The Silk Road and the slow moving elephant

During his visit to Pakistan, Chinese President, Xi Jinping agreed to invest USD 46 billion in the China Pakistan Economic Corridor (CPEC), part of an ambitious surface connectivity project named Silk Road. Named after the ancient caravan route, the larger project envisages connecting Beijing with Rotterdam in the Netherlands. China also aims to complement the land route with a maritime route connecting Venice to Quanzhou, in Fujian province of China, on the shores of South China Sea. The link extending into Pakistan seems to be an afterthought and an interesting one at that.

 

China has a vision of its “peaceful rise” while laying its hands on resources and markets around the world. This is nothing surprising, it is the second largest economy and the most populous country in the world. It needs resources and market access to sustain the pace of development it has pulled off in the last couple of decades. With the economy showing signs of cooling down, China has to spur consumption and shift its focus from being an export driven economy. Moreover it has to find a useful way to deal with the pile of foreign exchange it is sitting on (USD 4 trillion at the end of 2014). Investing in infrastructure projects abroad is one such use. Japan has done it the past and in the process helped Japanese companies to enter new markets.

The proposed investment in Pakistan should be seen in light of diminishing American presence in Asia, warming of India – America relations and an ambitious China eager to make its mark in international arena. The CPEC is a mix of transport and energy projects stretching from Kashgar in Xingjian, China to Gwadar in Baluchistan, Pakistan. The projects will help energy starved Pakistan and create jobs over the period of implementation. More importantly the CPEC will provide China the access to Straits of Hormuz, mitigating its dependence on the Straits of Malacca. Any blockade in an event of war will have serious impact on its trade.

Meanwhile the Indian High Commissioner to Pakistan, T.C.A. Raghavan has said, India is not worried by the Chinese investment in CPEC. It would be interesting to know what the inner circle at Ministry of External Affairs has to say. But the question one should ask India is, “will the elephant move faster”? It moves but at a woefully slow pace. While China has been extending its foot print in Africa, Europe and ASEAN, India has done precious little to enhance its own presence.

Progress and prosperity. May be, may be not.

Indian Affair has written on theIndia-ASEAN relationship and need to improve surface connectivity, in 2012, while the commemorative India-ASEAN Summit was underway. The post from December 2012 can be re-read to the policy makers today without having change much. Prime Minister Modi attended the 12^th India-ASEAN Summit in Nay Pyi Taw last November. He stressed a lot on the shared culture and heritage and the urgency to implement the Free Trade Agreement (FTA) in services and a relook at the FTA for goods. Same things that were discussed in 2012. He hardly had anything to say on surface connectivity.

The India – Myanmar – Thailand trilateral highway still exists only in files and the proposed rail link connecting India’s north eastern states to Myanmar and Thailand have been almost forgotten (despite many of the rail projects being termed “national projects”).

The 2010-11 annual report of Indian Railways lists a total of twelve projects (seven of them “national projects”) being undertaken to enhance connectivity in the region. The aim is then to connect the Indian Railways network to that of Myanmar, Thailand and eventually to Vietnam. Sadly the recent report for the year 2014-15 lists all but one (Harmuti – Naharlagun, a 20 km section in Arunachal Pradesh) project as incomplete. What is worse is that the 2010-11 report anticipated all twelve projects to be completed by the year 2015-16, the latest report has not given any fixed date for most of the projects. The total cost estimate for the twelve projects is INR 33,016 crore (USD 5.1 billion). The amount spent so far is a meagre INR 7,308 crore (USD 1.1 billion) or 22% of the total budget. So much for the status of “national project”.

The newly inaugurated Integrated Check Posts in Manipur, Meghalaya, Tripura and Mizoram, will not be of much use as long as the surface connectivity remains poor. The road connectivity in the region is poor and takes a long time to undulate around the Chicken’s Neck. The time for India to act on its ASEAN trade and foreign relations policy is now. China is already connecting its cities to ASEAN and is building artificial islands to expand its territory. The choice with India is simple, let the elephant move at its own pace or outpace the dragon.

India and dawn of a multipolar world

Once upon a time

Throughout the post war period and until the fall of Soviet Union, the world order was bipolar. At one end was the capitalist United States with its European allies and on other was a socialist Soviet Union with its European members behind the “iron curtain”. There was a third but insignificant pole, the nonaligned group of mainly poor countries. The third pole or the third world eventually became synonymous to poverty and to this date, the term “poor countries” and “third world countries” are used interchangeably.

The world order changed in the post-Soviet era. The cold war came to an end and Russia descended into an economic nightmare. The “shock therapy” Boris Yeltsin administered to the markets resulted in crony capitalism and hyperinflation, wiping out savings of common citizens. The world ceased to be bipolar and America more or less dominated the global landscape. Meanwhile elsewhere in the world, new equations were being written. China had started to show signs of tremendous economic potential and India opened up for investment.

The dragon, the elephant and the pivot to Asia

The fall of Soviet Union seemed to have perfectly timed with events elsewhere. The next two decades proved that the world was no longer unipolar (as America would like to believe) or even bipolar. The rise of third world has created a multipolar world. The first world saw a decline, both in economic and military power. America ended up being entangled in a bloody mess in West Asia while its European allies struggled with recession and plummeting defence spending (most of the NATO members fall short of the 2% targets on defence spending). China rose to prominence, both in economic and military terms. India, despite its bureaucracy and lethargy turned out to be of immense interest to western world. President Obama shifted his interest to “pivot to Asia”. President Putin safely installed himself as a long term ruler of Russia and opened up another power centre with his plans to counter the European Union. The mess in Ukraine is a fine example of EU – Russia power game.

With a multipolar world inevitable, where does India stand in the scheme of things? In his just concluded visit, the Australian Prime Minister Tony Abbott said, “India is an emerging democratic superpower”. It is hard to say whether he was referring to India’s vibrant democracy or referring to India as an emerging superpower in literal terms. Whatever the case be, India is attracting more attention than ever. The biggest advantage (or disadvantage) is India’s proximity to China. It assures, no one should feel threatened with the “peaceful rise” of China. But the territorial disputes with almost all its neighbours and a claim to almost all of South China Sea has always betrayed the assurance China gives on its peaceful rise.

Will the Buddha smile?

From Myanmar to Japan, countries are deeply suspicious of China’s expansionist threat. India comes as a natural counterbalance due to its economic potential and to some extent military deterrence. Since a few years Asian countries have tried to cosy up to India in an attempt to send a message to China. It is unlikely that India will play a role of a military superpower, the way America has played in the past or the way China intends to. The situation however provides for a very good opportunity where India can secure its national interest and open up new opportunities for its businesses abroad and invite businesses to India and create employment.

Are you thinking what I am thinking?

Singapore, Vietnam, Japan, Myanmar, all at some point have shown keen interest in doing business with India. Most of the time the reason behind such warmth is a mix of business interest and a rising China. Under the previous administration of Prime Minister Manmohan Singh, India did not seize the opportunity. The incumbent has shown a clear departure in foreign policy from his predecessor. In the first one hundred days in office the Prime Minister has travelled to Bhutan, Nepal and Japan. He sent his minister for foreign affairs, Sushma Swaraj to at least half a dozen countries in the same period. His Australian counterpart recently concluded his two day visit, which also saw an agreement on civil nuclear partnership.

All this will prove useful only if the visits are turned into concrete business opportunities. The equation of supply and demand will dictate the market, as usual. The world needs India as a counter balance to rising China. India needs the world to set manufacturing base in India and new markets for Indian businesses. The equation is perfect.

If one were to put a red flag on power centres of the world today, there would be one too close to another. America, the EU, Russia, India, China and Japan are all trying to make space for their ambitious plans or are struggling to hold on to what they fear losing.

Territorial expansion died in twentieth century (still thriving in Russia). Today the struggle is about control over resources and markets. The fear of a not so peaceful China rising will bring countries together. India has as much to watch out for as far away Japan. The big question is, “will India stand up to the occasion”?

The case of Himalayan handshake and indispensable partnership

India engaged with the world’s second and third largest economies over the past two weeks. The Chinese premier Li Keqiang made his first stop in India on his four nation itinerary. The visit happened weeks after Chinese military pitched tents 19 km inside Indian territory in early April. The incident attracted international attention and set rolling diplomatic manoeuvres between India and China. The standoff was resolved just in time to salvage the state visit of External Affairs minister Salman Khurshid to China and recently concluded visit of Mr Li to India.

China’s relationship with India has not been smooth in the past decades. Much like China’s strained relationship with its other neighbours in South China Sea, its relationship with India is soured over a border dispute (both countries fought a brief war in 1962, which India lost). Despite the border issues and lack of mutual trust both countries do significant amount of trade between them. China is India’s largest trade partner with total trade in 2012 at USD 66 billion (a decline of 12% over 2011). While trade is a good sign of cooperation and stability between the two countries, the fundamentals of a lasting peaceful coexistence are missing. Both countries accuse each other of encircling eachother with strategic assets in its immediate neighbourhood. The long standing border dispute, one of the main reasons for lack of trust is not heading towards a solution. China and India are rapidly building up their military and naval powers much to the dislike of each other.

The hand across the Himalaya

Given the strained relationship of India and China the visit of premier Li should have been used to start a process of easing the tensions. Sadly the visit ended with lot of politically correct statements and eight uninspiring documents signed by the two sides. Of these eight documents only two were of any real value. The first is the work programmes of three working groups for services and trade promotion, economic and trade planning and trade statistical analysis. The second is sharing of information on Brahmaputra (a river in north eastern India, which originates in Tibet) during flood seasons. The other six documents deal with Kailash Mansarovar yatra (a Hindu pilgrimage in Himalayas now under Chinese control), meat quarantine, sewage treatment, irrigation, translation and publication of classical work and identifying sister cities. Mr Li however reiterated that the handshake across the Himalaya is now stronger than before. When two fastest growing emerging economies sign agreements on sewage treatment and meat quarantine it can hardly be seen as a handshake. It was more of a nodding from a distance than a real handshake.

The more interesting visit is however that of India’s prime minister Mr Manmohan Singh to Japan. Japan, like many other countries in the region shares an uneasy relationship with China which goes back to the days of imperialist Japan. On top of that both countries have seen loud sabre rattling over a group of uninhabited islands (Senkaku to Japanese and Diaoyu to Chinese) recently. In fact the situation there is much more volatile than that between India and China. The rise of Mr Shinzo Abe, a nationalist as the prime minister of Japan has made matters worse for China. He has taken an aggressive stand against the long stagnation of the economy and is projecting himself as a man who wants to restore the lost glory of Japan.

Lets do it together

At the end of the visit India and Japan agreed on various issues ranging from civil nuclear energy cooperation, possible technology transfer of an amphibious aircraft the US-2, funding for urban infrastructure, funding of Chennai – Bangalore industrial corridor, a high speed train between Mumbai and Ahmedabad, educational grants and so on. This kind of cooperation will have a long lasting impact on the bilateral relationship and will create opportunities for both countries in the near future. India with its growing economy and younger population is a large market for Japanese investments. 

At present Japan is the second largest foreign investor in China with a total investment of USD 70 billion. A survey by Japan export trading organisation last year showed that India is emerging as the most preferred alternative site for Japanese investment. Japanese companies are facing problems in China due to the political relations of the two countries. Industry experts say that even if a small fraction of the Japanese investment in China moves to India it will create many jobs and boost industrial production.

The difference between the two visits is stark. The Chinese visit can at best be considered as a step towards an attempt to forge good relationship. The Japanese visit on the other hand is graduation of a long relationship into that of a natural indispensible partnership.  

Chinese tents in Ladakh - Back to the sixties?

On this day, fifty one years ago in the events leading up to the India – China war, the directorate of military operations proposed the use of air force to counter increasing Chinese presence along the McMahon line. The situation half a century hence is not as alarming but looks strikingly similar. Back then the Chinese disputed the border treaty and advanced into Ladakh. The five tents that the People’s Liberation Army (PLA) has pitched in the last two weeks is a reminder of the events of 1961. But much snow has melted since then on the Ladakh glaciers. The socio political situations in both India and China have changed. China is no longer the communist state it was in the 60s with a failed “Great Leap Forward”. India is no longer incapable of fighting a high altitude war. India and China trade goods worth USD 66 billion between them.

We don't crack jokes all the time

India’s external affairs minister Salman Khurshid is scheduled to visit Beijing on 9^th May 2013 and China’s Prime Minister Li Keqiang will visit India later this month. What is a bit difficult to understand is the fact that why China is engaging in aggressive military tactics at a time when high level political visits are on cards? This leaves us with another question, whether these actions are sanctioned by China’s high office in Beijing? Is PLA acting on its own interest by provoking tension (much like the Pakistani army does at times)? We might not get answers to any of these questions yet. Little information is flowing into public domain. Indian media has been reporting the events based on information obtained from unofficial sources (leaks from army establishments) and the government has been playing them down. Words like “localized”, “routine” and “acne” have been used to explain the latest events. On the other side of McMahon, there is hardly any information on the incident. The official news agency “Xinhua” does not give any information on the present situation. Few days ago it was reported that China has accepted the offer made by Prime Minister Manmohan Singh to resolve the border issue peacefully. In the meanwhile Indian media too has reduced its coverage on the subject.

Given the changing socio economic situations in both India and China and growing military strength, it is unlikely that any of the country would engage in a war. However, China has displayed expansionist behaviour in the past with many of its neighbours. The Senkaku/Diaoyu island standoffs are the latest in a long series. International pressure and domestic obligations will also play a role in avoiding any escalations. Having said that, it is now time for India to take concrete steps towards resolving its border disputes. After six decades of independence India has resolved only one of its border disputes (with Bangladesh). The Chinese leadership on the other hand is more interested in leaving the dispute to be resolved by a later generation, which will have wisdom.

Resolving its border dispute with its largest neighbour should not be left for a wiser generation. India needs to take on the issue seriously with China and set a long term timeline for the matter to be resolved. Let’s not forget that China has territorial disputes with almost all its neighbours (the most sensitive ones being in the South China Sea). It will be in the interest of both the countries to strike off the item off the list as soon as possible. As the saying goes, “good fences make good neighbours”. Its time India takes the first step. 

The unending battle

At the stroke of the midnight hour when the world was sleeping, India was divided into two countries based on religion. What followed was an orgy of hate, riots, arson, rape and murder. Communal tensions started brewing much before the actual date of partition. The days following 15^th August were the most dreadful. An estimated 10 million people migrated between India and Pakistan (many locked their homes believing they will return once the matter cools down) making it the largest mass migration in human history. The violence that engulfed large part of northern and eastern India during those few months lead to many deaths. Official records were scarce but estimates put the number to around a million. India and Pakistan never managed to reconcile.

Who can kick harder?

Four wars have been fought between India and Pakistan and border skirmishes are common. Though there is an agreed ceasefire between the two countries the troops regularly exchange fire. People to people contact on both sides of the border is scarce and there is a deep trust deficit. Regular export of terrorism by Pakistan since the early 90s has not helped the matter at all. The army of Pakistan which also acts as capitalist force (Pakistani armed force controls a USD 10 billion business empire manufacturing everything from fertilizers to breakfast cereals) has successfully managed to keep the fear psychosis alive in Pakistan. The defense budget of Pakistan for fiscal year 2012-13 is PKR 800 billion (USD 8.21 billion) 28% of the total budget spending.

The line between politics and armed forces in Pakistan is so blurred that the election commission wants the army to supervise the elections later this year. The election commission has also ordered verification of electoral rolls to be carried out under supervision of the army. No one knows for sure who between the army and the civilian government rules the state. This is one of the biggest problems when it comes to negotiating peace with Pakistan. The Pakistani army is interested in keeping the fire burning. If in the coming decades the relationship between India and Pakistan normalize there will be a heavy reduction in defense spending and the army will be sent back to the barracks. Obviously they do not want to be sidelined.

The civilian governments of Pakistan tried in the past to patch up with India (once even a general after staging a coup got talking to India) but their military always betrayed them. The recent violation of cease fire in Kashmir is one such example. Two Indian soldiers were killed and their bodies mutilated by the Pakistani troops in an ambush. Meanwhile Pakistan is claiming that Indian troops shot down one of their soldiers. Such news acts as fodder for the jingoists on both sides of the border. Many Indians want a “final” war on Pakistan, some want it to be nuked, some sane types prefer surgical strikes and almost every one firmly agrees that the government is spineless.

From similar experiences around the world we know that a “final” war does not exist, nukes are at best deterrents and military strikes have not wiped out Taliban in Afghanistan even after ten years. Is there a solution to this unending battle? No one knows. There will have to be many changes on both sides of the border. More on the Pakistani side than on the Indian. Political situation in Pakistan has to stabilize, its home grown and military financed terror networks have to be disbanded and honest textbooks should replace the present anti India ones. All this might never happen or at best take many decades. India cannot and should not wait for the right moment to arrive.

India is yet to harness its growing power on the international high table. Ministry of external affair finds it difficult to manage the various stakeholders at once. Severe staff shortage and misplaced foreign policies have made India a dwarf in the international arena. Till 9/11 the western world saw the India – Pakistan relationship from the Pakistani point of view. Aggressive diplomacy and friendly relationship with the US helped Pakistan a lot. India’s repeated allegation of state sponsored terrorism by Pakistan fell on deaf ears.

With no solution in sight, India should embark upon a two prong long term strategy. First is to engage into aggressive diplomacy and second to engage with Pakistan at multiple levels. The international community has finally recognized the issue of Pakistan and its terror networks. Post 2014 when the American forces move out the interest in Pakistan too will diminish. India should be worried about such a situation. This is the time when it should engage in a high level dialogue with not just America but also with other stakeholders like China and Turkey. India should also turn out as a matured democracy in the UN. As an aspirant of a permanent seat on the Security Council it should demonstrate its willingness to engage in world matters than abstaining on matters of world interest in a vote.

Engagement with Pakistan is a necessity. One cannot wish away its neighbours. The current level of engagement is a good step forward. But this can only happen if Pakistan plays ball. 

India and its Diaspora

What does a population of twenty two million mean? For the sake of comparison, it is same as the population of Australia or Taiwan. It is same as Belgium and Sweden put together or thrice the population of Hong Kong. Twenty two million can be a strong number and can do remarkable things. This is how big the Indian Diaspora is. Spread across the world from the USA to Kiribati and North Korea. Indians have been travelling east and west since early middle ages (trade with current day Indonesia and Malaysia in east and Tanzania in the west). Many Indians settled in East Africa and gradually moved westward to Uganda and as far west as Nigeria. Common colonial rule was a great facilitator in movement of Indians to far off places. Some times as administrative and military assistants, sometimes as traders and sometimes as slaves (on sugar plantations of Mauritius and Caribbean). By the time India gained independence and the term Diaspora was well established, Indians were everywhere.

Ethnic Indians now work in different professions in different countries. They own supermarket chains in Africa, shipping companies in Djibouti, airline in Malaysia, head banks in Germany, run state governments in the US, and so on. The Diaspora is well spread out both in terms of geography and employment. They are a mixed bunch with high end jobs as mentioned above and low end jobs (mostly in the Middle East and to some extent in North America). Twenty two million people of Indian origin and nonresident Indians are sitting on a vast cash pile. In 2011 India received inward remittances to the tune of USD 63.3 billion from non residents. Prediction for 2012-13 are close to USD 75 billion, a bit lower than the current account deficit for last fiscal (USD 78.2 billion). While non residents have limited options of parking their money, the ethnic Indians or people of Indian origin (who are no longer Indian citizens) have a much wider choice of investments. India can tap them.

Please give us more than just hand gestures 

A comparison in Upendra Kachru’s (the first CEO of Maruti Suzuki) book, "India: Land of a Billion Entrepreneurs", of Indian and Chinese FDI inflow states that China receives almost two thirds of its FDI from Chinese Diaspora compared to India’s under 5%. India has a long way to go before it can successfully attract capital from its Diaspora. The government of India has made it easy for ethnic and nonresident Indians to park money in small investment instruments like bank accounts and fixed deposits, but there is a lack of opportunity to invest in big ticket projects which would contribute to the overall growth of economy and infrastructure development. Long gestation periods of key projects and vulnerability to corruption is one big reason why individuals shy away from investments.

Of late initiatives like overseas Indian facilitation centre (OIFC), a public private partnership between ministry of overseas Indian affairs and confederation of Indian industries (an Indian chamber of commerce) have been set up, but with little success. Long winded processes and bureaucracy holds everything back. A highly understaffed external affairs ministry is another hurdle. A city state like Singapore has more diplomats serving across the globe than India has. Indian embassies and consulates abroad are more representative of a sluggish government authority back home rather than a conduit of business. Rude and indifferent staff can make simple procedures (like obtaining signatures to attest documents) a harrowing experience.  

L.N Mittal, owner of world’s largest steel company, Arcelor Mittal and an ethnic Indian has given up on investments in India. In the past years he tried to build steel plants in Eastern Indian states of Orissa and Jharkhand but the government failed miserably to even provide the land for the plant. Indian growth story is on a bumpy ride and there are twenty two million people willing to invest. India needs to tidy up its home and set the right policies to attract investment. Staffing the external affairs ministry will be a good start. 

India and its oil policy

India’s foreign policy has ruffled a few feathers of late. Largely restrained and reactionary the Ministry of External Affairs has been working overtime to secure India’s energy interests. The global oil markets are going through a rough patch. Iran threatened to close the Strait of Hormuz; South Sudan stopped oil production in early January, loss of Syrian oil because of embargoes, drop in exports from Yemen due to strikes and closure of North Sea rigs due to repairs; all this has lead to a situation of panic in the global oil market. The Economist reported that all these disruptions have shaved off 1.25 million barrels a day of crude output globally. The situation might improve later in the year with most of the production resuming, however this is a clear signal to net oil importing economies that a small disruption in the supply chain can cause serious troubles at home.

India imports 80% of its fuel requirements and offers subsidies on diesel, kerosene and cooking gas. The provisions towards fuel subsidy in the budget of 2012-13 are Rs. 43,580 crores (USD 8.5 billion, at Rs 51.15 for a Dollar). Any increase in crude price will have a huge impact on India’s fuel bill. With a fast growing economy India cannot afford to be caught in a situation where its energy requirements are compromised with. At present India imports a lot of oil from the Middle East, Saudi Arabia being the largest exporter, followed by Iran. Together Saudi Arabia and Iran contribute one third of India’s imports, making India heavily dependent on these two countries. With uncertainty looming large over the region, India has rightly decided to revisit its global oil policy.

To diversify its oil basket India has started exploring other options. There are three instances where India has taken a stand contrary to its established foreign policy. The overseas arm of ONGC has engaged in off-shore exploration in South China Sea. China for long has claimed sovereignty over most of the South China Sea sighting historical evidences. In later 2011 and early 2012, China has raised concerns over Indian expeditions in the region. China also terms the Indian endeavours as provocative and urges restrain. So far the Chinese statements on this matter have been restrained and a direct reference to India is not made. On the other hand Chinese neighbours like Vietnam (which claims the oil reserves to be in its Exclusive Economic Zone), Taiwan, The Philippines, Malaysia, Indonesia, Cambodia and Thailand all have territorial disputes over the South China Sea. Some political commentators describe this region as the most dangerous point of conflict in the region. India’s attempt to seek commercial and strategic foothold in such a region is clearly unprecedented.

In early days of April 2012, India appointed as special envoy for Sudan and South Sudan, again a departure from India’s established foreign policy. For the first time India has categorically mentioned its oil needs as the prime reason for appointing a special envoy. Press statements quote ministry officials saying, "There were three main reasons to send a special envoy - ensure our oil interests are protected, communicate our support for the peace initiative between the two nations and strengthen our technical support to them." India is also challenging the Chinese claims of setting up an alternate pipeline through Kenya in less than two years time.

Lets talk crude

Of all attempts made by India to secure its energy needs the manoeuvres with Iran are the most interesting. International pressure on an Iranian oil embargo is such that it is impossible to pay for Iranian oil through conventional means of bank transfers. The US and EU have banned the payment mechanism in place in Dubai and have delisted all Iranian banks from the SWIFT facility (an electronic funds transfer facility). India as maintained that it will not stop its oil imports from Iran (so have China, Russia, South Korea and Japan). India is now exploring mechanisms to pay for Iranian oil in Rupees. There are technical difficulties in doing so (including many from the Iranian side), however India and Iran are trying to work together to find a solution. In the mean while government of India has announced tax breaks for exports to Iran done in Rupees. The Indian exports will be used to pay for Iranian oil.

These may be considered as bold steps by the Indian government, especially given the fact that they might annoy India’s two largest trade partners, the US and China. But these steps are also testimony to the fact that India is slowly but surely asserting itself in the global geopolitics. The far reaching implications of these actions are not clear as of now, however what is clear is the short term gain. India might get cheap oil from Iran, since less people are buying from it. This might prove to be a breather for a government which is unpopular with masses and high oil price is one of the reasons.  

India at the United Nations Security Council - You propose, I oppose

India has been a non-permanent member of the United Nations Security Council (UNSC) seven times since 1950. Its current membership will end in December 2012. This membership period is perhaps the most interesting period in India’s history of UN membership of the Security Council. January 2011, started off with a wave of unprecedented string of uprisings in North Africa and Middle East. What started in Tunisia as a rebellion against the corrupt regime soon spread to the entire region and came to be known as the Arab Spring. Sadly as the Arab Spring gave way to Arab summer and winter, India watched the events from the sidelines or sat on the wrong side of the voting table.

The very first opportunity came up in shape of the Libyan crisis. As the Arab spring entered Libya hundreds of civilians became target of organised massacre by Mr Gaddafi. In middle of March 2011, Gaddafi forces announced a massive crack down on rebel forces in Bengazhi (second city of Libya), which immediately deteriorated the situation. The UNSC proposed to adopt a resolution (resolution number 1973) to enforce a no fly zone. The Libyans wanted UN intervention, the members of neighbouring Arab countries supported UN action, India however chose to abstain. The argument used to justify abstention on voting was more of a lame excuse. India said that the report prepared by the special envoy to Libya was not made available and the secretariat has not made an assessment of the report. In such a situation it will be unfair to take military action. India suggested political efforts to handle the situation, while a city of 650,000 people was under imminent danger from forward marching Gaddafi forces.

The second opportunity came when the case of Mr Gbagbo came up for discussion. Mr Gbagbo disputed the victory of Mr Ouattara, his political rival who won a presidential runoff election in November 2010. Mr Gbagbo’s refusal to hand over power to the legitimate winner (the election was monitored by international observers) started a spate of political violence. Thousands of people were killed by supporters Mr Gbagbo and hundreds of thousands fled their homes. The scale of violence was grave enough to be termed as the second civil war of Côte d’Ivoire. The UNSC adopted a resolution sanctioning military intervention to save civilians from the ongoing killings. The situation in Côte d’Ivoire was clearly an anathema to India’s democratic values. India was not a member of UNSC at the time the resolution (sanctioning military intervention) was adopted. However, India voted against another resolution (on 31^st March 2011) referring the case of Mr Gbagbo to the International Criminal Court. In its speech on the voting floor India came across as a country which preferred restrain even as thousands of civilians were killed or displaced.

Let there be no vote

Yet another opportunity presented itself with intensifying of conflict in Syria. The Human Rights arm of UN, The Human Rights Council on 23^rd August proposed to adopt a resolution to send an independent international commission of inquiry to Syria to investigate alleged violation of human rights. Syrians have been experiencing government crackdown ever since the protests first started on 26^th January 2011. Thousands were killed, tortured and arrested by August 2011. In its response to the resolution India said, “India’s traditional position on country specific resolutions is well known. We do not regard spotlighting and finger -pointing at a country for human right violations as helpful. We believe that engaging the country concerned in collaborative and constructive dialogue and partnership is a more pragmatic and productive way forward...” India abstained from voting.

Beware of the foreign hand

Three crucial votes and India played the spoilsport in all three. India however was not the only country sitting on the wrong side of the table. Russia and China consistently opposed most of the resolutions (it took a lot of effort to make them support the no fly zone over Libya). On careful analysis all the three resolutions were also an instrument of regime change. The UN on behalf of its member states and with support of NATO forces successfully changed regimes in Libya and Côte d’Ivoire. For countries like Russia and China this is their worst fears coming true.

Both Russia and China are accused of large scale human rights abuses, restricting free press, restriction on free movement of people and above all murdering democracy. While the Arab world was blossoming in its Arab Spring, China put extra policemen on the streets to stop a Jasmine revolution. Election results in Russia were predefined and Mr Putin decided to grab power for two more terms. Elections in China happen every decade without a single vote being cast. With political opponents and dissidents being sent to prison on frivolous charges both Russia and China are the hotspots of absolute power. They would be the last ones to support any such resolutions, which are aimed at altering the political framework of a country.

On the contrary India is a shining example of democracy. Human right records put India much ahead of Russia and China, India enjoys a free press and people are free to move within the country. With all the good players on its side India still lost the game. What went wrong with India? There can be many reasons as to why India behaved the way it did. The reasons can be traced back to the cold war and beyond.

As a young democracy India preferred to not align with any of the military blocs during the cold war. Acting on the principle of non interference India together with Egypt and what was then Yugoslavia started a Non Align Movement. This was a bloc of recently independent colonies in Asia and Africa (mostly poor). This bloc came to be known as the third world (the West and Soviet being first and second). India wanted to shed its colonial baggage and march ahead. However, later on India did suffer from some setbacks where the Western bloc meted out a raw deal to India. The non cooperation of the West in the Kashmir issue at the UN and later a war with China demonised it. India opposed whatever the West proposed. This also led to India’s proximity with the Soviet Union during later years of the Cold War.

Though India has emerged out of the “Hindu rate of growth” in economic terms it still is stuck in the cold war days when it comes to diplomacy. It still finds the concept of “sovereignty” extremely touchy and sometimes misunderstands it. Political veterans still refer to the “foreign hand” when situations go out of control (be it inflation or FDI in retail). India still feels threatened by the West and its ideas. However, India aspires to be the member of UNSC. But the question is, is India ready for that position? 

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.