Behind the geopolitical hugs

Instead of being content with doling out multibillion-dollar contracts to other powers, India must learn the art of aggressively pushing commercial interests as a central driver of diplomacy, says Brahma Chellaney

Brahma Chellaney

The Economic Times, January 7, 2011 http://j.mp/eVPNaH

In a recent span of five months, the head of government or state from each of the five powers with a permanent seat on the UN Security Council visited India. Accompanied by a delegation of business leaders, each came with a similar objective — to secure billions of dollars in new Indian contracts. New Delhi was more than happy to oblige. Each left flaunting the new export contracts.

The summit hugs actually point to a worrying trend: India seems to measure success of its diplomacy by how many billions of dollars of business it gives to a visiting foreign dignitary. In a world in which trade still follows the flag, India functions as if imports can help hoist its flag.

Foreign governments have been aggressively courting India to try to get a slice of its rapidly growing market. With Western and Japanese markets racked by economic troubles, other powers’ export machines avariciously seek a larger market share in India, the world’s second fastest-growing economy currently. Also, with India now the world’s second-largest arms buyer, wooing New Delhi as a defence and strategic partner has become necessary to sell military wares. The $150 billion worth of potential contracts opened up by the nuclear deal are yet another magnet.

The beeline to New Delhi began when Prime Minister David Cameroon arrived with Britain’s largest-ever trade delegation. He also hawked defence wares, managing to clinch one weapon deal worth over $1 billion. US exports to India have expanded five-fold in the past decade, yet President Barack Obama marketed his Indian tour as primarily a mission to create American jobs. He left India mightily pleased, with some $15 billion worth of export deals in his bag and assured of new arms contracts.  

To help France win India’s first contract under the nuclear deal, the environmental clearance of the Jaitapur plant site was rushed through in record 80 days. French President Nicholas Sarkozy’s visit yielded $13 billion worth of deals for him. Besides agreeing to buy high-priced Areva reactors of unproven design and safety, India has promised France a contract to upgrade its 52 Mirage fighters — an upgrade for which Paris has quoted a ridiculous price of $2.6 billion, which is as good as the cost of new warplanes of equivalent capability from Russia. Sarkozy’s take-home goodies also included an agreement-in-principle on coproduction of a short-range surface-to-air French missile system, to be called “Maitri.”

Just as Chinese President Hu Jintao came to New Delhi in 2006 after Beijing resurrected the Arunachal Pradesh card, Premier Wen Jiabao’s recent stopover on his way to Pakistan followed China’s unsheathing of a new instrument of leverage against India — Kashmir. In fact, Wen arrived after his standing at home had been weakened in the twilight of his political career, with the state-run national press censoring on three separate occasions his remarks on political reforms. Yet he came with some 400 businessmen to fortify an asymmetrical trade relationship that has turned India into the raw-material appendage of a neocolonial Chinese economy. While conserving its own natural resources, China is sourcing primary commodities from Africa and India and exporting refined goods to them in return. While its foreign direct investment in India remains minuscule ($52 million in the past decade) and it continues to impede Indian corporations from entering its market, China is undercutting Indian manufacturing through large-scale dumping.

As long as China can continue to strengthen such lopsided economic ties and reap a ballooning trade surplus, it will have little incentive to bridge the yawning political divide. Wen, in fact, did not even seek to address any of India’s security concerns. Yet he wrapped up his visit with a bagful of contracts worth some $23 billion.

At the year-end, when Russian President Dmitry Medvedev came calling, India signed a number of economic and defence agreements worth billions of dollars to shore up its relationship with an old ally. In a changing world, sticking with an old, “tried and tested” friend makes a lot of sense for India.

India, though, needs to recognize that reciprocity and leverage are the twin pillars on which sound diplomacy is founded. Dispensing contracts without reciprocity is a path neither to leverage building nor to developing comprehensive national power. Even when the prime minister travels overseas, he awards contracts to his hosts, instead of returning home with lucrative contracts. Little surprise India is the only major global economy that is import-dependent, not export-oriented. India relies predominantly on domestic consumption to fuel its economic growth.

High import dependency, however, puts an undue burden on the domestic consumer and taxpayer and acts as the main impediment to building comprehensive national power. It also lubricates big-bucks corruption because import deals often offer alluring kickbacks, usually routed directly to offshore bank accounts. More fundamentally, doling out multibillion-dollar contracts as a tool of diplomacy — even as India has gained notoriety for the scale of its stolen national wealth stashed in international financial safe havens — only undermines India’s rising strength.

The import dependency in various sectors has created strong business lobbies seeking to influence foreign-policy options so as to safeguard practices that threaten to pauperize the Indian economy. Such entrenched interests, for example, wish to perpetuate the inequitable trade with China, including the stripping of Indian resources. Also illustrative is defence spending, which India has doubled over the past six years, ploughing more and more funds into arms imports, but without an appraisal of the country’s long-term deterrent requirements. The more arms India has imported, the more it appears to lack the capability to decisively win a war thrust upon it by even the smaller of its two regional adversaries.

India must learn the way foreign leaders aggressively push commercial interests as a central driver of their diplomacy. Promoting exports has to become a key part of Indian foreign policy. Without meaningful political support, Indian industry will remain at a serious disadvantage to its Western and Chinese competitors.  And the country will stay mired in debilitating import dependencies. The next time the PM goes abroad, he should strive to come back with contracts for Indian industry.

(c) The Economic Times, 2011.

Krishna is continuing the tradition of Indians in high office messing up the country’s China policy.

Why Single Out Myanmar for Sanctions?

By BRAHMA CHELLANEY

International Herald Tribune, November 18, 2010

http://www.nytimes.com/2010/11/18/opinion/18iht-edchellaney.html?ref=global

NEW DELHI — With the release of Daw Aung San Suu Kyi from prolonged house detention, it is time for the United States and its European partners to moderate their sanctions policy against Myanmar (Burma) so as to create incentives for greater political openness and to insulate its citizens from the rigors of the punitive actions.

There is no reason why a weak, impoverished Myanmar should continue to be held to a higher human-rights standard than an increasingly assertive China. Why deny Myanmar the international-trade opportunities that have allowed the world’s biggest executioner, China, to prosper?

The defining events that led to the crushing of pro-democracy forces in Myanmar and China actually occurred around the same time more than two decades ago, yet the West responded to the developments in the two countries in very different ways.

China’s spectacular economic rise owes a lot to the Western decision not to sustain trade sanctions after the 1989 Tiananmen Square massacre of pro-democracy protestors. The Cold War’s end facilitated Washington’s pragmatic approach to shun trade sanctions and help integrate China with global institutions through the liberalizing influence of foreign investment and trade.

That the choice made was wise can be seen from the baneful impact of the opposite decision in favor of sustained sanctions against Myanmar, which brutally suppressed pro-democracy demonstrators 10 months before Tiananmen Square and subsequently refused to honor the outcome of a national election in 1990. Had the Myanmar-type approach of escalating sanctions been applied against China internationally, the result would have been a less prosperous and a potentially destabilizing China today.

By contrast, the continuation of sanctions and their subsequent expansion against Myanmar snuffed out any prospect of that country emulating China’s example of blending economic openness with political authoritarianism. Indeed, the military’s attempts to open up the Myanmar economy in the early 1990s fizzled out quickly in the face of Western penal actions.

Today, the release of Aung San Suu Kyi offers the U.S. and Europe an opportunity to recalibrate the sanctions policy by drawing on the lessons of the past two decades.

The first lesson is that the economic sanctions, even if justified, have produced the wrong political results. Years of sanctions have left Myanmar without an entrepreneurial class or civil society and saddled with an all-powerful military as the sole functioning institution.

A second lesson is that the expansion of sanctions has not only further isolated Myanmar, but also made that country overly dependent on China, to the concern of the nationalistic Myanmar military. At a time when the United States is courting Communist-ruled Vietnam as part of its “hedge” strategy against a resurgent China, it makes little sense to continue with an approach that is pushing a strategically located Myanmar into China’s strategic lap.

Yet another lesson is that the sanctions have hurt not their intended target — the military — but ordinary citizens. By cutting off investment and squeezing vital sectors of the Myanmar economy, from tourism to textiles, the sanctions have lowered the living conditions of the Burmese and shut out liberalizing influences.

The blunt fact is that after being in power for nearly half a century, the military has become too fat to return to the barracks. In fact, it won’t fit in the barracks.

With no hope of a “color revolution” in Myanmar, demilitarization of the polity can at best be a step-by-step process. In that context, the recent elections, although far from being free or fair, have helped revive a long-dormant political process, given birth to new political players and institutions (including a bicameral national Parliament, 14 regional parliaments and the impending appointment of a president and civilian federal government), and implicitly created a feeling of empowerment among the people.

With the military now in the throes of a generational change, the revived political process has created new space for the democracy movement, as symbolized by Aung San Suu Kyi’s release. But with the opposition badly splintered and the military’s grip on power firm as ever, Aung San Suu Kyi cannot bring about tangible democratic reforms without building bridges with the armed forces.

Now is the time, with Myanmar in transition, for the United States and its allies to get out of a self-perpetuating cycle of sanctions and help carve out greater international space in that nation. Each step toward greater political openness in Myanmar ought to be suitably rewarded.

More broadly, democracy promotion should not become a geopolitical tool wielded only against the weak and the marginalized.

Going after the small kids on the global block but courting the most-powerful autocrats is hardly the way to build international norms or ensure positive results.

An uncompromisingly penal approach against Myanmar has had the perverse effect of weakening America’s hand while strengthening China’s. This was best illustrated during the Bush administration, which, after slapping the harshest sanctions on Myanmar, turned to Beijing as a channel of communication with the Burmese junta.

President Barack Obama began on the right note by exploring the prospect of a gradual reengagement with Myanmar. Yet on his recent visit to India, Obama attacked Myanmar three times, reflecting his frustration with the painfully slow movement to create a democratic opening in that nation.

Despite Aung San Suu Kyi’s release, the seeds of democracy will not take root in a stunted economy. External penal actions without constructive engagement and civil-society development in a critically weak country defeat their very purpose.

Brahma Chellaney, a professor of strategic studies at the New Delhi-based Center for Policy Research, is the author, most recently, of “Asian Juggernaut.”

Obama will take more than give

Brahma Chellaney

The Economic Times, November 4, 2010

U.S. President Barack Obama comes to India when his presidency has been considerably dented by the mid-term election drubbing, with the poll losses in key swing states like Pennsylvania, Ohio and Florida likely to encumber his 2012 re-election bid. The president who harped on being transformational has been delivered a no-confidence in his own leadership by the voters.

It is remarkable that just a year ago, Obama was riding high, having unexpectedly won the Nobel prize for peace — a cause for which he has little to show up to now. A year, obviously, is a very long time in politics.

Obama’s Democratic Party lost the House of Representatives to the Republicans, while its razor-thin edge in the 100-seat Senate offers little consolation. It takes 60 votes to get anything done in the Senate. The Democrats’ continued control of the Senate thus is nominal. In effect, they stand kicked out of power.

Obama came to office with tremendous international goodwill. Yet, saddled with problems of historic proportion, he had little time to savour his epochal victory against rival John McCain. After all, he inherited national and global challenges more formidable than any faced by an American president at the beginning of the term. With the U.S. economic recession threatening to become a depression and two overseas wars raging, Obama had his work clearly cut out for him.

Now, midway through his term, these election losses ensure his hands will be full for the rest of his term. First, the high unemployment, growing U.S. debt and other economic problems that contributed to the poll reverses will preoccupy his presidency, especially if he hopes to be re-elected. That means he will shift to a more domestically focused agenda than before, with his international diplomacy geared towards trade deals to boost job and wealth creation at home. Second, he is likely to get tied down by the legislative actions and investigations of a Republican-influenced Congress, with a resurgent Tea party movement likely to target him increasingly.

That, plus an American public weary of the war, makes certain that Obama will start pulling U.S. forces out of Afghanistan before the job is done, leaving India on the front lines to face the brunt of greater terrorism from the Af-Pak belt. In fact, the recent unveiling of a new $2.3-billion U.S. aid package for the Pakistani military, along with the continued sale of offensive weapon systems, can only embolden an institution that is at the root of Pakistan’s problems and regional instability.

The good news on the U.S.-India front is that a weakened Obama presidency will do little to change the dynamics of a relationship whose direction is clearly set — towards closer engagement. The not-so-good news is that having given short shrift to some of India’s concerns in the first 22 months of his presidency on the pressing issues of counterterrorism and the scofflaw roles of the Pakistani army and ISI, Obama will have lesser leeway to accommodate India’s interests in his regional strategy, pivoted on extricating the U.S. from Afghanistan with the aid of the Pakistani military.

The president, pushed by the election setbacks, is likely to focus his India visit on promoting U.S. commercial interests, including job creation back home. That means he will crave for more contracts, especially high-visibility multibillion-dollar arms deals.

From Washington’s perspective, the billions of dollars worth of arms the Obama administration already has contracted to sell India since last year symbolize the new Indo-U.S. partnership. Closer military-to-military ties and defence transactions are part of the vaunted strategic partnership. Yet, India ought to be concerned about its growing reliance on the U.S. for weapons and their replacement parts, given that Washington is selling arms on both sides of the subcontinental divide.

During the second half of the Cold War, India relied on the Soviet Union for weapons. Now, New Delhi has begun to switch its dependency to the U.S., which has quietly emerged in recent years through government-to-government deals as the single largest seller of arms to India. Embarrassingly, India today stands out in the world as the only large nation dependent on imports to meet even basic defence needs.

Overall, the U.S. and India have never been closer than they are now, with their relationship set to deepen in spite of the policy differences on regional issues. Still, one should realistically expect more “take” than “give” from this presidential visit.

(c) The Economic Times.