The bigger picture

Prime Minister Modi invited the heads of the members of South Asian Association for Regional Cooperation (SAARC) to his swearing in ceremony. His Pakistani counterpart, Prime Minister Sharif attended the ceremony, which lead to a series of media debates on how the new government is giving out signals of restarting the relationship with Pakistan. Influential journalists from the English media even coined phrases like “sari/shawl diplomacy”, in response to PM Modi sending a shawl to PM Sharif’s mother and the latter reciprocating it with a sari to PM Modi’s mother.

But as always the hype was short lived and there were a series of ceasefire violation along the Line of Control and the international border in Jammu and Kashmir. There was another deliberate attempt by the Pakistani High Commissioner Mr Abdul Basit to annoy the Indian government. The High Commissioner met Mr Sayed Ali Shah Geelani, leader of the All Party Hurriyet Conference, a secessionist group operating from the Kashmir valley. The response from India was to call off the secretary level talks scheduled for 25^th August.

Such incidents have happened in the past. India tried to talk peace and was reciprocated with ceasefire violations and even localized war (Kargil 1999). The main reason why all the past attempts to establish peace have failed, is the absence of a unified command in Pakistan. There are three states acting within the country. The elected government, the sundry terrorist groups in the tribal areas and Baluchistan and the all-powerful Pakistani army-ISI nexus. The civilian government has no real power and is always dictated by the army-ISI nexus. The “khaki capitalism” that previous Pakistani generals created has become too big and it only makes sense for the army to keep things under its control. A 2007 book by Ayesha Siddiqa, “Military Inc. - Inside Pakistan's Military Economy” suggests that the total assets under the army control are USD 20 billion, half of it land holdings. An article on Guardian covering the book can be read here. With such huge stakes at hand the Pakistani military will never want peace with India. That would eventually mean no money for weapon stockpiling and hence no source of income.

The relations between India and Pakistan have been at a stage where India should take a step back and look at the larger picture. It is time to shed the obsession with Pakistan and work on others. The new government appears to have done that by engaging with its neighbours. The PM chose Bhutan for his maiden visit followed by Nepal. The response to his visit in both the countries was exceptionally warm. After a long time there are no Indian fishermen in the Sri Lankan prisons. Foreign minister Sushma Swaraj recently concluded her four day multilateral visit to Myanmar. This is a clear departure from the previous government’s stand on foreign engagement.

To put it bluntly, there is no need to go the extra mile to make friends with Pakistan. The country is constantly on the list of failed states, is rife with terrorist and secessionist groups, the economy is in tatters and there is no “real” government to talk to. India would do much better by focusing its energy on the countries which want to work with India and share the fruits of its economic growth.

Lets broaden the road of friendship

The biggest untapped potential is Myanmar. There are two reasons why the country is important. First it was until recently a closed economy run by the military junta. That has changed. Aung Sang Su Kyi has been released from house arrest and is most likely to run for president in the next elections. Second, it is a member of the Association of South East Asian Nations (ASEAN). Indian Affairs has in its previous posts stressed the need to capture the ASEAN market. The prime focus should be on connectivity between the two countries and cross border trade. The much talked about India, Myanmar, Thailand trilateral highway should be put on a priority. Not only will it help Indian businesses but the biggest beneficiary would be the much neglected North East India.

The trilateral highway will also provide much needed market access to land locked Nepal and Bhutan. Private business should take advantage of the resource rich Myanmar and set up manufacturing units, which can supply the products to the ASEAN countries. India’s auto sector, particularly the two-wheeler segment has huge potential in Myanmar and other ASEAN countries. TVS started its manufacturing plant in Indonesia in 2007 and the venture is expected to breakeven this year. Myanmar has its problems, mainly infrastructure, but a first mover advantage might just compensate for the lack of infrastructure, which will be in place, eventually.

With the new government there is a fresh chance to act rationally than emotionally on India’s foreign policy matters. PM Modi was born after India’s independence and has no personal relationship with Pakistan, unlike the previous PM, Mr Singh. The business minded approach of PM Modi and lack of emotional baggage will help him in dealing objectively with our neighbours. Let us see whether the new government seizes the opportunity or repeats the mistakes of the previous governments.

  

A new dawn – Suu Kyi warms up to India

The winds of change in Myanmar brought Ms Suu Kyi to India, her first visit since her release from her house arrest. Her visit is getting covered extensively by the Indian media, something that the other heads of neighbouring states hardly manage to get. Her close relationship with India as her educational base, her father’s close political relations with India in early days of independence and her being a noble laureate have all contributed to the excitement of the press. In her interviews she appears as a calm and composed person who has overcome her bitter experiences and has moved on. She talks of being disappointed by India’s failure to support the democratic cause of her movement, but immediately jumps to accept the pragmatic aspects of diplomacy and wants to start a new chapter. Her visit has provided India a golden chance to shrug off the past and start a meaningful partnership with Myanmar.

Myanmar used to be an important trade partner of colonial India. Hundreds of thousands of Indians from Bengal (now divided as West Bengal in India and Bangladesh) went to seek their fortune in Myanmar. The Marwaris (a trading community from western Indian state of Rajasthan) established trade links and industries in Myanmar. Regular ferry services used to connect the Indian trade hub of Kolkata to Yangon and then onwards to Singapore. Indian cinema of the 40s had references of getting telephone call from Rangoon (now Yangon) where the protagonist has gone to work. Such were the close relations between the two countries. Much has changed since independence and post military takeover of Myanmar. So much so that Ms Suu Kyi could not fly direct but had to make a stopover in Bangkok to reach New Delhi.

Advantage Myanmar

The sky looks brighter, for you and for me

Myanmar shares its borders with India on its west, China on its east and Thailand on its south. All three countries are fast growing economies with a huge middle class. Myanmar is also the only ASEAN (Association of South East Asian Nations, a regional trade bloc) state to share borders with India. The country was long isolated from rest of the world due to the military rule and international sanctions, leading to a low industry base and a small economy. However the social indicators of the country are healthy with high rate of literacy and low unemployment.

Indicator	Value*	Comparison with India*
GDP	$82.68 billion	Revenue, Tata sons 2011-12 $100 billion^
Literacy	89.9%	74%
Median Age	27.2	26.5
Population Growth	1.07%	1.2%
Unemployment	5.5%	9.8%
Urbanization	34%	30%
*CIA world fact book, ^financial results Tata sons

The economy of Myanmar depends largely on agriculture. 40% of the GDP contributions come directly from agriculture, major industries are also engaged in agricultural processing and timber. Other industries are mostly in natural resource mining and oil production. This combination gives an ideal platform to build the industrial base of the country and diversify its economy. Geographical advantage of Myanmar can help India connect with the fast growing ASEAN market by linking its surface connectivity.

Top of the list

India should look at long term prospects of closer ties with Myanmar and prepare a list of top priorities. Given the low industrial base of Myanmar there is a huge potential for Indian companies to setup base there. India in the past decade has developed skills in automobile, pharmaceuticals, steel, cement, etc. all these will be required in abundance once Myanmar opens up fully for investments. India should also offer help in institutional reforms like training of civil servants, setting up of an independent election commission, training and recruiting staff to oversee elections, building capacity to improve infrastructure, etc. Another major exercise will be to provide direct connectivity between the two countries, both surface and air. India is already providing financial help to Bangladesh to connect its north eastern states. Similar help can be provided to Myanmar to complete the seamless connection into ASEAN. There are proposals of intra ASEAN high speed rail networks. India will benefit by linking its own rail network to that of ASEAN. Increasing business relation will feed the demand of travel and improve productivity.   

All this will however not happen till basics of a healthy business environment are not put into place. Independent judiciary, enforcing contracts, transparency in governance, etc are some of the aspects Myanmar has to reform before foreign investment starts pouring in. This however should not stop the Indian government and business to start chalking out their Myanmar plans. 

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.

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.