkish institutions in Pakistan also suggest that India’s growing influence in Afghan matters is a long term conspiracy to ‘sandwich’ Pakistan (between India and Afghanistan). What ever the arguments be, India is increasingly seen as a threat by Pakistani establishment. This became apparent when Turkey under pressure from Pakistan did not invite India for the last high profile Afghan summit in Istanbul.

Will India limit itself to creating democratic infrastructure
or will it push for real democratic reforms in Afghanistan? 

A billion dollar plan for reconstruction, while the host country still battles with insurgency and terrorism is a risky proposition. Reports suggest that owing to lack of security apparatus the much talked about Zaranj – Delaram road connection is already under Taliban control. Kabul’s new parliament house being built by India (which it believes is the beacon of democracy in the largely tribal country) will house Mr Karzai (pictured) who is anything but democratic. He is facing allegations of large scale forgery and corruption in last presidential election. Afghans call Mr Karzai “king of Kabul” as the writ of his government ends at the city limits, outside which Taliban and tribal factions hold sway. So what exactly is India doing in such a place?

India sees its involvement in Afghanistan as an attempt to regain its credibility and strategic foothold which it lost after the Soviet invasion in 1979. Then a staunch Soviet ally, India supported the Soviet invasion leaving many Afghans angry. With the expulsion of Soviet troops and later a Taliban takeover, India lost all political contacts with the country. It was only in 2002 after Taliban was ousted from power that India reacted swiftly to fill the vacuum with non military aid. In the following years India once again came to be seen as a friendly country, more and more Afghans started coming to India to attend universities subsidised by Indian government. Bollywood songs could once again be heard in bazaars of Kabul and Afghanistan had its own national carrier. India found its lost neighbour once again.

What does the future hold for me? 

Till now India has made all the right noises in the country. However, the kind of role India is playing at present will not sustain it's presence for long. In a war torn country roads and power plants can be blown apart any time (as has happened in the past), schools can be closed down on whim of Taliban and food supplies can be cut off due to logistic issues (not impossible in a landlocked country). India needs to take up a greater role to rebuild the country.

The CIA world factbook estimates the Afghan GDP at $ 27.36 billion for 2010. Close to a third is contributed by opium trade. Unemployment rates are as high as 35% (2008) and an equal number of people live below the poverty line. The Afghan government collects $ 1 billion in revenues and spends $ 3.3 billion a year. Banking in the country is in a deep mess with recent scandal involving Kabul bank, the biggest bank of the country. With such a fragile situation Afghanistan needs institutions which can prepare it for future.

India should look at taking a larger responsibility of training Afghans to manage their nascent institutions like government finance, international trade and commerce, natural resources, etc. Along with institutional training India should also look at rebuilding the economy of Afghanistan. Recently the Afghan government dusted out a report from 1960s, which gives a detailed account of huge iron ore deposits in Hajigak, 130 km west of Kabul in the Bamiyan province. According to the report the region has approximately holds 1.8 billion tonnes of iron ore. In middle of 2010 the Americans declared that Afghanistan has huge deposits of previously undiscovered minerals worth a trillion dollars. These include copper, iron, cobalt, gold and lithium. 

It is no secrete that both developed and developing economies today are in dire need of natural resources. In the past decade China has extended its reach to a large part of Africa in search of natural resources to power its enviably cheap manufacturing plants. Indian companies too went abroad shopping for natural resources in Latin America, Africa and South East Asia. But the game in Afghanistan is different, especially for India. Being a landlocked country, bringing in minerals to India will be an expensive option, eroding any financial benefits. Geopolitics too will play a crucial role in Afghan-India trade ties. The only way minerals can be shipped to India is by surface transport via Pakistan or Iran to the nearest port or to northern India via Wagha. Given the strained relationship with Pakistan and a direct conflict of interest this option is far from feasible. Iran is reeling under sever international sanctions and India will not be willing to upset its relations with the west by warming up to Iran (whether India should get involved with Iran at the cost of its relationship with west can be another discussion in itself. Let’s leave it for another day).

Out of the box 

The previous article attracted a comment drawing parallels between post war Europe and present day Indian subcontinent. The comment suggested that if countries and individual have business interest then they make an effort to maintain the cordial relationship. Some thing similar should happen between India and Afghanistan.

Merely taking the mineral wealth of Afghanistan away will be extremely myopic and unfair. Exporting minerals (as and when it becomes possible) will contribute billions of dollars every year to the state exchequer, which can then be used for public welfare. However, it will take a long time for the benefits to reach the Afghan society. India should understand this and forge a long term relationship by investing in setting up large scale manufacturing plants in the country. Many Indian companies both state owned and private are interested in investing in the mines, but are held back due to logistic and security concerns. A shift in focus from merely mining to mining and manufacturing can address this problem.

Shipping of finished products directly to export markets will face less logistic challenges than shipping iron ore to India. With the setting up of manufacturing plant other support industries will come up in the region, helping the Afghan people to take up jobs in the factories or set up their own business. It is anybody’s guess what change such a situation will bring to the country. India will keep its strategic foothold in, Indian companies will benefit from high value exports (including some to India), the Afghan people will benefit and above all the Afghan government will benefit.