Winds of change in India’s east

Indian summer

Changes in Myanmar are often glacial if not unheard of. Politically isolated by international sanctions and heavily guarded by its generals, Myanmar has virtually closed its doors to the world. Extreme poverty and rampant corruption has put lives of ordinary Burmese in the slow lane. The 8888 uprising (pro democracy movement lead by Ms Aung San Su Kyi on 8^th August 1988) was brutally crushed by the junta. Since then Ms Kyi has been languishing under house arrest. She was released in November 2010 with limited freedom to her movement.

Things have started changing ever since. Ms Kyi’s release came six days after a stage managed general election, which she and her party refused to recognise. The government is still controlled by ex-generals including the current president Mr Thein Sein (inaugurated in March 2011), who served four decades in the armed forces. But it is civilian in its appearance. Mr Sein has discarded his military uniform in favour of a democratic government. However, a change in constitution in 2008 vests immense powers in the military. But in Myanmar any change is a welcome step.

There have been instances in the past when things looked bright on the banks of the Irrawaddy. In the mid 1990s and then in late 2002, the generals and Ms Kyi seemed to make some headway towards reconciliation. Sadly nothing came out of the efforts. It will be interesting to see if 2011 proves to be Burma’s Indian summer.

Spring in India

India’s relationship with Myanmar has been cold at the best. The last time Myanmar was discussed widely in India was during the twilight days of the Second World War. Japanese army was in Myanmar hoping to control Assam and later Calcutta (now renamed Kolkata). Once the World War came to an end, Myanmar slipped into a corner in Indian foreign policy. A second, Myanmar wave struck India during the prodemocracy 8888 uprising, but pragmatism won the day. Economic changes of the 90’s and rise of an assertive China put an end to India’s support for democracy in Myanmar.

India maintained its distance from sensitive topics of democracy and human rights in Myanmar, while it still engaged with the Junta keeping an eye on its natural resources. Myanmar has a huge potential to serve India’s growing demand for minerals and energy. It is also a link between India and economically successful ASEAN trade bloc. India was however left behind in its efforts to harness the potential Myanmar has to offer. Long period of military rule and international sanctions pushed Myanmar closer to China. With dictatorships like North Korea and coup prone countries like Pakistan as close friends, it did not bother China to have another member in its club.

China made huge investments in Myanmar’s infrastructure with an eye on its vast natural resources and strategic location close to India. But the winds of change are blowing now. Like every where else Chinese presence is being seen as a threat. Earlier this month Myanmar announced that it will suspend construction of Myitsone dam, a $3.6 billion Chinese hydro electric power project (due to environmental concerns) in north east of the country. The project had a capacity to generate 6,000 MW electricity and almost all of that was supposed to be sold to China’s energy hungry grid. Another ambitious plan to link Myanmar’s north eastern state of Shan to the port city of Kyauk Phyu on the Bay of Bengal (at a cost of $ 20 billion) was supposed to start in December 2011. After the scrapping of the power project, the project might get delayed if not stalled.

With Chinese relations souring, Myanmar is looking at India. President Mr Thein Sein is visiting India (12 – 15 October 2011) and will hold talks on increasing bilateral trade and matters of cross border security. This visit has the potential of transforming the cold relations between India and Myanmar into a spring of opportunities.

The shining pagodas

Things are looking up in Myanmar (or at least appearing so). A quasi democratic government, increased political freedom for opposition, setting up of labour unions and release of political prisoners are all steps in the right direction by Myanmar. Rest of the world will soon recognise these efforts and the sanctions might be rolled back in a phased manner. India’s proximity to Myanmar and Myanmar’s strategy of counter balancing China can spell boon for both the countries.

India’s north eastern states have huge potential to engage in trade activities with Myanmar. In the long run as and when the transit corridors with Bangladesh become operational an extension can be offered to Myanmar, giving it easy access to sea ports and a larger market to India. Closer relation between India and Myanmar will also help in handling the insurgency in north east India. There is a whole new spectrum of opportunities to be explored by India and Myanmar to forge closer and deeper ties. What remains to be seen is how long the pagodas can retain their shine.

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.