The case of Himalayan handshake and indispensable partnership

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

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

The hand across the Himalaya

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

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

Lets do it together

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

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

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

Avenging national shame

It all started at home. The opposition accused the Congress lead UPA government of policy paralysis when it failed to come up with a worthy policy reform in its second stint. Inflation was riding high, foreign investment was slowing down and a string of corruption scandals battered the government. A home grown middle class movement against corruption and the government’s poor handling of the whole movement further damaged its image. The government’s inability to perform and slowing down of the economy brought the corporate India to the front-line. Corporate India openly blamed the government of failing to live up to the expectation and deliver long promised reforms. All was bearable till this point. But suddenly the matter started to get international attention.

It was The Economist which published first of the series of the “damning” articles against the Indian prime minister. In its December 17^th, 2011 edition (India’s political paralysis – Gasping for breath) the newspaper started the article saying, “A LESSER man might have quit by now. Even Manmohan Singh's fabled ability to endure humiliation is being tested”. The reference was made to Mr. Singh being undercut by his colleagues including Mrs Sonia Gandhi. If this was not enough, the same newspaper yet again in its April 14^th 2012 blog called Banyan, accused Mr. Singh of leaving a job half done (referring to the economic reforms). The matters became worse with the Time magazine branding the prime minister an underachiever in its mid July edition. Quickly after the report, The Independent of the UK branded him a poodle of Mrs. Sonia Gandhi.

Will the real underachiever please stand up

This generated a huge uproar in the country; the politicians first ignored it but later lashed out at the foreign media and accused them of spreading false information and insulting the head of the state. The opposition parties took the opportunity and the BJP (the main opposition party) said the Time magazine is late to the party (implying that the prime minister was always an underachiever). Public opinion rode high on patriotism and social media buzzed less with support for the prime minister and more with, “how dare you say something about my prime minister?” The common man took it too personally and eventually The Outlook, a weekly Indian newspaper came up with its own version of Mr. Obama being the real underachiever.

No one can deny that Mr. Singh has failed to deliver in his second stint. There was no big ticket reforms pushed through parliament. The only policy decision worth remembering was to allow foreign direct investment (FDI) into multi brand retail, which sadly was reversed within a fortnight. The Indian middle class loathes the ruling UPA due to high inflation and a consistent inflow of corruption scandals. However, the moment criticism comes from foreign countries it’s not welcome.

In all this madness, what comes out clearly is the relevance of India to rest of the world. How many times does The Economist or the Time magazine talk about the head of the state of Lesotho, or Estonia, that too on their cover? All the attention that Mr. Singh and India is attracting now is because India is too big to be ignored. Indian economy is now linked to the world economy. Stung by domestic slowdown western companies are looking towards the untapped markets in India. Policy paralysis or underachievement by Indian government is as much a worry to the west as it is to Indians.

The Outlook can always launch a counter attack, which at its best was juvenile, given the usual scope of coverage by the magazine. The masses can pour their anger on the Internet, politicians can use the situation for personal gains, industry can feel vindicated, but in all this cacophony there is a subtle message which says India is becoming important in world affairs. Someone in the government should read this message. Stand still too long and others will overtake. There are many of them by the way. 

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’s improving Bangla relations

Out from the cold storage

Prime Minister Manmohan Singh will breathe a little easy on September 6^th and 7^th. He will be on a state visit to Bangladesh, away from heat of the anti corruption movement back home. Prime Minister Singh’s visit is closely watched by many in India and Bangladesh (more closely by Bangladesh media). After a long period of hostile and unfriendly governments in Bangladesh, Prime Minister Sheikh Hasina has come as a welcome change. Relationships between the two countries have improved significantly with a state visit by Prime Minister Hasina in early 2010. The current visit by India is expected to further strengthen the relationship.

After the first military coup in Bangladesh which eliminated the entire family of its first Prime Minister Sheikh Mujibur Rehman (from which Sheikh Hasina escaped), India lost interest in its neighbour. Domestic issues, Pakistan and an escalating cold war kept India busy. Lack of active Indian interest and successive regimes hostile to India were used by China and Pakistan to nurture insurgency in North Eastern states of India. Matter got worse with thousands of Bangladeshis migrating illegally into India for economic reasons. In effect India Bangladesh relations were strained.

Off late it has dawned upon India to actively involve Bangladesh and forge a mutually beneficial relationship. India sees a great prospect of connecting its North East with rest of the country by means of transit corridors. Currently it is extremely difficult to connect its North East through the existing Siliguri corridor (also known as ‘chicken neck’), which is barely 20 km wide at some points. For people living in India’s North East, transportation is a major issue and is often expensive. Air travel is the only means to travel quickly. Other critical matters like disaster management, health services, food supply, etc proves to be difficult owing to long distances to be covered and wastage in transit.

Bring it to the table

With Bangladesh doing its bit to curb anti India activities on its soil, India wants extend the deal and include infrastructure to connect to its remote region. India and Bangladesh together have identified transit corridors which will help not just India and Bangladesh, but Nepal and Bhutan too will be able to make use of transit corridors to connect to the ports in Bangladesh. India has extended a credit line worth $ 1 billion on concessional terms to implement the project.

Let the barbed wire not stop the dove

India and Bangladesh are also working hard to resolve their border issues. The two countries share the longest international border in the world (4,100 km) and also have a unique situation of enclaves and counter enclaves in each other’s territories. A solution is expected to be arrived at before Prime Minister Singh visits Dhaka early next month. Available information suggest at a possible land swap to firm up the border. This will be a first complete border settlement case for India.

One of the most sensitive issues between India and Bangladesh was of shooting of illegal migrants (most of them are Bangladeshis). India’s Border Security Force (BSF) killed 33 Bangladeshis in 2010, while they were crossing over illegally into India. This had not gone down well with the government and common man in Bangladesh. Killing of Felani, a teenage girl by the BSF was widely criticised by Bangladesh and international media and human rights agencies. A meeting between home ministers of the two countries has resolved the issue with India promising not to shoot any one crossing the border.

On the trade front India and Bangladesh did trade worth $ 2.6 billion, which is close to 0.58% of India’s total trade. This can definitely be improved. Prime Minister Singh should take this opportunity to foster closer business ties with Bangladesh, offering greater private investment in the country. Taking advantage of India’s strengths in information technology, companies like TCS and Infosys should be encouraged to set shops in Bangladesh. Active involvement in Bangladesh’s economy will ally fears of a sell off to India. India and Bangladesh should eventually move towards a free trade agreement where there is no list of negative trade items.

For all this to happen, both countries should upgrade their surface transport. A road or train trip to Dhaka from Indian state of West Bengal can take as long at 12 hours, to cover 400 km. To ensure more people to people contact, a convenient transport system is very important. A swift system will ensure more cross border movement and hence closer cultural ties. India and Bangladesh share a lot in common, from Rabindra Nath Taogre who wrote the national anthem of both countries to a common language (in West Bengal) to culinary habits and of course the love for cricket. Bringing the two countries closer will not be difficult provided India plays its cards wisely.