There has been a tectonic shift in the global geopolitical economy, to which powers such as the U.S., China and Russia have responded. However, India is yet to formulate a worldview even as Asia, after a gap of 260 years, is again set to become the centre of the world.
Till 1757, India was the richest country with its wealth based on textile export: India clothed the world. The choices we made enabled the British to secure the “Diwani” of Bengal. The loot oiled the Industrial Revolution (textile production), and brought about colonisation and impoverishment. In 1950, India was richer than China; now it is a fifth the size of the Chinese economy. China will soon surpass the U.S. as the largest economy, and a young and digital India can overtake China by 2050. How do we achieve our potential?
Recognising global trends
The “Look East Policy” enunciated in 1992 does not have much to show for it other than the sale of coastal patrol craft to Vietnam. In the west, India’s investment of $500 million in the Chabahar port, mooted some years ago, is minuscule compared to China’s investment of $46 billion in the China-Pakistan Economic Corridor (CPEC) ending in Gwadar, a port just 100 miles away. Despite investments in Afghanistan, political discussions there exclude us. In South Asia, only Bhutan can still be considered to be in our “sphere of influence”.
India now finds itself increasingly isolated in continental Asia. Russia and the Central Asian countries are linking their infrastructure to China’s One Belt, One Road (OBOR), launched in 2013, meeting their long quest for a warm-water port. Chinese investment is also attractive to Europe, Malaysia, Thailand, Myanmar. With two-thirds of global wealth soon going to be in Asia, can we achieve our potential without being deeply integrated into the Asian market?
NITI Aayog has yet to develop a strategy laying out how India can become a $10- trillion economy by 2032. Currently, there is no national perspective on the uncertainties, challenges and opportunities from global forces and technological innovation reshaping global politics, economy and society. Consequently, the stress remains on the military balance in dealing with other countries. Remaining Pakistan-centric and ignoring trade cannot constitute the foreign policy of an aspiring global power.
It’s now about connectivity
The post-1950 world order designed by the U.S. rested on a “tripod” of rules with coercive power: global trade with dispute settlement, global security system resting on alliances, and deliberations in the United Nations based on a division between donors and recipients. The re-emergence of China has limited the ability of the U.S. in setting the global agenda.
U.S. President Barack Obama failed in writing trade rules for a re-emerging Asia through the Trans-Pacific Trade Partnership, deterring China from claiming the strategic South China Sea despite the military pivot, and preventing the establishment of the Asian Infrastructure Investment Bank by asking Europe to keep out.
U.S. President-elect Donald Trump election rhetoric notwithstanding, a trade war is unlikely as both economies restructure, with Chinese manufacturing — low labour cost — eroding, and factories, using high-efficiency robotics, shifting to the U.S., as Mr. Trump wants. In the global economy, digital flows are now adding more wealth than goods and services. As the U.S., Russia and China have strengths in individual sectors, their relations may well get better.
China is fast replacing global rules with connectivity, the OBOR, through infrastructure, new institutions and integrated markets. The massive investment has been welcomed, with prospects for shared prosperity. India alone in continental Asia does not support the OBOR, which spans more than 65 countries, three-quarters of known energy resources, envisages an investment of $4 trillion and is estimated to cover two-thirds of the global population and GDP.
China, rival or partner?
Mr. Trump is also moving away from military alliances to ramping up military superiority based on technological leadership, characterising the UN as a talk shop, and could end up recognising China’s primacy in Asia. Similarly, a deal with Russia recognising spheres of influence in Europe and West Asia would make NATO redundant, with implications for military alliances in Asia viewing China as an adversary.
Where do we fit in this realignment? The primary concern of the U.S., Russia and China in South Asia is the threat to themselves from terrorist safe havens in Pakistan, while India is no longer a “swing state” with the shift in international politics moving from containment to spheres of influence. For example, the U.S. Senate has both designated India a “major defence partner” to facilitate defence sales and provided Pakistan with nearly $1 billion in military assistance conditional on action against the Haqqani network operating in Afghanistan while being silent on the safe havens for terrorists operating on India.
Mr. Trump’s policy shift considering a deal with China on trade as more important than security concerns has important lessons for us; focus on GDP rather than the NSG, Masood Azhar and the Cold War military logic of a two-front conventional war. These problems will be resolved after we become a $5 trillion economy and the leverage it will provide.
China’s national goal is to double its 2010 GDP and per capita income by 2020 for which the OBOR is considered essential. China is keen that India join that initiative, providing the opportunity to reset relations. The Modi-Xi joint statement in May 2015 recognised the two countries as “two major poles in the global architecture”.
We should become a partner in the OBOR adding a “Digital Sustainable Asia” component, an area where we have global leadership,shaping the infrastructure and markets around two nodes. We should also see Pakistan-sponsored terrorism as a symptom of the domination of the military with the OBOR leading to strengthening of democratic control.
There are encouraging signs that we have begun to think strategically by balancing cross-border terrorism with cross-border water flows and greater reliance on endogenous cybersecurity and missiles. Participation in the OBOR and treating the Line of Control as a “soft border” will be the bold vision needed to exorcise the ghosts of 1757.