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. 

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.

The Afghan roadmap

Roles reversed

India has pledged to spend $ 1.2 billion as non military aid in Afghanistan between the years 2002 - 2013. This comes as a surprise for a country which is a major recipient of international aid. One might choose to consider India’s aid as a tool to assert its influence (some like to phrase it as strategic foothold) in Afghanistan. India has involved itself in a big way in rebuilding the war torn country. In past nine years it has got its foot in virtually every aspect of Afghan redevelopment, be it the Zaranj – Delaram road connection on Heart – Kandahar highway, Salma dam power project, setting up schools or building the new parliament. Apart from infrastructure projects India is also running medical care and child nutrition programmes in many Afghan cities. On a small scale India is also providing skill enhancement programmes (mostly vocational training) to Afghan youth to help them get into mainstream economy.  After nine years and pumping in 40% of the pledged aid what does India stand to gain?

Love thy neighbour 

India’s involvement in Afghanistan has not gone down well with Pakistan. It sees Indian presence as a threat in its backyard. Some hawkish institutions in Pakistan also suggest that India’s growing influence in Afghan matters is a long term conspiracy to ‘sandwich’ Pakistan (between India and Afghanistan). What ever the arguments be, India is increasingly seen as a threat by Pakistani establishment. This became apparent when Turkey under pressure from Pakistan did not invite India for the last high profile Afghan summit in Istanbul.

Will India limit itself to creating democratic infrastructure
or will it push for real democratic reforms in Afghanistan? 

A billion dollar plan for reconstruction, while the host country still battles with insurgency and terrorism is a risky proposition. Reports suggest that owing to lack of security apparatus the much talked about Zaranj – Delaram road connection is already under Taliban control. Kabul’s new parliament house being built by India (which it believes is the beacon of democracy in the largely tribal country) will house Mr Karzai (pictured) who is anything but democratic. He is facing allegations of large scale forgery and corruption in last presidential election. Afghans call Mr Karzai “king of Kabul” as the writ of his government ends at the city limits, outside which Taliban and tribal factions hold sway. So what exactly is India doing in such a place?

India sees its involvement in Afghanistan as an attempt to regain its credibility and strategic foothold which it lost after the Soviet invasion in 1979. Then a staunch Soviet ally, India supported the Soviet invasion leaving many Afghans angry. With the expulsion of Soviet troops and later a Taliban takeover, India lost all political contacts with the country. It was only in 2002 after Taliban was ousted from power that India reacted swiftly to fill the vacuum with non military aid. In the following years India once again came to be seen as a friendly country, more and more Afghans started coming to India to attend universities subsidised by Indian government. Bollywood songs could once again be heard in bazaars of Kabul and Afghanistan had its own national carrier. India found its lost neighbour once again.

What does the future hold for me? 

Till now India has made all the right noises in the country. However, the kind of role India is playing at present will not sustain it's presence for long. In a war torn country roads and power plants can be blown apart any time (as has happened in the past), schools can be closed down on whim of Taliban and food supplies can be cut off due to logistic issues (not impossible in a landlocked country). India needs to take up a greater role to rebuild the country.

The CIA world factbook estimates the Afghan GDP at $ 27.36 billion for 2010. Close to a third is contributed by opium trade. Unemployment rates are as high as 35% (2008) and an equal number of people live below the poverty line. The Afghan government collects $ 1 billion in revenues and spends $ 3.3 billion a year. Banking in the country is in a deep mess with recent scandal involving Kabul bank, the biggest bank of the country. With such a fragile situation Afghanistan needs institutions which can prepare it for future.

India should look at taking a larger responsibility of training Afghans to manage their nascent institutions like government finance, international trade and commerce, natural resources, etc. Along with institutional training India should also look at rebuilding the economy of Afghanistan. Recently the Afghan government dusted out a report from 1960s, which gives a detailed account of huge iron ore deposits in Hajigak, 130 km west of Kabul in the Bamiyan province. According to the report the region has approximately holds 1.8 billion tonnes of iron ore. In middle of 2010 the Americans declared that Afghanistan has huge deposits of previously undiscovered minerals worth a trillion dollars. These include copper, iron, cobalt, gold and lithium. 

It is no secrete that both developed and developing economies today are in dire need of natural resources. In the past decade China has extended its reach to a large part of Africa in search of natural resources to power its enviably cheap manufacturing plants. Indian companies too went abroad shopping for natural resources in Latin America, Africa and South East Asia. But the game in Afghanistan is different, especially for India. Being a landlocked country, bringing in minerals to India will be an expensive option, eroding any financial benefits. Geopolitics too will play a crucial role in Afghan-India trade ties. The only way minerals can be shipped to India is by surface transport via Pakistan or Iran to the nearest port or to northern India via Wagha. Given the strained relationship with Pakistan and a direct conflict of interest this option is far from feasible. Iran is reeling under sever international sanctions and India will not be willing to upset its relations with the west by warming up to Iran (whether India should get involved with Iran at the cost of its relationship with west can be another discussion in itself. Let’s leave it for another day).

Out of the box 

The previous article attracted a comment drawing parallels between post war Europe and present day Indian subcontinent. The comment suggested that if countries and individual have business interest then they make an effort to maintain the cordial relationship. Some thing similar should happen between India and Afghanistan.

Merely taking the mineral wealth of Afghanistan away will be extremely myopic and unfair. Exporting minerals (as and when it becomes possible) will contribute billions of dollars every year to the state exchequer, which can then be used for public welfare. However, it will take a long time for the benefits to reach the Afghan society. India should understand this and forge a long term relationship by investing in setting up large scale manufacturing plants in the country. Many Indian companies both state owned and private are interested in investing in the mines, but are held back due to logistic and security concerns. A shift in focus from merely mining to mining and manufacturing can address this problem.

Shipping of finished products directly to export markets will face less logistic challenges than shipping iron ore to India. With the setting up of manufacturing plant other support industries will come up in the region, helping the Afghan people to take up jobs in the factories or set up their own business. It is anybody’s guess what change such a situation will bring to the country. India will keep its strategic foothold in, Indian companies will benefit from high value exports (including some to India), the Afghan people will benefit and above all the Afghan government will benefit.