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”?

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.

India and its global ambitions

Yes, no, maybe…

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

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

Running the extra lap

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

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

The tiger sleeps on

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

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

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

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