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.

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.