Modi’s Russia Challenge

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Russian President Putin shakes hands with India's Prime Minister Modi during a photo opportunity ahead of their meeting at Hyderabad House in New Delhi

Brahma Chellaney, The Hindustan Times, June 2, 2017

Indian Prime Minister Narendra Modi’s Russia visit raises a fundamental question: Is Moscow still India’s ‘tried and trusted’ friend? Russia’s growing relations with India’s adversaries, China and Pakistan, have spurred unease in New Delhi. However, many in India have failed to grasp the factors driving Moscow’s overtures to Pakistan or its sale of offensive weapon systems to China.

Such moves have little to do with India. Russia may be in decline economically but, geopolitically, it is a resurgent power, spreading its geopolitical influence to new regions and pursuing rearmament at home. Russia is the only power willing to directly challenge US interests in the Middle East, Europe, Caspian Sea basin, Central Asia and now Afghanistan, where America is stuck in the longest war in its history.

In keeping with the maxim that countries have no permanent friends or enemies, only permanent interests, Russia has rejigged its geopolitical strategy to respond to the biting US-led sanctions against it since 2014. Russian President Vladimir Putin has significantly expanded the geopolitical chessboard on which Moscow can play against the US and NATO.

Putin has made Russia the central player in the bloody Syrian conflict, fuelled by outside powers. Until Russia launched its own air war in Syria in September 2015, the US-British-French alliance had the upper hand there, aiding supposedly ‘moderate’ jihadist rebels against Bashar al-Assad’s regime and staging separate bombing campaigns against ISIS. Russia’s direct intervention, without bogging down its military in the Syrian quagmire, has helped turn around Assad’s fortunes and reshaped Moscow’s relationships with Turkey, Israel and Iran.

As part of his multidimensional chess game, Putin is also building Russian leverage in other countries that are the key focus of US attention — from North Korea to Libya. But it is Russia’s warming relationship with the medieval Taliban — the US military’s main battlefield foe in Afghanistan — that seriously conflicts with India’s interest.

Russia’s new coziness with the Taliban, of course, does not mean that the enemy of its enemy is necessarily a permanent friend. Moscow is opportunistically seeking to use the Taliban as a tool to weigh down the US military in Afghanistan. Because of the Taliban’s command-and-control base and guerrilla sanctuaries in Pakistan, Moscow has also sought to befriend Islamabad. This imperative has been reinforced by the US refusal to bomb the Taliban’s command and control in Pakistan.

The paradox is that as India has moved strategically closer to the US, American policy has worked against India’s regional interests, propelling Russia to forge closer ties with Beijing and to build new relationships with the Taliban and Pakistan. The US still continues to fecklessly accommodate China and battle the Taliban on just one side of the Afghanistan-Pakistan divide. Russia is equally nonchalant if its geopolitical chess play squeezes Indian interests.

The revival of the “Great Game” in Afghanistan is just one manifestation of the US-Russian relationship turning more poisonous. Another sign is Moscow’s stepped-up courting of China. For example, with Russia staying quiet, last year’s BRICS Goa Declaration, at China’s insistence, omitted any reference to cross-border terrorism or to any Pakistan-based group yet mentioned ISIS and al-Nusra. Putin attended the recent “One Belt, One Road” summit in Beijing despite his concern that China is using that project to displace Russia as the dominant influence in Central Asia.

With Russia becoming the largest crude oil exporter to China, Moscow-Beijing ties are booming economically, yet underlying political suspicions and wariness remain. In the India-Russia case, it is the reverse: Relations are warm politically but the two-way trade is in sharp decline, slumping to less than $8 billion in 2015. US-led sanctions against Russia, by promoting Moscow-Beijing closeness, are undercutting a central US policy objective since the 1972 opening to Beijing — to drive a wedge between China and Russia.

For Putin, the sanctions represent war by other means and a justification for Russia to countervail US power. With the US Congress threatening to impose additional sanctions even as a special counsel investigates alleged collusion between President Donald Trump’s election campaign and Moscow, US-Russian tensions and rivalries will continue to buffet India’s regional interests, but serve as a strategic boon for China.

Against this background, Modi faces an exigent challenge to revitalize a flagging partnership with Russia while safeguarding India’s regional security and its $3 billion development aid to Afghanistan since 2002. This challenge is compounded by the fact that a robust relationship with Moscow is vital to a balanced Indian foreign policy, to leveraging India’s ties with other powers, and to managing an increasingly muscular China. A drifting relationship with Russia would crimp India’s options, to its serious detriment.

Brahma Chellaney is a geostrategist and author.

© The Hindustan Times, 2017. 

China’s Imperial Overreach

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A column internationally syndicated by Project Syndicate

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HONG KONG – Chinese President Xi Jinping’s tenure has been marked by high ambition. His vision – the “Chinese dream” – is to make China the world’s leading power by 2049, the centenary of communist rule. But Xi may be biting off more than he can chew.

A critical element of Xi’s strategy to realize the Chinese dream is the “one belt, one road” (OBOR) initiative, whereby China will invest in infrastructure projects abroad, with the goal of bringing countries from Central Asia to Europe firmly into China’s orbit. When Xi calls it “the project of the century,” he may not be exaggerating.

In terms of scale or scope, OBOR has no parallel in modern history. It is more than 12 times the size of the Marshall Plan, America’s post-World War II initiative to aid the reconstruction of Western Europe’s devastated economies. Even if China cannot implement its entire plan, OBOR will have a significant and lasting impact.

Of course, OBOR is not the only challenge Xi has mounted against an aging Western-dominated international order. He has also spearheaded the creation of the Asian Infrastructure Investment Bank, and turned to China’s advantage the two institutions associated with the BRICS grouping of emerging economies (the Shanghai-based New Development Bank and the $100 billion Contingent Reserve Arrangement). At the same time, he has asserted Chinese territorial claims in the South China Sea more aggressively, while seeking to project Chinese power in the western Pacific.

But OBOR takes China’s ambitions a large step further. With it, Xi is attempting to remake globalization on China’s terms, by creating new markets for Chinese firms, which face a growth slowdown and overcapacity at home.

With the recently concluded OBOR summit in Beijing having drawn 29 of the more than 100 invited heads of state or government, Xi is now in a strong position to pursue his vision. But before he does, he will seek to emerge from the National Congress of the Chinese Communist Party later this year as the country’s most powerful leader since Mao Zedong.

Since taking power in 2012, Xi has increasingly centralized power, while tightening censorship and using anti-corruption probes to take down political enemies. Last October, the CCP bestowed on him the title of “core” leader.

Yet Xi has set his sights much higher: he aspires to become modern China’s most transformative leader. Just as Mao helped to create a reunified and independent China, and Deng Xiaoping launched China’s “reform and opening up,” Xi wants to make China the central player in the global economy and the international order.

So, repeating a mantra of connectivity, China dangles low-interest loans in front of countries in urgent need of infrastructure, thereby pulling those countries into its economic and security sphere. China stunned the world by buying the Greek port of Piraeus for $420 million. From there to the Seychelles, Djibouti, and Pakistan, port projects that China insisted were purely commercial have acquired military dimensions.

But Xi’s ambition may be blinding him to the dangers of his approach. Given China’s insistence on government-to-government deals on projects and loans, the risks to lenders and borrowers have continued to grow. Concessionary financing may help China’s state-owned companies bag huge overseas contracts; but, by spawning new asset-quality risks, it also exacerbates the challenges faced by the Chinese banking system.

The risk of non-performing loans at state-owned banks is already clouding China’s future economic prospects. Since reaching a peak of $4 trillion in 2014, the country’s foreign-exchange reserves have fallen by about a quarter. The ratings agency Fitch has warned that many OBOR projects – most of which are being pursued in vulnerable countries with speculative-grade credit ratings – face high execution risks, and could prove unprofitable.

Xi’s approach is not helping China’s international reputation, either. OBOR projects lack transparency and entail no commitment to social or environmental sustainability. They are increasingly viewed as advancing China’s interests – including access to key commodities or strategic maritime and overland passages – at the expense of others.

In a sense, OBOR seems to represent the dawn of a new colonial era – the twenty-first-century equivalent of the East India Company, which paved the way for British imperialism in the East. But, if China is building an empire, it seems already to have succumbed to what the historian Paul Kennedy famously called “imperial overstretch.”

And, indeed, countries are already pushing back. Sri Lanka, despite having slipped into debt servitude to China, recently turned away a Chinese submarine attempting to dock at the Chinese-owned Colombo container terminal. And popular opposition to a 15,000-acre industrial zone in the country has held up China’s move to purchase an 80% stake in the loss-making Hambantota port that it built nearby.

Shi Yinhong, an academic who serves as a counselor to China’s government, the State Council, has warned of the growing risk of Chinese strategic overreach. And he is already being proved right. Xi has gotten so caught up in his aggressive foreign policy that he has undermined his own diplomatic aspirations, failing to recognize that brute force is no substitute for leadership. In the process, he has stretched China’s resources at a time when the economy is already struggling and a shrinking working-age population presages long-term stagnation.

According to a Chinese proverb, “To feed the ambition in your heart is like carrying a tiger under your arm.” The further Xi carries OBOR, the more likely it is to bite him.

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Averting an accidental war on the Korean Peninsula

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BY BRAHMA CHELLANEY, The Japan Times, March 21, 2017

North Korea’s rapid nuclear and missile advances and America’s rushed deployment of a ballistic missile defense system known as the Terminal High Altitude Area Defense (THAAD) in South Korea have increased the risks of a war on the Korean Peninsula by accident or miscalculation.

U.S. President Donald Trump may be battling the “deep state” at home but, in hastening THAAD’s deployment, his administration has acted proactively to present a fait accompli to the next South Korean president. The new president is to be elected in a snap poll in May after South Korea’s Constitutional Court recently upheld the National Assembly’s impeachment of President Park Geun-hye over alleged corruption. It was the conservative Park who agreed last July to the THAAD placement, triggering grassroots protests, especially in the area where the system was to be deployed.

The THAAD issue increasingly has become divisive in South Korean politics, and the liberals’ presidential hopeful, Moon Jae-in, has said the system’s deployment unnecessarily escalates tensions on the peninsula. However, anticipating that the Constitutional Court would oust Park and that Moon could win the presidential election, the Trump administration began THAAD’s placement early this month.

Trump, during his own election campaign, gleefully challenged diplomatic orthodoxy, including American foreign policy’s long-standing principles and shibboleths. Yet by implementing his predecessor’s THAAD decision with enthusiasm to speed up the system’s deployment, Trump has offered an example of how he is embracing key pillars of the previous administration’s foreign policy.

Two fundamental issues raised by the THAAD placement, however, cannot be obscured.

First, the deployment has been necessitated by the abysmal failure of the U.S.-led strategy to squeeze North Korea with ever-increasing international sanctions while shunning any diplomatic engagement with it. The sanctions-only approach, far from stymieing North Korea’s development of weapons of mass destruction, has only encouraged it to single-mindedly advance its nuclear-weapons and missile capabilities.

In the decade since the United States froze all diplomatic contact with North Korea, that reclusive communist nation has gone from possessing rudimentary WMD capabilities to testing advanced systems that pose a regional threat. For example, it tested a nuclear device last September whose yield, as recorded by outside seismic monitoring stations, was twice as powerful as the atomic bomb that the U.S. dropped on Hiroshima in 1945. Since last year, Pyongyang has also tested solid-fueled missile systems, including one that can launched from a submarine.

And second, the THAAD deployment, although arising from a failed American strategy, is no plausible answer to North Korea’s nuclearization. Indeed, this is a case of the supposed remedy being worse than the disease.

The deployment could counterproductively lead to North Korea (and China, which fears that THAAD’s sophisticated X-Band radar could track its missile forces) aiming to defeat the defensive system by developing greater offensive capability. In fact, China and Russia believe that the THAAD placement is part of a larger American plan to establish a fence of antimissile systems around them and thereby undermine their nuclear deterrents.

Let’s be clear: THAAD cannot credibly protect South Korea from the North’s tactical or short-range ballistic missiles. Designed for high-altitude intercepts, THAAD is geared mainly to interdict medium- and intermediate-range ballistic missiles.

Given South Korea’s relatively small land size, an attack by the North may not necessitate the use of medium- or intermediate-range missiles. Metropolitan Seoul, which has almost as many residents as North Korea’s total population of 25 million, is located just 40 km from the Demilitarized Zone dividing the two Koreas.

North Korea has a virtual artillery choke-hold on Seoul that THAAD cannot neutralize. This is why the U.S. lacks a realistic option to militarily degrade the North’s nuclear and missile capabilities without provoking Pyongyang to unleash its artillery power against Seoul or triggering an all-out war. The absence of credible techno-military options against North Korea is also underscored by the reported failure of the U.S. to undermine Pyongyang’s nuclear and missile programs through coordinated cyber and electronic strikes in recent years.

In this light, THAAD’s political symbolism is greater than its military utility. The system, in any case, has never been battle-tested.

But rather than enhance South Korea’s security, including by reassuring its citizens, the THAAD deployment threatens to make South Koreans more insecure through an action-reaction cycle. For example, the Stalinist regime in Pyongyang may now plan, in a combat scenario, to fire many missiles simultaneously so as to defeat THAAD.

Against this background, a new strategy is needed to stem the growing risk that a small mishap could escalate to a full-fledged war. U.S. President Barack Obama employed sanctions with engagement to clinch a nuclear deal with Iran yet, throughout his eight-year tenure, pursued a completely different approach toward North Korea — sanctions without engagement.

Given that the threat posed by North Korea’s weapons of mass destruction has reached a level defying solution through technological or military means, diplomacy must come into play to reduce tensions. For long, North Korea has sought direct talks with Washington. Trump, during his campaign, said that he would be willing to meet with North Korean ruler Kim Jong Un over a hamburger.

If the THAAD placement is not to prove counterproductive, Washington must shift to a policy of sanctions with engagement toward Pyongyang, with the ultimate goal of clinching a WMD deal as part of a comprehensive peace treaty replacing the Korean War armistice. South Korea has even a bigger stake in engagement with the North in order to reduce the costs it will bear if Korean Peninsula reunification were to occur.

Brahma Chellaney, a longtime contributor to The Japan Times, is a geostrategist and the author of nine books, including “Water, Peace, and War.”

© The Japan Times, 2017.

Trump’s China Challenge

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A column internationally syndicated by Project Syndicate.

Photo of Brahma ChellaneyOver the last eight years, as China’s posturing in Asia became increasingly aggressive, many criticized US President Barack Obama for failing to stand up to the Asian giant. It was on Obama’s watch, after all, that China captured the disputed Scarborough Shoal from the Philippines and built seven artificial islands in the South China Sea, on which it then deployed heavy weapons – all without incurring any international costs.

Many expect Obama’s tough-talking successor, Donald Trump, to change all of this. He is not off to a good start.

During the campaign, Trump threatened to retaliate against China for “raping” America on trade, to impose massive tariffs on Chinese imports, and to label China a currency manipulator on “day one.” Soon after his victory, Trump took a congratulatory phone call from the president of Taiwan, thereby breaking with nearly 40 years of diplomatic orthodoxy. Trump then took the matter a step further, publicly suggesting that he would use the “One China” policy as a bargaining chip in bilateral negotiations over contentious economic and security issues – from import taxes to North Korea.

But Trump backed down. Chinese President Xi Jinping made it clear that he would not so much as talk to Trump on the phone without assurance that the US president would pledge fidelity to the One China policy. The call happened, and Trump did exactly what Xi wanted, ostensibly without extracting anything in return. If China now perceives Trump to be all bark and no bite, he will undoubtedly find it harder to secure concessions from China on trade and security issues.

Trump is not the only figure in his administration to stake out a bold position on China, and then retreat meekly. During his Senate confirmation process, US Secretary of State Rex Tillerson declared that the US should “send China a clear signal” by denying it access to its artificial islands in the South China Sea. China’s expansionism in the region, Tillerson asserted, was “akin to Russia’s taking Crimea” from Ukraine – an implicit criticism of Obama for allowing the two developments.

But Tillerson, like his new boss, soon backed down. The US, he now claims, merely needs to be “capable” of restricting China’s access to the South China Sea islands, in the event of a contingency.

And yet China’s behavior merits stronger US action now. The country is attempting to upend the status quo not only in the South China Sea, but also in the East China Sea and the Himalayas. It is working to create a large sphere of influence through its “one belt, one road” initiative. And it is reengineering transboundary river flows. All of this is intended to achieve Chinese leaders’ goal of re-establishing the country’s mythical “Middle Kingdom” status.

Flawed US policy has opened the way for these efforts, in part by helping to turn China into an export juggernaut. The problem isn’t that China has a strong economy, but rather that it abuses free-trade rules to subsidize its exports and impede imports, in order to shield domestic jobs and industry. Today, China sells $4 worth of goods to the US for every $1 in imports.

Just as the US inadvertently saddled the world with the jihadist scourge by training Afghan mujahideen – the anti-Soviet fighting force out of which al-Qaeda evolved – it unintentionally created a rules-violating monster by aiding China’s economic rise. And it sustained its China-friendly trade policy even as China’s abuses became bolder and more obvious.

It is ironic that China, which has quietly waged a trade war for years, has responded to Trump’s threats to impose punitive tariffs by warning – notably, at this year’s World Economic Forum Annual Meeting in Davos – of the risks of protectionism and trade wars. But not everyone is falling for China’s story. A growing number of countries are recognizing that reciprocity should guide their relations with China.

Trump himself may yet challenge China. When he agreed to abide by the One China policy, he said that he had done so at Xi’s request, suggesting that his commitment to the policy should not be taken for granted.

Moreover, even without defying the One China policy, Trump has ample room to apply pressure. He could start by highlighting increasing Chinese repression in Tibet. He could also expand political, commercial, and military contacts with Taiwan, where the One China policy has had the paradoxical effect of deepening people’s sense of national identity and strengthening their determination to maintain autonomy.

In any case, as China continues to pursue its hegemonic ambitions, Trump will have little choice but to pivot toward Asia – substantively, not just rhetorically, as Obama did. To constrain China and bring stability to Asia, he will have to work closely with friends. His efforts to establish a personal connection with Japanese Prime Minister Shinzo Abe – the first foreign leader he hosted at Mar-a-Lago, his “Winter White House” – and the high priority his administration is assigning to relations with India and South Korea are positive signs.

By failing to provide strategic heft to his Asia pivot, Obama left it unhinged. Trump has the opportunity – and the responsibility – to change this. If he doesn’t, China will continue to challenge US allies and interests, with serious potential consequences for Asia and the world.

China’s Debt-Trap Diplomacy

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A column internationally syndicated by Project Syndicate

If there is one thing at which China’s leaders truly excel, it is the use of economic tools to advance their country’s geostrategic interests. Through its $1 trillion “one belt, one road” initiative, China is supporting infrastructure projects in strategically located developing countries, often by extending huge loans to their governments. As a result, countries are becoming ensnared in a debt trap that leaves them vulnerable to China’s influence.

Of course, extending loans for infrastructure projects is not inherently bad. But the projects that China is supporting are often intended not to support the local economy, but to facilitate Chinese access to natural resources, or to open the market for low-cost and shoddy Chinese goods. In many cases, China even sends its own construction workers, minimizing the number of local jobs that are created.

Several of the projects that have been completed are now bleeding money. For example, Sri Lanka’s Mattala Rajapaksa International Airport, which opened in 2013 near Hambantota, has been dubbed the world’s emptiest. Likewise, Hambantota’s Magampura Mahinda Rajapaksa Port remains largely idle, as does the multibillion-dollar Gwadar port in Pakistan. For China, however, these projects are operating exactly as needed: Chinese attack submarines have twice docked at Sri Lankan ports, and two Chinese warships were recently pressed into service for Gwadar port security.

In a sense, it is even better for China that the projects don’t do well. After all, the heavier the debt burden on smaller countries, the greater China’s own leverage becomes. Already, China has used its clout to push Cambodia, Laos, Myanmar, and Thailand to block a united ASEAN stand against China’s aggressive pursuit of its territorial claims in the South China Sea.

Moreover, some countries, overwhelmed by their debts to China, are being forced to sell to it stakes in Chinese-financed projects or hand over their management to Chinese state-owned firms. In financially risky countries, China now demands majority ownership up front. For example, China clinched a deal with Nepal this month to build another largely Chinese-owned dam there, with its state-run China Three Gorges Corporation taking a 75% stake.

As if that were not enough, China is taking steps to ensure that countries will not be able to escape their debts. In exchange for rescheduling repayment, China is requiring countries to award it contracts for additional projects, thereby making their debt crises interminable. Last October, China canceled $90 million of Cambodia’s debt, only to secure major new contracts.

Some developing economies are regretting their decision to accept Chinese loans. Protests have erupted over widespread joblessness, purportedly caused by Chinese dumping of goods, which is killing off local manufacturing, and exacerbated by China’s import of workers for its own projects.

New governments in several countries, from Nigeria to Sri Lanka, have ordered investigations into alleged Chinese bribery of the previous leadership. Last month, China’s acting ambassador to Pakistan, Zhao Lijian, was involved in a Twitter spat with Pakistani journalists over accusations of project-related corruption and the use of Chinese convicts as laborers in Pakistan (not a new practice for China). Zhao described the accusations as “nonsense.”

In retrospect, China’s designs might seem obvious. But the decision by many developing countries to accept Chinese loans was, in many ways, understandable. Neglected by institutional investors, they had major unmet infrastructure needs. So when China showed up, promising benevolent investment and easy credit, they were all in. It became clear only later that China’s real objectives were commercial penetration and strategic leverage; by then, it was too late, and countries were trapped in a vicious cycle.

clipboard01Sri Lanka is Exhibit A. Though small, the country is strategically located between China’s eastern ports and the Mediterranean. Chinese President Xi Jinping has called it vital to the completion of the maritime Silk Road.

China began investing heavily in Sri Lanka during the quasi-autocratic nine-year rule of President Mahinda Rajapaksa, and China shielded Rajapaksa at the United Nations from allegations of war crimes. China quickly became Sri Lanka’s leading investor and lender, and its second-largest trading partner, giving it substantial diplomatic leverage.

It was smooth sailing for China, until Rajapaksa was unexpectedly defeated in the early 2015 election by Maithripala Sirisena, who had campaigned on the promise to extricate Sri Lanka from the Chinese debt trap. True to his word, he suspended work on major Chinese projects.

But it was too late: Sri Lanka’s government was already on the brink of default. So, as a Chinese state mouthpiece crowed, Sri Lanka had no choice but “to turn around and embrace China again.” Sirisena, in need of more time to repay old loans, as well as fresh credit, acquiesced to a series of Chinese demands, restarting suspended initiatives, like the $1.4 billion Colombo Port City, and awarding China new projects.

Sirisena also recently agreed to sell an 80% stake in the Hambantota port to China for about $1.1 billion. According to China’s ambassador to Sri Lanka, Yi Xianliang, the sale of stakes in other projects is also under discussion, in order to help Sri Lanka “solve its finance problems.” Now, Rajapaksa is accusing Sirisena of granting China undue concessions.

By integrating its foreign, economic, and security policies, China is advancing its goal of fashioning a hegemonic sphere of trade, communication, transportation, and security links. If states are saddled with onerous levels of debt as a result, their financial woes only aid China’s neocolonial designs. Countries that are not yet ensnared in China’s debt trap should take note – and take whatever steps they can to avoid it.

Nepal’s water curse

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Nepal needs bridge over troubled waters

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People ride on a boat to reach the bank of the Rapti River at Sauraha in Chitwan, south of Kathmandu. © Reuters

By Brahma Chellaney, Nikkei Asian Review

Nepal sits on vast water resources. The United Nations describes the landlocked Himalayan state as “one of the Asian countries with the highest level of water resources per inhabitant.” Water can potentially be to Nepal what oil is to Arab sheikhdoms.

Nepal’s renewable water resources are estimated at 7,372 cubic meters per capita annually, or several times higher than those for the two demographic titans between which it is sandwiched — China and India. Yet Nepal, oddly, seems afflicted by a water curse. A failure to adequately harness water resources has left the nation acutely energy-starved, and water shortages are endemic in major Nepalese cities, including the capital, Kathmandu.

Meanwhile, as it increasingly becomes a theater of geopolitical competition between China and India, Nepal is tilting more toward Beijing and away from India, its main partner through the centuries. China, blending economic and security policies, is steadily making strategic inroads. Beijing’s latest deal with Nepal to build another largely Chinese-owned dam there highlights its growing success in clinching major infrastructure contracts in India’s backyard to advance its foreign policy and commercial interests.

Had India tried to secure a contract to set up a largely Indian-owned dam in Nepal, it would likely have faced a nationalistic backlash. Maoists, communists and nationalists in Nepal portray India as a regional hegemon and have seriously impeded its hydropower development plans. China, however, does not face such opposition in communist-dominated Nepal. This helps to explain why the new deal over the planned 750-megawatt West Seti Dam is not the first Chinese hydropower project in the country.

China, through construction projects by Chinese state-run companies and large loans to finance them, is quietly enlarging its presence in and leverage over the increasingly indebted Nepal, which risks becoming its client state. Already, Beijing has used its clout to push Nepal to crack down on Tibetans traveling through Nepal to India, where the Dalai Lama is based.

While dressing its investments in the cloak of economic aid, China is imposing stiff commercial terms on Nepal, plus taking majority project ownership upfront. For example, its state-run China Three Gorges Corporation has picked up a 75% stake in the West Seti Dam project.

Nepal holds up to 83,000 megawatts of hydropower reserves, which, if tapped partially, can make it a major exporter of electricity. By harnessing the natural bounty of the Himalayas to produce renewable electricity, Nepal could emulate the success of Bhutan in generating the hydro dollars to fuel its rapid economic development. Small Bhutan has effectively turned its rich water resources into “blue gold,” achieving the highest per capita income in South Asia.

Power shortages

Nepal, however, produces barely 800 megawatts of electricity for its 30 million citizens from all sources of energy, with the result that long power outages are common even in Kathmandu. Nepal controls the headwaters of, or serves as the corridor for, several rivers that flow into India, yet it imports electricity from that country.

As opposed to China’s water megaprojects at home, smaller and ecologically friendly projects in the Himalayas — if properly planned and designed and conforming to thorough and impartial environmental impact assessments — can yield major benefits without carrying significant environmental and social costs. Environmentally sound hydropower is particularly attractive because, despite the high upfront capital costs, a hydropower plant has a life span almost double that of a nuclear power reactor and generates electricity with no fuel cost.

India, as the subcontinent’s largest energy consumer, has sought to incentivize a subregional energy grid. Yet the vast majority of its own Himalayan hydropower projects have been delayed, suspended or shelved, largely due to grass roots opposition.

India has employed water collaboration as a tool of its diplomacy with Nepal and Bhutan. In Bhutan, India has subsidized the development of environmentally friendly hydropower by providing 60% of the investment for each project as a grant and the remaining amount as a low-interest loan. The projects have helped power Bhutan’s success story.

By contrast, the political dividends from Indo-Nepalese water cooperation have declined over the years, partly because of political constraints in Nepal and partly because India has not been sensitive to Nepalese concerns. Several joint projects have either not been completed or failed to live up to their promise, leaving a troubled legacy that has increasingly weighed down bilateral cooperation.

Bangladesh has actively sought the start of water projects in Nepal to augment the lean-season flows of the Ganges River at Farakka, the critical downriver point where the waters are equally shared between India and Bangladesh under a 1996 treaty. The treaty — which coincided with the 25th anniversary of Bangladesh’s Indian-assisted independence — has set a new principle in international water law by guaranteeing delivery of specific water quantities to downstream Bangladesh in the critical dry season.

Hundreds of rivers, some them originating in Tibet, crisscross Nepal. The country has five major river basins, from the Mahakali in the west to the eastern Kosi. All its river systems empty into the Ganges basin in India. Nepal is also rich in groundwater resources in the southern plains along its long border with India.

Resource curse

Whereas countries afflicted by what development economists call the “resource curse” find it difficult to break out of slow rates of economic growth and high levels of income inequality, despite relying on major exports of natural resources, Nepal’s water curse has come without exploiting its resource reserves for its own needs, let alone exporting hydropower.

No less significant is the fact that Nepal has several water treaties with India but none with China, which has dammed the Karnali River just before it enters Nepal. China is also planning to build a cascade of five dams on the upper reaches of the Arun River. The construction of that cascade, by diminishing flows into the Ganges, could potentially affect India’s Ganges water-sharing arrangement with Bangladesh.

Nepal’s water curse has been compounded by severe political turmoil for the past quarter century. It remains today in a politically shaky position — wracked by underdevelopment, poverty, poor governance and lawlessness and increasingly divided by its murky politics.

The sorry state of affairs in Nepal has seriously hampered its hydropower and irrigation expansion, even though progress in these areas is essential to obtain much-needed revenue and development and to help tame the transboundary rivers that often overrun their banks in Nepalese and Indian areas during the monsoons.

Indeed, the integrated development of the Ganges basin demands trilateral institutional collaboration between the three basin states — Nepal, India and Bangladesh — with cooperation extending to energy, transit and port rights. However, the entry of a non-basin state, China, is muddying the waters. Both through its unilateral dam-building activities in Tibet on the rivers that flow to Nepal, India and Bangladesh, and its entry in the Nepalese hydropower sector, China is compounding the challenges of regional integration.

Breaking the water curse is critical to Nepal’s future. While the mighty Himalayas separate it from Chinese-ruled Tibet, Nepal is tied to India by geography, including multiple shared river basins. Water cooperation with India and Bangladesh can help harness the waters of the common rivers for shared benefit.

But if Nepal remains battered by political turmoil, it risks becoming a failed state — a development that will carry major security implications for India, given the open Indo-Nepalese border that permits passage without documentation or registration.

Brahma Chellaney, a geostrategist, is the author of nine books, including “Water: Asia’s New Battleground.”

© Nikkei Asian Review, 2017.

The World According to the Donald

COVER STORY/Open Magazine/20 January 2017

c2m-2a9viaak-teBy Brahma Chellaney

New US President Donald Trump’s geopolitical focus on China and Islamic radicalism meshes well with Indian strategic priorities. But will his administration add real strategic content to a vaunted ‘strategic partnership’ with New Delhi whose most-prominent feature is the emergence of India as a leading client of the American armament industry?

Trump’s predecessor, Barack Obama, undoubtedly advanced the relationship with India. But it is also true that Obama compounded India’s regional security challenges, both by emboldening China through his meekness toward Beijing and by bolstering China’s ‘contain India through Pakistan’ strategy. While refusing to take sides in the China-India territorial disputes, the Obama administration actually strengthened China’s strategy to box in India by extending munificent US aid to Pakistan, thus encouraging that country to continue to sponsor cross-border terrorism with impunity.

Whether the Trump administration will contribute positively or negatively to India’s regional interests hinges fundamentally on the geopolitical framework that will guide its foreign policy.

Trump ran an election campaign that challenged American diplomacy’s longstanding principles and shibboleths, turning his party’s own establishment against him. This might suggest that his foreign-policy approach would represent a break from the past.

The fact, however, is that the institutional policymaking structure in the US is much stronger than, say, in India. Therefore, it is not easy for a president to break with well-established policies that have been pursued by presidents belonging to both parties. Moreover, the approach and direction of an American president’s foreign policy becomes apparent only after his first year in office.

For example, Obama’s coming to power created high anticipation globally of significant changes in the American foreign-policy approach, with the expectations being strengthened when he surprisingly was awarded the Nobel peace prize less than nine months after assuming office. Yet Obama proved to be as interventionist as any president before him. The chaos in Libya that he sowed through regime change will be remembered—like President George W. Bush’s unravelling of Iraq—as one of his imprints on history.

India needs to play a more active role in influencing policy in Washington. New Delhi has not tried to persuade the US to end its policy of mollycoddling Pakistan by leveraging India’s defence imports from America or by utilising the services of the large and increasingly influential American Indian community.

Obama came to office vowing to end the Bush-era wars in Afghanistan and Iraq. The war in Afghanistan (the longest war in American history) still rages. Obama ended the war in Iraq, only to start a new one there and in Syria. He presided over the birth of a terrorist organisation more potent that Al Qaeda—the Islamic State of Iraq and the Levant, known as ISIS, ISIL or Islamic State. In 2016, Obama’s last year in office, the US dropped more than 26,000 bombs in seven countries, according to one assessment.

By getting the US embroiled in more conflicts, Obama has bequeathed to Trump a Middle East more violent and less stable than the one Obama inherited from Bush in 2009.

Faced with major international challenges, Trump has signalled his intent to revamp American foreign policy so that he can concentrate on his main priority—comprehensive domestic renewal, the central pillar of his promised strategy to “make America great again”. He has also indicated his desire to reverse the interventionist, regime-change policy that successive American presidents have followed since the early 1950s, when the CIA successfully plotted the overthrow of Iranian Prime Minister Mohammad Mossadegh.

Trump’s determination to boost US job growth by eliminating critical roadblocks, including unfair competition from Chinese manufacturers, has set the stage for a tougher American policy on trade. This is also apparent from those he has named to key positions, especially Robert Lighthizer, his nominee for trade representative, Wilbur Ross, his choice to become commerce secretary, and Peter Navarro, the head of the new White House office overseeing trade and industrial policy.

Trump’s trade-related nationalism is linked to the perception that trade liberalisation has contributed to America’s relative decline. For Trump, trade is one area where he must deliver on his campaign promises or risk losing his credibility with the blue-collar constituency that helped him defeat Hillary Clinton.

No country faces a bigger challenge from Trump’s ascension to power than China, which has been flexing its military and economic muscles more strongly than ever. After the Obama administration’s obsequious stance, Beijing must brace up and face an assertive new national security and economic team in Washington that is unlikely to put up with its covert territorial expansion and trade manipulation.

China will likely bear the brunt of Trump’s trade-related nationalism at a time when its economy is slowing despite the state heavily providing fiscal and monetary stimulus. By contrast, the impact on India will be marginal because the fallout will largely be limited to the H-1B visa issue. Trump’s tougher stance on trade with China is unlikely to be deterred by the spectre of a trade war for the simple reason that Beijing is already waging an economic war against major economies.

While subsidising its exporters, China has quietly but systematically been blocking imports. The Obama administration’s announcement last April that China had agreed to scrap export subsidies on some products, mainly agricultural items and textiles, drew scepticism in the international markets because the deal did not cover major exports, including steel. It also left intact other forms of state support to the Chinese industry.

Trump seems willing to call a spade a spade and adopt a tougher and less predictable line toward Beijing, with his choice to become secretary of state, Rex Tillerson, going to the extent of saying that China should be denied access to the artificial islands that it has created in the South China Sea.

China exports $4 worth of goods to the US for each $1 of imports. Its trade with India is even more skewed: It exports nearly $6 worth of goods for each $1 of imports. This mismatch, largely due to the systematic dumping of goods, has allowed China to rapidly double its trade surplus with India to $60 billion just on Prime Minister Narendra Modi’s watch. China’s bilateral trade surplus with the US, of course, is bigger and is equal to about 3 per cent of its entire economy.

The Trump team has clarified that the president is not against free trade but against unfair trade. If China can slap Mongolia with punitive tariffs for merely allowing the Dalai Lama to undertake a purely religious tour, will it be unreasonable for the Trump administration to penalise China likewise for unashamedly distorting free trade?

Of course, the implications for China extend beyond trade. After all, Trump has signalled an imperative to recalibrate America’s foreign policy by shifting its geopolitical focus from Russia—a declining power with a sharply contracting economy—to the increasingly muscular and openly revisionist China. Unlike Russia’s 2014 annexation of Crimea, China’s territorial revisionism, as illustrated in the South China Sea and the Himalayas, is creeping and incremental yet relentless. Also unlike Russia, China sees itself as superior to the rest of the world and seeks to regain its fabled ‘Middle Kingdom’ status.

Abandoning the longstanding US fixation on Moscow and concentrating instead on the more potent, long-term challenge from China makes eminent sense for the Trump administration. In the global geopolitical competition between the US and China, Washington should seek to ensure that Russia stays neutral, if not on America’s side. However, the Obama administration did the opposite—forcing Moscow to pivot to China.

In the Obama era, China’s defiant unilateralism remained cost-free. Indeed, in the dying days of the Obama administration, China rushed more missiles to its man-made islands in the South China Sea, where, on Obama’s watch, it built seven islands and militarised them in an attempt to annex a strategically crucial corridor through which half of the world’s annual merchant fleet tonnage passes.

But now Trump seems willing to call a spade a spade and adopt a tougher and less predictable line toward Beijing, with his choice to become secretary of state, Rex Tillerson, going to the extent of saying that China should be denied access to the artificial islands that it has created in the South China Sea. While Obama remained virtually mum on China’s creeping aggression in the South China Sea, Tillerson has called it “akin to Russia’s taking Crimea” and favoured a strategic payback.

Will Trump try ‘madman diplomacy’ to tame a renegade Pakistan? The plain fact is that only coercive US diplomacy can help break the Pakistan military establishment’s cosy ties with terrorist groups, some of which are among the most dangerous.

China prefers quiet diplomacy, a setting that allows it to play its cards shrewdly. But Trump’s approach is completely different, as is apparent from his statement that, “Everything is under negotiation including One China.” That America’s ‘one-China’ policy since the 1970s is no holy cow for Trump was also apparent earlier from his conversation with Taiwan’s president by telephone. Trump has also turned his Twitter feed into a twenty-first-century version of the bully pulpit, repeatedly castigating Beijing for refusing to play by the rules. President Xi Jinping and his coterie in Beijing are at a loss on how to handle Trump.

Those analysts concerned about Trump’s deal-making approach tend to forget that US foreign policy, essentially, has always been transactional in character. Trump wants to clinch good deals for the US, just as the leader of any nation ought to do.

Another Trump priority is waging war against radical Islamic militancy before it turns into a global jihadist movement. Trump, however, cannot deliver credible or enduring counterterrorism results without disciplining Saudi Arabia, Qatar and the other oil sheikhdoms that continue to export Islamic radicalism. US foreign policy has had a longstanding alliance with Arab monarchs that has continued even as these cloistered royals bankroll Islamic militant groups and in other countries. Trump will also need to abandon the failed US policy on Pakistan that his immediate two predecessors pursued since the September 11, 2001 terrorist attacks in the US.

Had Hilary Clinton won the presidency, we would likely have seen the continuation of America’s failed Pakistan policy, which has involved doling out billions of dollars in US military and civilian assistance to that quasi-failed country without seeking substantive results on the terrorism front. However, the only language Pakistan’s powerful generals understand is of the kind the US delivered right after 9/11 to bend Pakistan to its will. As former Pakistani military dictator Pervez Musharraf has acknowledged in his memoir, he and his fellow generals genuinely believed that unless they met the Bush administration’s demands, they would be ‘bombed back to the stone ages’.

Against this background, as one American analyst has asked, will Trump try ‘madman diplomacy’ to tame a renegade Pakistan? The plain fact is that only coercive US diplomacy can help break the Pakistan military establishment’s cosy ties with terrorist groups, some of which are among the most dangerous in the world.

Yet in his written submissions to the Senate Armed Services Committee during his confirmation hearing process, Defence Secretary-designate James (‘Mad Dog’) Mattis pledged to build ‘trust’ with Pakistan ‘for an effective partnership’. This might suggest that America’s failed Pakistan policy would persist, even though this policy is the main reason why the US military is still stuck in the war in Afghanistan. Trump’s national security adviser, Gen. Michael Flynn, while serving as the US intelligence chief in Afghanistan, and Gen. Mattis, as CentCom chief, established close relations with the Pakistani military establishment. However, the direction of the Pakistan policy will likely be set by Trump himself, with the policy details left to the Cabinet members.

India needs to play a more active role in influencing policy in Washington. For example, it did little in response to Obama’s move nearly a year ago to reward Pakistan with eight more subsidised F-16s and hundreds of millions of dollars in additional aid under the Overseas Contingency Operations fund, which has been dubbed the ‘slush fund’. It was congressional opposition that stymied the planned transfer of additional F-16s. The blunt truth is that New Delhi has not tried to persuade the U.S. to end its policy of mollycoddling Pakistan by leveraging India’s defence imports from America or by utilising the services of the large and increasingly influential American Indian community.

As for Trump, he is already facing resistance to recalibrating US foreign policy from the deep state, which extends to a nexus between the intelligence agencies and major media organisations. To prevent any détente with Russia, powerful interests in Washington have gone to extraordinary lengths to undercut Trump, including by seeking to irreparably dent his image. This underscores the formidable challenge Trump faces to revamp foreign policy.

No president in living memory has taken office with America so politically polarised and divided and the deep state so unwelcoming as Trump, with the outgoing CIA chief actually blasting him on the eve of his inauguration. If Trump succeeds in recalibrating US foreign policy, including relating to China and Pakistan, he will set the stage for a true, robust and enduring partnership with India.

Brahma Chellaney is professor of strategic studies at the Centre for Policy Research in New Delhi and Richard von Weizsäcker Fellow of the Robert Bosch Academy in Berlin. © Open Magazine, 2016.