India Transformed

by Rakesh Mohan

  On balance, therefore, Rao’s reforms of Indian foreign policy, like all great and successful reform, was as traditional as it was inventive and as empathetic as it was pragmatic, reworking tradition where necessary and going well beyond it. He pragmatically concentrated on the opportunities opened up by geopolitics while flagging but effectively postponing world order issues, such as a seat on the UN Security Council for India.

  The fact that the adjustments and changes to India’s foreign and security policies made in the early 1990s have been continued by successive Indian governments, irrespective of their ideological preferences and domestic bases of support, suggests that the foreign policy prompted and made possible by the 1991 reforms represented a remarkably wise set of policy choices, despite being made in the midst of the fog and confusion of a world in fundamental change. In essence, it is still Rao’s vision of a re-invigorated India retrieving a place of dignity and worth in a fast-changing, sometimes erratic, often unpredictable world that drives Indian foreign policy. The foreign policy reforms of the early 1990s are worth studying for what they teach us about dealing with fundamental phase change in the international system. For today, again, the international system is undergoing a fundamental transformation before our eyes: the US’s unipolar moment is being challenged by a rising China; the globalized world economy is being fragmented and is shrinking or sluggish; and, populism, demagoguery and authoritarianism are on the rise everywhere. At the same time, the economic optimism and hope of the early 1990s seems far, far away from the post-2008 crisis prospect and the world of today. There is much that we might learn by looking back to the early 1990s as we contemplate an uncertain future.

  8

  Navigating the Post–Cold War Landscape: India’s Rise in a Contested Geopolitical Space

  Shyam Saran

  We have entered a new phase of renewed great power rivalry and incipient confrontation, which presents India with a more complex and polarized international environment. The more successful India is in sustaining economic reforms and accelerating its growth, the more it will be able to expand its regional and global profile.

  The adoption of far-reaching economic reforms and liberalization by India in 1991 was a historic development, which also had a significant impact on the country’s foreign policy. This was a year when India grappled with two coincidental crises. One was the economic crisis related to the balance-of-payments deficit, and an unprecedented threat of default and bankruptcy. The other related to the sudden collapse of the Soviet Union, with which India had shared a long-standing strategic partnership rooted in a shared perception of threat from China and which had also provided significant support for India’s pursuit of self-reliant economic growth. Dealing with the twin crises led to a major reorientation in India’s foreign policy. In order to understand these changes, it may be worthwhile to examine the geopolitical setting prevailing at that time.

  The end of the Cold War in 1990 and the collapse of the Soviet Union brought about a dramatic and seismic change in the geopolitical landscape, which had been relatively stable since the end of the Second World War. It marked the emergence of the United States as a hyper-power, and the bipolar international order gave way to a unipolar moment dominated by it. The collapse of the Soviet Union also meant that the ideological competition between authoritarian socialism and liberal democracy appeared to have been settled in favor of the latter. Liberal democracy and free markets became the new orthodoxy enshrined as the Washington consensus. It was accepted as self-evident truth that societies embracing capitalist–style market economies would inevitably gravitate towards liberal democracy. This certainly was a widespread expectation regarding China but was rudely belied when, in June 1989, Chinese authorities put down, with a heavy hand, the pro-democracy demonstrators who had gathered in their thousands in the historic Tiananmen Square at the heart of the Chinese capital, Beijing. This marked the end of the Western romance with China since Nixon’s famous visit to Beijing in 1971. It also marked the end of the virtual alliance between the US and China against the Soviet Union. There was now no common adversary to ally against. As China continued to rise and challenge American power in the Asia-Pacific region, a resurgent India began to be seen as a potential partner in keeping the power balance stable in the region. To the extent that India’s new and outward-looking economic policies required support from the advanced economies of the West, the changed geopolitical environment provided opportunities that Indian diplomacy was able to leverage. The scope of India’s external engagement expanded rapidly, often beyond the human resource and intellectual capacity to manage it.

  The economic crisis that compelled the embrace of economic reform and liberalization opened the doors to the globalization of the Indian economy. While seeking to build its own economic and security capabilities, India had to look for other options to counter the continuing threat from a rising China. Several of the post-1990 initiatives derive from these unanticipated compulsions. Relations with the US and the European Union (EU) began to improve and expand as China’s rise began to appear threatening to its erstwhile sponsors. India’s accelerating economic growth and its relatively more outward-looking economic strategies began to project it as the next big commercial opportunity after China. Economic and security drivers also pushed India to re-engage with its East Asian neighbourhood. The Look East policy, not coincidentally, was adopted in 1992 and it wasn’t long before the Asia-Pacific region became one of the most dynamic components of India’s external economic relations as well as a target for more robust security engagement. The emergence of the US as a hyper-power masked the steady shift in the centre of gravity of the global economy from the trans-Atlantic to the trans-Pacific. This was not only because of the emergence of China but also, in time, of India as rapidly growing, continental-sized economies. Indian foreign policy began to reflect this change, and this was nowhere more apparent than in the steady intensification of India’s relations with ASEAN. From a sectoral dialogue partner, India successively became a full dialogue partner in 1992, a summit partner in 2002 and finally a strategic partner in 2012. An emerging India with significant military capabilities, in particular, maritime capabilities, was welcomed as a countervailing presence to the expanding Chinese security footprint in the region. This intensification in relations had a politico-security aspect as well as a significant economic dimension. The political dimension was reflected in the regular meetings at leadership level. India also became active in the Asia Regional Forum which focused on regional security issues. It became a founder-member of the East Asia Summit and was invited to join the ASEAN Defence Ministers’ Meeting (ADMM). India and ASEAN have since entered into a Free Trade Agreement, which now covers goods, services and investment. They are currently negotiating the Regional Comprehensive Economic Partnership (RCEP). The RCEP brings together the ten ASEAN countries plus six of its summit partners, namely, Australia, China, India, Japan, Republic of Korea (RoK) and New Zealand. India has also applied for membership of the Asia-Pacific Economic Community, which could well become the platform for a future trans-Pacific Free Trade Area. This could become a rival to a now stalled US-led Trans-Pacific Partnership (TPP), from which both India and China have been excluded.

  It will be apparent that India has consciously tried to integrate itself both politically and economically with its eastern neighbourhood. It has readjusted its diplomacy to accord greater priority to the Asia-Pacific region and pay attention to economic links as being equally important as political relations. However, the level of integration achieved to date is much lower than China’s. India-ASEAN trade has attained a level of $70 billion against a target of $100 billion in 2015 and is likely to remain stagnant over the next few years. The investment picture, on the other hand, is better with a progressively larger volume of FDI flows in both directions. Indian companies are invested heavily in Singapore, which serves as a hub for India’s economic interaction with the region. Singapore is also a major investor in India wi
th over $30 billion in cumulative FDI. The India–Singapore Comprehensive Economic Partnership Agreement, which concluded in 2005, has played a major role in boosting trade and investment ties between the two countries.

  The nuclear weapon tests in 1998 and the declaration of overt nuclear weapon status by India was only a temporary setback in this reorientation of major power relationships in the post–Cold War era. Within barely two years after the tests, President Bill Clinton paid India a well-publicized visit. In 2005, the perception of strong long-term strategic convergence with India led the US to acknowledge—though implicitly—that India’s acquisition of a nuclear deterrent was now a permanent reality and should no longer stand in the way of forging a strong strategic partnership. The Indo-US nuclear deal of July 2005 was made possible against this backdrop. Military exchanges and a new defence hardware relationship with the US also emerged at about the same time, even though Russia continued, and continues, to be a significant source of defence technologies and hardware. It was not lost on India, however, that since the end of the Cold War, Russia and China had moved much closer together and that Russia was supplying much the same advanced hardware to China as it was to India. It was the US that neither supplied weapons to China nor allowed the Europeans to do so.

  In retrospect, India was relatively successful in responding to a complex political and economic challenge after the Cold War. In less than a decade, it had reoriented itself to a vastly transformed international landscape and began to leverage its newfound engagement with a different constellation of major powers to support its continuing task of nation-building.

  The post–Cold War international environment endured, by and large intact, for a quarter of a century up until the global financial and economic crisis erupted in 2007–08. As a result of the virtual monopoly of power enjoyed by the US, there was relative calm in great power relations. Neither Russia nor China were inclined to confront the United States, even if there were perceived transgressions of their interests. On regional issues—such as the conflict in the Balkans, the Afghan War and the invasion and occupation of Iraq, during the decade of the 1990s and the first decade of the current century—China and Russia often acquiesced in the unilateral assertion of US power. On certain issues, such as the Iranian and the North Korean nuclear programmes, there was a degree of coordination and cooperation among the major powers. This created the illusion that the end of the Cold War had inaugurated a new phase in history, where there was no sharp ideological conflict among the major powers, that all such powers had accepted the logic of capitalist market economics and were ready to cooperate in managing cross-cutting challenges whose salience had increased in an increasingly globalized and interconnected world. The norms of global behaviour laid down by the Western democracies were deemed to be undisputed and universal in application. From a Western, in particular, US, perspective geopolitics had receded to the background, the probability of major power conflict had diminished and the prospects of major power cooperation on managing the global commons and dealing with regional and global challenges had significantly improved.

  Of course, geopolitics had never gone away from the perspective of non-Western powers. If anything, geopolitical contestation had become sharper in West Asia and the Gulf, in several parts of Africa and in our own South Asian neighbourhood, in particular, the Afghanistan–Pakistan theatre. From the perspective of Japan, RoK and South East Asian countries, the rise of China and its increasing assertiveness raised new fears and tensions. Thus, when the US and West Europeans now speak about the ‘return of geopolitics’, it is from a much narrower Western perspective. Geopolitics has made a comeback because the unipolar moment that prevailed over much of the twenty-five-year period after the Cold War has come to an end. Rival powers such as Russia and China are no longer constrained to acquiesce in the US definition of the global order. The global financial and economic crisis has severely dented the ideological orthodoxy enshrined in the Washington consensus. The US and, in particular, Western Europe, find themselves on the defensive; their own social and economic institutions are under heavy and sometimes, as in the case of Greece, debilitating stress. In many instances, it is the Western countries that are most guilty of violating their own solemnly upheld norms.

  For India, the quarter of a century that followed the end of the Cold War was a benign phase and generally supportive of its economic advancement and conducive to its pursuit of its security interests. With the exception of China, the other four members of the Security Council joined hands in 2008 to enable India to obtain a waiver from the Nuclear Suppliers’ Group (NSG) and allow it to access the international nuclear energy market. China eventually acquiesced because of this overwhelming support for India among the major powers, including middle powers such as Brazil, Mexico and South Africa. Today, the situation is different with a more confident and assertive China willing to be the last man standing in preventing India’s membership of the NSG.

  Similarly, all major powers supported India’s permanent membership of the Security Council, even though for some it was more of a rhetorical than a sincere commitment. In the Asia-Pacific, India’s rise was welcomed. India’s relations with the countries of South East Asia and the Far East reflect this new perspective about India. India–Japan relations have witnessed a thorough transformation driven both by the common perception of Chinese threat as well as mutual economic opportunities. As the attractiveness of the Chinese market has begun to dim and Chinese military assertiveness worries Japan, India has emerged as a preferred partner. Japanese companies, encouraged by the Japanese government, have finally begun to see India as a major investment destination.

  The 9/11 terrorist assault by al-Qaeda on the United States in 2001 also brought about a significant change in international attitudes towards cross-border terrorism, which could earlier be pursued by Pakistan with impunity under the guise of supporting a ‘freedom movement’. Pakistan could no longer rely upon the US and international ambiguity to indulge in state-sponsored terrorism against India or embark on adventurist actions on the LOC, such as the Kargil war in 1999, and escape opprobrium. This was an important gain for India and a collateral benefit of the global war on terrorism unleashed by the US. In particular, after the 26/11 terrorist outrage in Mumbai perpetrated by Pakistan-based Lashkar-e-Taiba operatives in 2008 and the subsequent assassination of the al-Qaeda leader Osama Bin Laden in 2011, hiding in plain sight in the Pakistani cantonment city of Abbottabad, Pakistan has earned the unenviable reputation of being the breeding ground of Jihadi terrorism. India and the US today have a level of counterterrorism cooperation, including against Pakistan-based terrorism, which would have been unthinkable even a decade ago. So, from this perspective, the decline of geopolitics for the US and the West helped India deal more successfully with its own geopolitical challenges. This benign phase that provided a generally supportive international political and economic environment for India’s rise may now be coming to a close, as sharper contradictions come to characterize the evolving relations among the major powers. China has taken advantage of the relative passivity of the US under a domestically preoccupied Trump administration to enhance its own regional and global profile. With protectionism on the rise in Western economies and the virtual demise of the US-led TPP, China has projected itself as the new champion of globalization, free trade and open economies. Its ambitious One Belt One Road (OBOR) initiative has given it both economic and geopolitical traction. This was visible at the recent Belt and Road Forum convened by Chinese President Xi Jinping in Beijing (14–15 May 2017) to formally launch the initiative, but which India chose to stay away from. In making the China–Pakistan Economic Corridor (CPEC), which runs through Pakistan-Occupied Kashmir (POK), the centrepiece of the OBOR, China not only chose to ignore Indian sensitivities but also provided a political and security shield to Pakistan, which has emboldened the latter to up the ante against India. Thus cross-border terrorism has taken on a new intensity as have hostile actions against
India—for example, the decision to execute an alleged Indian spy, Kulbhushan Jadhav, a former Indian naval officer. India thus confronts a more complex security situation in its neighbourhood, which also acts as a constraint in the expansion of its regional and global profile.

  This new phase of geopolitical competition may be traced to the global financial and economic crisis of 2007–08, from which neither the US nor Europe have fully recovered, although the US appears to be in better shape today than its Western allies. The persistence of this crisis has meant that the relatively open and liberal trading environment in the West, which allowed the export-driven economies of China and East Asia to flourish and to emerge as major manufacturing platforms supplying the global market, is now under threat. In responding to sluggish growth and shrinking markets, both the US and the Western economies are resorting increasingly to protectionist measures using non-tariff barriers, such as imposing environmental or labor standards or stricter regulatory standards. For India, which adopted economic reforms and liberalization comparatively late, these protectionist trends come at a time when there is a renewed effort to establish India as a globally competitive manufacturing hub. ‘Make in India’ will not enjoy an international economic environment as supportive as China, since it began its own market-oriented reforms in 1978. The US-led TPP in Asia-Pacific and its initiative for a Transatlantic Trade and Investment Partnership (TTIP) threatened to create a vast trading zone with restrictive norms and standards, designed to keep away competition from countries like India, which otherwise enjoy comparative advantage. The erstwhile votaries of free trade became its most serious violators. India confronted the risk of being pushed to the margins of the global economy. However, the TPP is no longer possible with the withdrawal of the US, its main sponsor. For the same reason, the TTIP too has become a distant possibility. This may bring some relief to India, but as we have seen, the Trump administration is adopting increasingly restrictive trade policies. There is particular danger to the Indian IT industry as a result of limits placed on the issue of H-1B visas. These steps also render the strategic partnership between India and the US unstable and unbalanced. For a strong partnership, both the economic and security pillars must be strong and mutually beneficial.