Being credible

New Delhi must not buckle to Chinese pressure in its engagement of Indo-Pacific countries.

After hiatus of over a year, I resume my monthly column in the Business Standard on the geopolitics and geoeconomics of the Indo-Pacific region. As the edit page is behind a paywall, I will put up unedited drafts, excerpts or the published column a day or two after it is published.


The central argument of the first innings of this column (September 2010-October 2015) was a simple one: that India should recognise that East Asia is a part of its extended neighbourhood and that it is in our national interest to invest in the stability and security of the Indo-Pacific region.

Why? Because by the mid-2000s, China under Hu Jintao was shedding the facade of ‘peaceful rise’ and beginning to take assertive positions on its territorial disputes and claims in the waters off East and South-East Asia, causing the countries of the region to look towards India for support. In their strategic calculus, if they fail to bring the United States, China and India into a balance, they had little choice but to hop onto the Beijing bandwagon. Month after month, your columnist exhorted New Delhi to exploit the geopolitical and geoeconomic opportunities that Beijing had unintentionally created.

That prescription is just as valid today as it was seven years ago. Chinese foreign policy under Xi Jinping has moved from assertive to aggressive, always arrogant and increasingly adventurous. The men in black suits and hair dye in Beijing have not only completely blown the cover story of ‘peaceful rise’ but have managed to antagonise the regional powers in the Indo-Pacific.

Even as Beijing pushes Chinese hegemony under clever phrases such as “One Belt, One Road” (OBOR), Maritime Silk Road and “China Pakistan Economic Corridor” (CPEC), it does so in the absence of the regional goodwill that enabled its entry into the ASEAN-centred economic and security architectures in the early-2000s. South East Asian countries watch with increasing anxiety as their more of their ASEAN counterparts are attracted or coerced onto China’s camp. The divide that your columnist had predicted within ASEAN is now gaping wide.

President Xi appears to have moved beyond merely maintaining China’s claim in a dispute to pressing it. He might have calculated that Beijing is now strong enough to negotiate where it cannot just coerce the other side into caving in. In November last year, Hong Kong authorities seized military vehicles belonging to the Singapore Armed Forces on their way back from routine exercises in Taiwan. Given that the Singaporean armed forces have been training in Taiwan since the 1970s with China’s tacit non-disapproval, it is clear that Mr Xi deliberately upped the ante. Similarly, Beijing coerced Mongolia into submission after the latter allowed the Dalai Lama to visit the Gandan Monastery in Ulaanbaatar the same month. Since the Dalai Lama had visited Mongolia at least eight times earlier, Beijing’s reaction this time stands out as extraordinary.

This week, China sent its aircraft carrier through the Taiwan straits quite likely signalling a more aggressive stance on that issue. This comes a few weeks after it challenged the US Navy in the region by stealing an underwater drone from under its noses. It is uncertain how the incoming administration of Donald Trump will handle the military dimension of its relations with China, but Mr Xi is not done with testing the nerve of Washington’s new establishment.

As much as there is a regional demand for India to play a stronger role in regional security, it has become harder and riskier for New Delhi to do so. The Modi government is reportedly considering selling medium-range surface-to-air missiles to Viet Nam. Both New Delhi and Hanoi will come under Chinese pressure and possible retaliation if the deal goes through. It would be imprudent for New Delhi or Hanoi to back down under pressure. It is in Beijing’s interest to create a perception that India is unreliable as a partner, whose promise falls short of delivery. Chinese commentators suggested as much after Beijing arm-twisted Mongolia over the Dalai Lama’s visit, drawing attention to the fact that New Delhi’s promised $1 billion line of credit failed to save Ulaanbaatar from China’s economic coercion.

New Delhi should thus be scrupulously careful about the commitments that it makes, implies, or might be construed. Once made, it should not hesitate to keep them in the face of China’s opposition. With rising risks and emerging uncertainties, credibility is the new currency in the Indo-Pacific.

This is by no means an argument to deliberately antagonise China: it is in India’s interests to nurture a close relationship with its northern neighbour. To be an effective swing power, we must enjoy better relations with China and the United States than they have with each other.

This will not come by wishing for it, especially if the wishing is one-sided. Nor will it come by succumbing to Chinese hegemony. To the extent New Delhi accumulates economic strength and demonstrates foreign policy credibility, Beijing is likely to reciprocate India’s desire for amicable bilateral relations.

Copyright: Business Standard

Geopolitics in Trump’s age

Perhaps it’s time for new champions of democracy, liberty and open economies

I was in a panel discussion with Steve Coll, dean of the Columbia Journalism School and T K Arun, senior editor of the Deccan Herald at the Deccan Herald Spotlight, Taj West End, Bangalore on 9th January 2017. The topic of discussion was Trump and geopolitics. The following is an outline of my initial remarks. (Read the newspaper report here)

  1. The bases for US global leadership have become uncertain
    • Resilience of its democracy is uncertain (more than merely risky)
    • Its status as a magnet for the world’s most talented people is also uncertain
  2. Trump’s rhetoric and posturing will cause others to adopt protectionist policies and withdraw behind walls and fences, at least in the short term.
    • This might reverse in the longer term but we can’t be sure how long that will take and what we’ll have to endure in the meantime
  3. For the first time, the factors that propelled India’s & China’s unprecedented growth will come under a cloud. China is luckier because it started earlier and was most focused.
    • For India the challenge will be to generate 8% growth without a benign external environment
    • How fast can India integrate domestically and iron out the kinks regarding movement of people, goods and capital across state boundaries
    • How fast can India create external relationships that will allow growth to take place?
  4. In geopolitics, it all the more clear that India will have to become a swing power. This means selective alignment with the US and China where interests coincide, without joining any one camp.
    • Better relations with US and China than they have with each other
    • Ability and willingness to inflict pain and give pleasure
  5. Finally, a more mischievous point: if the West is ceding leadership of values of democracy, liberty and free markets, then India should stake its claim to that leadership.
    • Do we really need so many illiberal democracies and authoritarian states in the permanent membership of the UNSC?
    • Do we need four or five Putins in the UN Security Council

Trump is fantastic. Don’t worry.

Mr Trump’s telephone conversations with world leaders are indicative of his style, not substance.

Donald Trump’s phone calls with world leaders, screams a headline in the New York Times are “upsetting decades of diplomacy.” An already excited commentariat — around the world — is aghast at the fantastic manner in which the new US president-elect has been conducting the sublime act of statesmanship that is a telephone conversation. Just after some experts assessed that his fantastic phone call with the Pakistani prime minister might be unwelcome in India, their were jolted into assessing that Beijing would be upset (okay, make that apoplectic) after he announced that he spoke with the Taiwanese president. He even reportedly spoke to Rodrigo Duterte, the foul-mouthed president of the Philippines who had recently made a great show of insulting Barack Obama and kowtowing to Beijing. Oh yes, Mr Trump has violated the norms of the subtle, contrived and staid world of international diplomacy.

That is not a bad thing in itself. Nor is it much of a bad thing as far as US foreign policy towards Pakistan, China and the Philippines is concerned.

Mr Trump’s remarks to Nawaz Sharif appear more like the polite comments tourists make to their hosts regardless of the reality they observe. If he really meant what he said, then Pakistanis need to be worried right after they get over the surprise and puzzlement. Whoever believes that India should be concerned, less consider them unwelcome, is living in the 1990s. Analysts who believe that New Delhi is vying with Islamabad to court Washington’s favour must enlarge their frame of reference to the Indo-Pacific region, and set their watches to the present.

What about China? Hasn’t Mr Trump provoked the People’s Republic of China by exposing Beijing’s most dearly held—and most forcefully enforced—myth that the Republic of China on Taiwan does not exist as a normal state? Yes, and that’s not a bad thing at all. Perhaps due to the Western perception of its supposed exoticness, Beijing has usually had its way by pressing foreign governments to ‘respect its sensitivities’ over the Taiwan, the Dalai Lama, Xinjiang and the various territorial disputes it has with its neighbours. When the United States yields to this coercion, the rest of the world follows. If the United States were to be less inclined to ‘respect China’s sensitivities’, others are more likely to follow suit.

Beijing is quite likely to retaliate, but then, it has taken sharp foreign policy positions over the past decade without provocation. Let Beijing decide how long it wishes to play tit-for-tat with a much more powerful adversary. It remains to be seen if Mr Trump has the stomach for such a game.

It makes good sense for Mr Trump to reach out to Mr Duterte: at worst, it will confuse the Philippines establishment as it explores alignments with China and Russia. At best, it can cause Mr Duterte to execute a wild swing back towards Washington. To argue that Mr Trump must shun or punish Mr Duterte merely because the latter insulted President Obama would be to trade in foreign policy realism for soap opera sentimentalism. There is no evidence that the latter outperforms the former as a basis for pursuing a state’s interests.

For all his bluster, Mr Trump is out of his depth on matters of statecraft. He’s likely to learn on the job. Regardless of the value judgements we place on their content, it would be incorrect to take the fantastic man’s telephone conversations as indicators of his future administration’s real foreign policy positions.

China warns Singapore

As Singapore confronts difficult choices, it must sound out New Delhi.

It is an open secret that the Singapore Armed Forces (SAF) train in the Republic of China in Taiwan, and the two countries have enjoyed a quiet, but very productive partnership since the early 1970s. Like how actors in ’70s Hindi movies used to become totally unrecognisable merely by putting on a moustache and a beard, Singapore’s soldiers would become Taiwanese ones when they exercised in that country. The subterfuge was out of respect for diplomatic niceties, to placate the People’s Republic of China. For instance, Singapore service personnel would assume Taiwanese aliases. Sometimes this would lead to hilarious outcomes: like when my friend, an ethnic-Tamil Singaporean infantry platoon commander, had to pass off as Chong Wai-kiong.

Singapore’s defence cooperation with Taiwan (Project Starlight) predates the establishment of diplomatic relations with China. For its part, Beijing was content with this arrangement, even when it came close to war with Taiwan in the mid-1990s. Ian Storey writes that Li Peng, then China’s Premier, said that China ‘should not mind too much’ if Singapore continued its military relationship with Taiwan, but had asked that this be done discreetly.

So last week, when Hong Kong customs authorities — tipped off by their Chinese counterparts — seized nine infantry vehicles on a ship that was making its way from Taiwan to Singapore, it appears that Beijing has decided to deliver a warning. Or more.

It comes as a surprise, but is clearly yet another manifestation of an emboldened China taking aggressive positions in its extended neighbourhood. Even if Beijing were to end the impasse by releasing SAF’s equipment in return for renewed Singaporean commitment to the One China policy, it would further strengthen the perception among East Asian countries that it is best not to antagonise China. It would also put greater caution, and perhaps even a suspension of the four-decade old Singapore-Taiwan military cooperation. Chastising Singapore has multiple benefits for China.

It is too early to tell if Beijing’s actions are informed by an expectation that the upcoming Trump administration will disengage from Asia, leaving the field open to China. China’s actions over the past few years suggest that Beijing is confident of upping the ante even in the face of US “pivot” to Asia. It may be American conceit to believe that Trump is leaving East Asia to China. The rulers in Beijing perhaps believe they already have Asia.

This is a crucial period for India’s own Act East policy. New Delhi must reassure Singapore, Hanoi, Jakarta, Seoul, Tokyo and Canberra that India has the wherewithal and a commitment to shape an Asian balance that does not surrender to Chinese hegemony. If the United States wishes to be part of such an arrangement, then it is all for the better. If not, the six Indo Pacific powers must manage on their own. Let’s not forget that if the United States is no longer in the picture, India is the only nuclear power on the other side of China.

On OBOR’s commercially suspect projects

Win-win, for China.

Analysts have observed that many projects that China is financing and building under Xi Jinping’s One Belt One Road (OBOR) initiative are commercially dubious. People whose job it is to worry about such things have have surmised that the real motivation might be military-strategic in nature.

There is another — less sinister, but non-mutually-exclusive — explanation. Fitch’s Kalai Pillay says that the real motivation is “exporting China’s excess construction capacity that is accompanied by financing from Chinese state-led enterprises.”

“A lot of the big construction companies in China have bulked themselves up significantly over the last 10 years to carry out the big infrastructure projects in China. As many of these come to the tail end they have this excess capacity, the know-how, the real technical knowledge, a lot of patented technology that can be sold abroad, that needs to be exported abroad,” Pillay says.

He adds that there may be little room for non-Chinese banks and institutions to play a role in financing OBOR infrastructure projects.

“The final leg to this is the capital. There is excess capital which finds itself into all kinds of things, international bond markets, the spread market wherever. But one way to export it also is through financing projects that’s going to take place outside of China. So that’s part of that OBOR strategy,” Pillay says. [The Asset]

In other words, China is providing cheap loans to regional countries to build infrastructure — that might not be commercially viable — using Chinese construction companies. If the projects take off, China benefits. If they don’t, then regional governments will be stuck with debts to the Chinese government.

Not bad. For Beijing, that is.

Chinese inroads

The new silk road is being built faster than the world’s ability to grasp its consequences.

China has worked out a railway route to Afghanistan and, from August this year, begun operating two trains a month from Nantong (China) to Hairatan (Afghanistan) passing through Kazakhstan and Uzbekistan along the way. This remarkable achievement suffers from a temporary hitch — the trains have to go back empty to China because Uzbek authorities are yet to give permission for Afghan goods to transit their territory.

Last week, Chinese trucks drove south-west across the Himalayas, passing through the Karakorum pass into Pakistani territory. They transited through Gilgit-Baltistan and Balochistan before unloading their cargo onto a Chinese ship at the Chinese-built, Chinese-operated Pakistani port of Gwadar. [Gwadar is finally in Chinese hands, after Washington released its pressure on the Pakistani government due to an inability to persist or out of a lack of interest.]

On the eastern side of the Indian Ocean, analysts in Singapore are concerned over what appears to be a commercially dubious proposal to build a new port in the Malaysian town of Melaka (Malacca) that sits at the northern side of the important Straits of Malacca. The Malaysians have pulled out the stops to enable the project to take shape quickly. In typical fashion a little-known local firm is partnering a Chinese company to build the port.

Since there’s enough capacity in existing Malaysian ports, and it is relatively easy to expand them, the Melaka Gateway project is of questionable business value. But a foothold that commands the Straits, the Bay of Bengal and the Indian Ocean makes a lot of geostrategic sense if someone is willing to foot the $10 billion bill. And China is.

It appears that Xi Jinping’s One Belt, One Road (OBOR) is proceeding at a pace faster than the region’s policymakers can handle.

Connectionistan
Building transport connectivity in Central Asia is likely to unleash economic potential in the landlocked region, and depending on where the roads and railways lead, to other regions too. This will come with the usual political economy of Chinese overseas economic expansion: newly enriched local entrepreneurs, strengthened local political strongmen and grumblings due to Chinese labourers imported en mass. This will also be accompanied by fears of a demographic invasion from China into the sparsely populated Central Asian states.

The Chinese railway through the Central Asian states to Afghanistan presents India with a tantalising opportunity, if it were possible for Indian cargo and passengers to use the route. Pakistan would be deeply concerned, of course. Indeed, Pakistani strategists would already be worried that for the first time, China can trade with Afghanistan without having to transit through Pakistan.

New Delhi should explore arrangements with China, Kazakhstan, Uzbekistan and Afghanistan to connect to this railway. At the very least, Beijing’s intentions can be put to test.

Another port in the straits
The Chinese interest in Melaka comes at a time when the United States is likely to rebuff the painfully negotiated Trans-Pacific Partnership. Singapore, among other East Asian states will be unhappy with the turn of events. Another port along Malaysia’s west coast abutting the Malacca straits implies further competition to the island’s own ports. With the projected overcapacity, it gets worse.

While there is little New Delhi can do to ameliorate this, there is an emerging convergence of interests between India and Singapore. So too, we are likely to see, with other East Asian countries as they grapple with the undesirable prospect of having to jump onto the Chinese bandwagon given the increasing unreliability of the United States. This has been true for much of the past decade. Now, however, it has gotten all the more intense. The Modi government is clear that it seeks to engage East Asian states with greater boldness and purpose. Whether this will prove adequate or fast enough remains to be seen.

President Trump. What now for India?

Play the ball as it comes to the bat

Peter Thiel, a Silicon Valley billionaire who backed Donald Trump’s candidacy, perhaps best explained the latter’s political appeal. Journalists and analysts, he said, took Mr Trump literally but not seriously, and wanted to know details of how he would implement some of the outrageous ideas he proposed. Ordinary people, on the other hand, took him seriously but not literally, and were persuaded that he intented to take policies in directions that they agreed with; the exact details didn’t matter. In the uncertainties that prevail in Washington and elsewhere on what policies President Trump would pursue, Mr Thiel’s explanation is a very useful signpost.

It would only be conceit for anyone at this stage to predict Trump’s foreign policy positions. Candidate Trump and his core supporters were anti-immigration, anti-Muslim and anti-trade. Mr Trump threatened to pull out of NATO, repudiate free trade agreements, engage Russia’s Vladimir Putin, withdraw the security umbrella from over treaty allies, renegotiate the Iran nuclear deal, deal with ISIS, back Israel and grab the oil in Iraq. And yes, build that wall on the border with Mexico. At this point, it is best to take all these, as Mr Thiel suggests, seriously but not literally.

To the extent that President Trump attempts to throw international regimes, norms and institutions up in the air, New Delhi will encounter opportunities that it must be prepared to seize. This means the level of diplomatic imagination and boldness in the external affairs, commerce and defence ministries must be boosted. India is far better placed today than ever before to take advantage of possible shifts in global order.

Of course there are risks. A world that retreats from free trade will hurt India’s growth and development trajectory. A global recession will shave off significant percentage points from India’s economic growth rate. Throttling of free movement of people — in the US as in Europe — will necessitate painful business and human readjustments, although the result might be more business for India’s outsourcing/offshoring industry. Most of these risks can be managed by proceeding with structural economic reforms, or Reforms 2.0 (yes, I sound like a broken record, but the point is valid and important to make).

The path to success in the world of President Trump is nimbleness, deftness and speed. New Delhi’s diplomats and policymakers will need to see the opportunities early and act faster than others, without being constrained by historical baggage. No pre-determined strokes: see the ball early and play it accordingly.

Related Link: My colleague Pranay Kotasthane has an opinion piece on this in the New Indian Express today.

Manila on the Chinese bandwagon

The Philippines becomes the first Indo-Pacific country to declare itself for Beijing

On the geopolitics of the Indo-Pacific, I have long argued that “the small- and medium-sized countries of the region will prefer a balance where no single power dominates over them. If they do not see this forthcoming, they are likely to join the stronger side.”

Rodrigo Duterte, the president of the Philippines, appears to have decided that that stronger side is China.

“America has lost now. I’ve realigned myself in your ideological flow,” he said at a business forum in Beijing on Thursday. “And maybe I will also go to Russia to talk to Putin and tell him that there are three of us against the world: China, Philippines and Russia. It’s the only way.” [CNN]

There were indications of this for the last few months, but the manner in which he announced a “separation” from the United States, the Philippines’ treaty ally since 1951, could not have been more designed to ingratiate Beijing, his newfound benefactor. Mr Duterte calculates — correctly, in all likelihood — that China will now shower the Philippines with exemplary largesse. It is in Beijing’s interests to demonstrate that those who decide to join the Chinese side will be rewarded, as long as they are willing to ignore some trifling territorial disputes and international arbitration verdicts.

I have also argued that there is a Chinese wedge between ASEAN states that have a dispute with Beijing and those that don’t. That wedge has just gotten deeper and wider. The ASEAN agenda on maritime cooperation is now in question, as Philippines joins other pro-China ASEAN members in being uninterested in confronting China. Vietnam, in particular, will be under a lot more pressure.

The Philippines remains a pro-American country. It is also likely that parts of the country’s security establishment have deep links with the US armed forces. How Mr Duterte’s policy will go down with the people and the security establishment remains to be seen.

Jamaat-ud-Dawa, an assessment

What New Delhi should do about the threat

Here is an assessment following an email discussion with my colleagues Rohan Joshi & Pranay Kotasthane on the Jamaat-ud-Dawa. See Rohan’s post for context.

1. The Pakistani state and the Pakistani society have neither the intention nor the capability (if they have the intention) to take down the Jamaat-ud-Dawa (JuD). It has crossed the line from being a merely extremist terrorist group to a provider of public goods. It acquired the characteristics of a para-state with obvious popularity and social legitimacy.

2. The Pakistani army, on the other hand, does retain the capability to degrade the Jamaat-ud-Dawa. For instance, they could get a hothead loyal to Hafiz Saeed to assassinate Zakiur Rehman Lakhvi or another competing top-rung leader, engineer a rift, cause clashes while promoting propaganda against them. However, given that the Jamaat-ud-Dawa is a key instrument of the Pakistani army’s existential anti-India posture, the army is unlikely to want to damage the JuD.

3. So the best the civilian government will do is play the Schrödinger-Hiesenberg quantum game, where the JuD is banned but not banned. If another party takes over, the JuD will be not banned but banned. It is unrealistic to expect democratically elected civilian governments to act against JuD especially to satisfy India or the United States.

4. Therefore, India’s short-term options should be

  • to prevent JuD from acquiring greater capabilities. At this moment it is an irregular light infantry. It should not be permitted to acquire more advanced weapons and capabilities.
  • to prevent JuD from acquiring territory. ‘Non-state actors’ getting hold of swathes of territory from which they can carry out conspiracies and attacks on Indian soil will complicate New Delhi’s national security strategy.
  • to prevent JuD from acquiring followers in India. In contrast to the 1990s, it is possible today for followers to ‘train’ with the Lashkar-e-Taiba (LeT) without actually having to go to PoK via Karachi via Dubai.
  • to prevent the JuD from launching terrorist attacks in India.

5. India’s longer term option remains clear: dismantle and destroy the military-jihadi complex.

6. There is a convergence of interests between India and the United States, and to a lesser extent with China too, on the short-term options. New Delhi’s outreach to these states should be to arrive at a consensus on preventing the strengthening of JuD. It is unclear if other countries share interests on the longer-term issue of destroying the military-jihadi complex. It might be some time before the United States comes around to this view. For now, the focus on short-term goals will be good enough.

The Saudi bomb

Made in Pakistan, Supported by China, but still Saudi Arabia’s nuclear weapon

This week, a major Western media house discovered that the Saudi Arabia has already paid Pakistan for the bomb and can have it home-delivered pretty quickly. This is perhaps the first time that news of the Saudi-Pakistan nuclear arrangement is getting media coverage. This topic was something that Western mediapersons and analysts would determinedly avoid discussing in public. Even the most committed advocates of the nuclear non-proliferation regime still do not write or talk about the relationship, which makes their advocacy and intent a lot less credible than it otherwise might have been.

Regular readers of this blog will recall analysis suggesting that Pakistan’s rapid stockpiling of fissile material is linked to Saudi Arabia’s needs in correlation with Iran’s nuclear advancements. China’s grandfatherly nuclear largesse makes Beijing an accomplice in this nuclear weapons manufacturing and transfer business. This is plain and simple nuclear proliferation, no matter if the self-appointed guardians of that term choose to ignore it.

Given this background, the fact that BBC’s Newsnight is now revealing that the Pakistanis might transfer the bomb to Saudi Arabia on demand suggests that the Saudi Arabian government wants it to be revealed. This is understandable: with chances of a Iran’s rapprochement with the West increasing this year, the likelihood that the world will eventually accept a nuclear Iran is also rising. Letting it be known that Saudi Arabia also has nuclear capacity—albeit in an outsourced model—serves to reinforce Riyadh’s prestige, proto-deterrence and adds pressure on its Western allies to not cut deals with the Iranians. It also helps prepare the ground for an eventual coming out of the nuclear closet.

What Western analysts of nuclear proliferation have to answer for is when exactly did the Saudi-Pakistan-China nuclear arrangement start? If it predates Tehran’s own decision to develop nuclear weapons capacity, then shouldn’t part of the responsibility for Iran’s move accrue to Riyadh, Islamabad and Beijing? Recriminations of the intellectual kind are futile in geopolitics, but to the extent that the United States recognises Iran’s security challenges, it might be able to negotiate for better outcomes with Iran, for the international community.

The emerging problem in the Middle East is one of shaping a stable nuclear deterrence relationship primarily involving Israel, Saudi Arabia and Iran, with the United States, Pakistan and China as actors in a supporting role. Getting facts out into the open is the good way to begin addressing it.