India, Israel and the irrelevance of the Middle East

Oh! I managed the GCC
PC: Hindustan Times

The historic visit of PM Modi to Israel is important on many fronts. The first is the dehyphenation of Israel from Palestine. The importance of dehyphenation was discussed widely on TV debates last night. Pro BJP panellists and BJP spokes persons drew analogy from the dehyphenation of India and Pakistan by America and by other western countries. This is important because international diplomacy does not depend on keeping everyone happy. Diplomacy is an act of shrewdness, where the sole aim is self-preservation. But is that the only reason India changed its seventy year old stand?

There are other factors that have led to this change. For starters it is the realisation that the Indian Muslims are not going to go berserk over India’s close ties with Israel. This might sound a bit strange but it is the truth. Read what Al Jazeera has to say on this. In fact all previous governments were probably aware of this misconception. They simply lacked the courage to take the step.

It finally took a non-Gandhi Congress Prime Minister to established full diplomatic ties with Israel, twenty five years ago. That was the time for India to shake away the imagined fear and go ahead with closer ties with Israel. But Political instability and ascend of Sonia Gandhi to the throne dragged India back into its shell. It is hard to imagine why the Congress and the UPA were so scared of taking Indo-Israel relations forward. The loudest pro-Palestinian voices one hears are either from the loony Left or their foot soldiers on Twitter. Majority of Muslims in India are more worried about jobs, education and healthcare like other Indians.

Secondly the politics in the Middle East has changed completely. It was thought that supporting Israel will isolate India in the Arab world, especially the Gulf Cooperation Council (GCC) countries. Millions of Indians work in the GCC countries and remit billions of dollars every year.

The seventy or so years of Palestinian support has not got India anywhere with the Arab world. India, despite its multiple efforts, was not allowed to join the Organisation of Islamic Cooperation (OIC). India never got support from OIC on Kashmir and probably never got any favourable deal on the oil imports. So there was no real benefit to India from its pro Palestine stand.

The other change that happened in the Middle East was the internal feud of the GCC countries. Before the Arab Spring, the only factions in the Middle East were the Sunnis led by the Saudis and the Shias represented by Iran. Their attempts to dominate the Muslim world resulted in regional wars. Post the Arab Spring, things changed and a third country emerged as a power broker. The Qataris sitting on huge gas reserves have the cash to extend influence. In a new three cornered Arab world it is easy to play one against the other. More over the internal frictions often result in extremely favourable oil prices for rest of the world. Saudi Arabia increased its oil output in 2012 only to render the Iranian oil cheaper. Qatar is doing the same today.

Cheap oil is one thing but we all know this will never last. What is, perhaps, prompting India to take the risk of being deprived of gulf oil is its huge domestic market and its increasing shift towards renewables. India is too big to be ignored by anyone, including the oil exporters. OPEC has never been united on oil production and it probably never be. There will always be willing exporters ready to send oil to Indian refineries.

On the renewable front India has made great progress and as much as 17% of its installed capacity supplies clean energy. In fact the actual price of solar energy has gone below the per unit price of thermal energy. So the future belongs to clean energy and not oil. The confidence with which India has adopted 2032 as the year of zero carbon powered cars clearly shows the intent. The only reason the GCC and Iran are relevant to India, may not exist in future.

Thirdly there is Make in India. The western countries have shown their interest and intent but the works that have or may arrive to Indian shop floors are not cutting edge. Chinese manufacturers are bringing in mobile assembly plants and other low tech manufacturing but that can only provide low tech jobs. Israel on the other hand is willing to transfer technology in the high tech sector. That is where the real gains are to be made.

So there might be some extraneous noise on the deepening ties of India and Israel (mostly from the opposition and some attention seeking activists), the ground realities are very different. 

Of losses and quick wins

The Bihar assembly results are out and open to interpretation. There will be dissection, postmortem and blame fixing in the coming days. On the face of it, the resounding victory of the Grand Alliance, brings out some very interesting facts. First, the clean image of Nitish Kumar was a factor that helped, but his image was not clean enough and the Janata Dal (United) could only win 71 of the 101 seats it contested. Second, though the clean image of Nitish Kumar made him a popular Chief Minister, a corrupt and convicted Lalu Prasad’s Rashtriya Janata Dal bagged 80 of the 101 seats it contested. Third, Indian National Congress, which was reduced to a humiliating four seats in the outgoing assembly managed to win 27 seats this time. Fourth, the huge crowds that the Prime Minister pulled during his 30 rallies in the state, did not like his message and hence voted someone else.

There are many reasons, which worked in favour of the Grand Alliance and pushed it to a two-thirds majority in the assembly. Similarly there are reasons, which lead to the crushing defeat of National Democratic Alliance. Some of the reasons that immediately come to mind are similar to the ones that failed corporations face during their turnaround. At the end of the last parliament, India was similar to a failing organisation. Big ticket scams, slowing economy, non-existent foreign policy, cash guzzling and zero value social programmes (MNREGA) and fuel subsidies were pulling the country down. India was not allowed to live up to its potential.

Failing corporations employ experienced consultants to turnaround the company. The consultants in turn use tried and tested (sometimes radical) measures to re-engineer the processes and bring in efficiencies. The Modi government promised a similar re-engineering for India. But the similarities end there. A good consultant knows that challenging the status-quo will inevitably bring resistance. Change is the only constant, yet it is the most difficult thing to accept. Try bringing in a radical change in an organisation and it is doomed to fail. The consultants know this and they have found a way around. For the entire organisation to see the benefit of the turnaround exercise, they use quick wins. Quick wins are tasks that are easy to do, take little time to implement but show results that are visible and tangible.

Once the quick win succeeds the rest of the organisation can be easily taken on board and they will act as partners in the turnaround. The Modi government failed in identifying quick wins. Let alone implementing them. The government embarked upon dream projects like Make in India and Swachh Bharat. Both very well meaning projects and will yield results, but in the long run. The mammoth task of bringing millions in the banking network was achieved rather swiftly but again it falls short on expectations. Having a bank account is good but there has to be enough money in it for the account holder to benefit.

The PM is repeating the mistakes the Vajpayee government made. Stressing on big ticket reforms at the cost of quick wins cost them the 2004 elections and the UPA I reaped the benefits five years later.

One of the easiest quick wins for the government is job creation. Job creation in semi-skilled sector. That is where the rural population hunts for employment. The government should emphasis on sectors like highway and manufacturing. These are labour intensive sectors and have a high multiplier effect. Red tape and archaic concession agreements make it difficult for the private sector to bid aggressively and for the government to close the transaction efficiently.

A construction site or a factory not only provides employment to the actual workers, it also generates business opportunities for transport companies, taxi services, restaurants, hospitals, housing companies, and so on, creating further employment opportunities. It helps create an ecosystem, which brings in prosperity and jobs to a region.

So far the government has done things for India, it is now time to do things for Bharat. Gold monetisation might attract India but a country where two thirds of the population is poor, Bharat might find it elitist. The government has lost a year and a half, if it does not wake up to quick wins, it might see a repeat of 2004 and the next government will reap the benefits of the long term reforms that the Modi government is carrying out today. Bihar is a warning bell and we know for whom it tolls.

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.

The fringe is now mainstream

The fringe has gone mainstream, claims Rana Ayyub in her latest post on DailyO (a site run by India Today). In another article on Firstpost, G Pramod Kumar warns that the attacks on Christians are merely a warning shot for Muslims. Meanwhile former officer of the Indian Police Service, Julio Ribeiro wrote a letter to the Indian Express saying, “As a Christian, suddenly I am a stranger in my own country”. Ribeiro later told a TV channel that he exaggerated some of the claims to attract attention.

In the past few months, there have been thefts in Churches in some parts of Delhi, one church was gutted. These incidents were painted as an attack on Christians by some Hindu groups. The commissioner of Delhi Police later issued a statement giving information on cases of theft in places of worship. It turned out that more temples were burgled than any other place of worship. The highest number of temple theft being reported in 2014, the year Bharatiya Janata Party (BJP) lead National Democratic Alliance came to power.

The spate of concerned opinions like the claims of Rana Ayyub, the warning from G Pramod Kumar and the emotional outburst of Ribeiro came just after the brutal sexual assault on a nun in Ranaghat, West Bengal.  Are these concerns justified? Is there evidence suggesting Christians are being targeted? Your guess is as good as mine. The one thing that is common in all such concerned opinions is that the blame squarely lies at the Prime Minister’s door step. Almost the entire Indian media is blaming the Prime Minister for the law and order situation that is essentially the responsibility of the state governments according to the constitution.

There are two important things to be taken note of. One, an atmosphere of panic is being created by the media, where minorities, especially Christians are shown under siege. The three articles sighted above are full of text sans any statistics to back the opinion up with. Such writings would classify as provocative, if someone were to carefully scrutinize them, at best and hatemongering at worst. A law and order problem is being given a communal colour, deliberately. Second, the blame is selectively put on the union government, where it actually lies with the state government (surprisingly no one has questioned the respective state governments, unless it happens to be a BJP government).

So should one trash the concerns raised by the press and a decorated IPS officer? The answer in a word is, no. But having said that the cases should be examined on what they really are. A law and order problem. Safety is not just a concern of the Christians, but of every citizen of India. The individual state governments should ensure that the rule of law is imposed without any discrimination or favour. Mamata Banerjee’s West Bengal has become one of the most dangerous places for women. She in the past has dismissed the rape and assault of Suzette Jordon as a “sajano Ghatana” (concocted incident) to malign her government. After the rape of the nun, when she went to show her sympathy, she was welcomed with a blockade of her convoy, rightly reflecting the anger of people against the miserable failure of her government to maintain law and order. Her colleague, Firhad Hakim shifted the blame from his government to Gharwapsi. Surprisingly there is no hue and cry on such indifference  and apathy by an elected chief minister.

What the press should be concerned about is the absence of strict implementation of laws to ensure safety of everyone, not just the Christians or women or minorities. We all deserve a safe environment to live in. 

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 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.

  

Great Expectations

If the next Lok Sabha elections are held on social media, Narendra Modi (Prime ministerial candidate of the opposition) will probably win hands down. In the past few months there have been various opinion polls suggesting that Modi leads his closest rival, Rahul Gandhi (heir of the ruling Congress party) by several miles when it comes to the choice of next prime minister of India. The Business Standard ran an article on September 12, 2013, summarizing the trends of seven opinion polls conducted in the recent past. According to the article, two clear trends emerge from the findings. First is the rise of Bharatiya Janata Party (BJP, right of centre) and National Democratic Alliance (BJP and its allies) as the single largest party and pre poll alliance respectively. Second is, huge losses for Congress (between 75 to 90 seats). What will actually happen in 2014 is anybody’s guess, but BJP is definitely enjoying high approval ratings in almost a decade. Social media and other internet platforms are inundated with pro Modi and pro BJP comments, sometimes even bordering jingoism. On the other hand Congress supporters seem to struggle a lot in defending the indefensible series of scandals and poor governance.  

Outside the social media, the recent public speeches by Modi in various Indian cities have demonstrated his popularity among a large section of urban and semi urban population too (in some cases people paid to attend his public rallies). He seems to have the backing of the middle class. Though there are no clear polls suggesting Modi’s popularity among the rural voters, it can be assumed (based on the other surveys conducted on random samples) that he has some support in the rural constituencies too. Now let us imagine a scenario where Modi is indeed chosen as the next prime minister of India. What should the voters expect from him?

I have an idea, or two

If one reads through the comments on major news paper websites, one thing that catches the attention is the expectation people have from Modi. From rising onion prices to the latest scandal, violation of cease fire on the Line of Control with Pakistan to Tamil fishermen being arrested by Sri Lankan navy, Narendra Modi seems to be the answer to every single problem the urban internet users face. For the ears of BJP and Modi this might be the best music they heard in a while. But let us not forget that it was the same group of middle class, Internet using Indians who marched the streets of Delhi and other cities in support of the anti corruption movement headed by Anna Hazare, it was the same middle class which once again took to the streets to protest against the rape and subsequent death of a student in Delhi. Such was the force of Indian middle class that the government was forced to give in and discuss changes in legislation well into the night.

In the past there have been no attempts from either the BJP or Modi to tone down the expectations people have from them in the next government. This probably suits them well for the time being. But with so much that is wrong with the economy, governance, public health, law and order, etc it will probably take more than just five years to show visible improvement. It takes years for the economy to show any sign of growth after a few bad years. The American economy despite the quantitative easing took almost five years to recover and things are still not the same as they used to. Any improvement in governance might require constitutional amendments. This means long negotiations with the opposition and possibility of a deadlock. These issues are just the tip of the iceberg. The real problems might be worse.

Modi should come up with a separate strategy to manage the expectations people have from him. The middle class, who today is willing to put him on the pedestal, will not hesitate to pull him down if he does not meet their expectations.