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.

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.

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.

G-20, East Asia and high-profile foreign policy

The focus on G-20, East Asia and raising India’s foreign policy profile are all the right things to do, and long overdue.

Notes for my television appearance on CNN-IBN at 9am IST today:

The Brisbane G-20 statement is so closely aligned with India’s own growth agenda: India must capitalise on this opportunity.

G-20 should become India’s most important international engagement (as my Pax Indica article from June 2010 argues). What the UN was to newly independent India, G-20 should be for a newly resurgent India. New Delhi should invest in high forums that India is already a member of is more valuable than pleading to enter stodgy old clubs like the UN Security Council.

India must contribute to the Asian Balance because it is in our interests to do so. As China and the United States contest for global power, India must project power in regions like East, West and Central Asia to defend its interests. [This is the central argument of The Asian Balance, my monthly column in Business Standard.]

It is good for Prime Minister Narendra Modi to invest time in international engagements: India’s growth is influenced by the world and the world’s situation influences India’s growth [This is the subject of an ongoing research project between Takshashila and the Hudson Institute]. India’s policy discourse will benefit from the prime minister’s international engagements & exposure.

(Point made in response to other panelists)
Mr Modi’s personal popularity among expatriate Indians and the enthusiasm they have shown around his visit to Australia help elevate India’s foreign policy profile. However, it is important for the media to not hype it beyond a point. It is in India’s interests for Indian-Australians to be good Australians: by being loyal, responsible and successful members of their communities.

MH370 and three worrying “ifs”

Risks from the missing aircraft and implications for India’s diplomacy, national security and civil aviation policy

Implications for India’s diplomacy, national security and civil aviation policy.: my The Asian Balance column at Business Standard.

It was not until Wednesday, nearly four days after Malaysia Airlines flight MH470 was lost over South China Sea, that the Indian armed forces were activated into the search for the missing aircraft. This was well after the crucial first 48 hours and after President Pranab Mukherjee’s offer of assistance. Given that the Malaysian authorities knew — for Royal Malaysian Air Force’s primary radars had detected an aircraft heading towards the Andaman Sea — that there was a chance that the aircraft might have flown westwards, we wish they had requested Indian assistance much earlier.

In his press conference on Saturday, a week after the plane was reported lost, Najib Razak, Malaysia’s prime minister said that “(s)ince day one, the Malaysian authorities have worked hand-in-hand with our international partners – including neighbouring countries…(in the investigation)”, which only implies that the Malaysian authorities did not consider India a neighbouring country either. Given that he also announced the missing plane might have gotten anywhere from the Kazakhstan-Turkmenistan border to northern Thailand—which implies overflight or landing on Indian territory — Kuala Lumpur’s lapse was terribly unfortunate.

The underlying message is that India’s Look East policy in general and the Indian navy’s sustained outreach near and across the Straits of Malacca in particular still leaves countries like Malaysia unpersuaded. There are reasons to believe that Malaysia is an exception, but Kuala Lumpur’s delay in roping in India is an indicator that New Delhi must redouble its diplomacy, messaging & capacity demonstration in East Asia.

The human tragedy of the uncertain fate of 239 passengers and crew on the aircraft is bad enough. The possibility that the flight might have entered Indian maritime space, passed undetected over thousands of kilometres of Indian territory or landed somewhere across our borders is disturbing.

From what we know at this time, the probability that the plane flew in India’s direction is only 50% (as there is an equal chance that it could have flown towards the southern Indian Ocean). The probability that it overflew the Indian landmass is lower than that, and that of a touchdown across India’s borders even more so. Even if the chances are very low, that one of the biggest aircrafts in the world might have passed undetected by our armed forces in the Andaman Sea and by both civilian and defence authorities over the mainland should worry us. Risk, after all, is a function of both probability and the potential loss.

The first of the three “ifs” concerns our military setup in the Andaman and Nicobar Islands. India’s only tri-service theatre command, it is “charged with the responsibility for the defence of the Andaman & Nicobar territories, its air space and waters.” If, and it is a big if, MH370 had indeed flown west or north-west across the Straits of Malacca, it went undetected by Indian military radars. That is a lapse. Admiral Arun Prakash, a perspicacious former navy chief, told the Washington Post that there are only two radars there, focussed on Indian airspace (not the Straits of Malacca) and might not be operate round-the-clock.

Given all the geopolitical turbulence in East Asia and intense naval activity in the vicinity of the Straits of Malacca, India cannot allow its south-eastern gates to be guarded only during daylight hours. If you can’t spot a lumbering elephant the chances are that you can’t spot quick brown fox either. If you miss a Boeing 777-200, you are likely to miss smaller, faster, lower-flying objects too. That’s not a good thing for national security.

The next government must review the capacity of the Andaman & Nicobar Command and allocate enough resources to ensure that our armed forces don’t miss the next bird.

The second “if” involves the missing plane approaching or flying over Indian territory undetected. Yes, the plane’s transponders had been turned off, and secondary surveillance systems wouldn’t have detected it — but how that aircraft could have evaded the many civilian and military primary radars across India is unfathomable. However, if (and note that this is a bigger “if”) it did pass undetected then not only are our air defences weak, our skies are more unsafe for civilian flight than we thought. Should subsequent developments raise the probability of this scenario, the management of our skies will need an urgent reappraisal.

Now for the third and most far fetched “if”. What if the plane was stolen and landed somewhere across our borders? Who might have stolen it and why? Given that there are some very bad answers to these questions, the far-fetchedness doesn’t diminish the risk to national security. Terrorism is political theatre, and if the plane had been hijacked, it makes little sense for the hijackers or their associates not to claim responsibility. One of the questions that leaves us with is what if stealing the plane was the first act of an unfolding drama? We should hope not, but as George Shultz said, hope is not a policy.

The cat’s paw

Strategic proxies have disproportionate negotiating power

This month’s Asian Balance argues that China is indeed being ‘bullied’ by the Philippines. Such a statement is likely to cause many people to jump because of the value judgement placed on the term ‘bully’ as well as the David and Goliath-like setting. Shorn of those value judgements and biases, though, this statement holds up. As the column notes, the Philippines has more to gain and less to lose by behaving in a provocative manner than China.

One reason for this is Manila’s treaty alliance with Washington. This affords it with the security that the United States will have to intervene in some form if the Philippines is attacked by China. Washington has let it be known that it is unlikely to intervene in a territorial dispute. This allows China to act against the Philippines in the disputed territory—if Beijing takes military action beyond the disputed islands, and onto sovereign Philippines territory, then it raises the risk of US intervention. The exact red line might be fuzzy, but both Beijing and Manila know that it exists. The game then is to exploit the space before the red line is crossed.

The United States might well be using the Philippines as a proxy to indirectly contain China, its strategic adversary. However, this is not without its own strategic costs—failure to manage the proxy can drag the United States into a conflict it does not want to get into. Manila knows this and can exploit it, for instance, by demanding that the United States sell it arms so that it can defend itself better.

China is at the receiving end in this case, but is quite an accomplished player in the strategic proxy game. North Korea ties down the United States, Japan and South Korea in Northeast Asia. Pakistan checks India and the United States in the subcontinent. All in the game.

Is China being bullied by the Philippines?

The disproportionate negotiating power of strategic proxies

Today’s Asian Balance column in Business Standard.

The small-country bullies
China’s aggressive posturing over maritime boundaries has caused East Asian countries to look at other powers for support

It’s those Chinese fishing vessels again. Last month they ventured into a shoal in the South China Sea, presumably hunting for giant clams, when they were apprehended by the Philippines’ naval patrols. If the Philippines claims the Scarborough shoal – a few hectares worth of low-lying rocks 200 kilometres from its shores – China claims the entire South China Sea as its own. In what has become a familiar pattern over the last few years, the Chinese fishing vessels triggered off a confrontation that quickly escalated into a maritime and diplomatic stand-off. Chinese tourists left the Philippines, and Filipino bananas face an uncertain prospect now in clearing China’s food safety tests.

The two countries are now trying to back off at this time, but not before the “w” word surfaced in the popular discourse.
War? Over some uninhabited rocks in the middle of nowhere? Between China (GDP $7.3 trillion, defence budget $106.4 billion) and the Philippines (GDP $213 billion, defence budget $2.3 billion)? Who would want it?

Not China. While it certainly wants to keep its territorial claims alive by letting intrepid fishing vessels do to South China Sea islands what dogs do to lamp posts, it knows that an outright military conflict will be counterproductive to its longer-term interests.

Provocative fishing vessels and Beijing’s aggressive diplomatic posturing over maritime boundaries have already caused East Asian countries to look at the United States, India and other powers for support. In case China finds itself in a war with the Philippines, opposition to Beijing will consolidate, and the US will make strategic inroads into the region, making it harder for China to achieve its goal of dominating the Western Pacific.

The US too does not want a war. It has a military alliance with the Philippines, and Manila could call upon US support if it is attacked. Washington is understandably reluctant to let itself be dragged into a war against a great power by a small ally over a tiny issue. The Obama administration has signalled that territorial disputes are outside the scope of the defence pact. Even so, if it is seen as shirking from supporting its ally, the value of Washington’s strategic promissory notes in East Asia will sharply depreciate. It cannot, however, support its ally without provoking Beijing. A war would cause the US to choose between losing its reputation and getting into an unwanted confrontation with China.

Most East Asian countries do not want war either. They have spent the last decade attempting to engineer “regional security architectures” – essentially multilateral forums that discuss security issues – that hope to solve tricky geopolitical disputes without being bullied and without having to fight. Yet for all its achievements, the Association of South East Asian Nations (Asean) has little to show in terms of ability to manage armed conflict, even between its member states. Thailand, for instance, has stonewalled the deployment of Indonesian military observers over its border dispute with Cambodia over the Preah Vihear temple.

Nor has Asean been very vocal in insisting that China comply with the code of conduct in the South China Sea they agreed to in 2002. Its member states are unlikely to want their solidarity to be put to the kind of test that a China-Philippines naval conflict would entail.

What about the Philippines itself? For Manila, maritime boundaries in the South China Sea assume an economic significance that goes beyond nationalistic sentiment over territory. The seabed is supposed to have rich reserves of oil and natural gas, although estimates vary. The technology to exploit natural gas fields in the South China Sea is maturing. China National Offshore Oil Corporation already has semi-submersible deep sea drilling platforms. Manila has its eyes on healthy revenue streams from energy exports which can make a substantial difference to its fiscal position and overall economic health.

This, coupled with the security guarantee the Philippines enjoys by virtue of its alliance with the US, has caused it to stand firm and confront China. So much so that Dai Bingguo, one of Beijing’s top foreign policy hands, accused the Philippines, “a smaller country”, of bullying China. He has a point. As China’s leaders ought to know all too well, small countries that are backed by great powers have disproportionate negotiating power, and they “bully” both their adversaries and their backers. The Philippines might calculate that it has relatively less to lose by letting tensions escalate.

That’s the main risk — when pesky fishing boats, Chinese law enforcement vessels and Philippines naval ships are facing off each other, an accidental trigger can cause an unintentional escalation. Given the turbulence in China’s civil-military relations ahead of this autumn’s leadership transition, and the numerous Chinese state agencies engaged in the South China Sea, the risk of escalation is higher on its side. The onus, therefore, is on Beijing to keep a lid on the tensions.

Unrelated to the stand-off, a contingent of four warships from the Indian Navy’s Eastern Command is on a routine long-range overseas deployment to the South China Sea, and ports in China and the Philippines are among those it will call on. It does come at an interesting time, given its mission of what the Navy terms “generating goodwill among the neighbouring countries”.

Copyright © 2012. Business Standard. All Rights Reserved.

The price of minding Mr Hu’s delicate sensibilities

It is not in New Delhi’s interests to be seen as a craven appeaser of China

There are a number of reasons why states come together and form international groupings. These include common interests, common causes, common weaknesses, common fears, gawking, lurking and sabotaging. One of the more inexplicable reasons they form groupings is because some research at some investment bank wrote a report lumping them together based on their growth rates and sizes of their economy. That’s why when outrage suppresses yawn when BRICS summits are held.

If the Indian foreign service is understaffed and overstretched, it also is guilty of enthusiastically expending resources in one too many pointless clubs, from the Commonwealth to the Non-aligned Movement and now to BRICS. The opportunity cost of getting wrapped up in pointless pageantry is lower attention to more important forums like the G-20 and the East Asia Summit. Like in many other areas, the UPA government’s sense of priorities is highly questionable.

Worse, because China’s highly Tibet-sensitive president was to attend the summit, the Indian government found it necessary to round up not only Tibetan protestors, but anyone else who faintly resembled them. Calling it our shameful kow-tow, Mihir Sharma writes of “Tibetans being rounded up, made to squat in the sun; the ever-sensitive Delhi Police indulging in the worst sort of racial profiling, demanding that people who look even vaguely Tibetan prove their credentials or be locked up.”

Having met some of the top Indian officials dealing with China policy, I can say with some confidence that they are not the appeasing sort. So why did Delhi Police (which takes orders from the Union home ministry) behave in such a demeaning manner?

One explanation that you might hear is that since New Delhi is playing hardball where its core interests are concerned there is no point in gratuitously embarrassing China’s leader in the eyes of his peers. This being a crucial year for the Chinese leadership—where power is supposed to change hands at the Party Congress amid factional strife, economic uncertainties and internal instability—why make President Hu Jintao lose face? There’s some merit in this argument. You don’t need to make a public show of your intentions. Making your guest comfortable is as good a principle in diplomacy as in daily life (although some Leftists didn’t believe this ought to extend to a US president).

Nor does preventing pro-Tibet protests prejudice India’s current or future negotiating position on the Tibetan issue. After all, “Free Tibet” protests can take place elsewhere in the country and on any other day of the calendar.

It’s not uplifting, it’s not fragrant, but there is merit in this logic. However, it still misses a larger point. The world—and especially the countries of East Asia—are watching. What they saw is a potential counter to Chinese hegemony bend over backwards (a reverse kow-tow?) to please China’s leader. Although they have seen some measures by New Delhi that persuades them of India’s intentions to contribute to the Asian balance of power, such signals risk confusing them. Small and medium-powers in India’s extended eastern neighbourhood will begin to have doubts about New Delhi’s ability to stand up to Chinese assertiveness. This will make it much more difficult for India to pursue its own interests in East Asia.

Finally, the perception that New Delhi ‘appeased’ Beijing yet again will exacerbate the hysteria in the media and public discourse on matters concerning China. Ironically, the UPA government has ended up embarrassing itself in front of its people in order to avoid embarrassing Mr Hu in front of his. Senior Indian officials have complained that the way the Indian media report issues pertaining to India-China relations complicates matters. The way the Indian established handled Mr Hu’s visit doesn’t help matters either. Feeding a narrative of a weak India unable to show spine to China on core democratic values is unlikely to help New Delhi make tough decisions of give-and-take if the opportunity presents itself. After all, we are all just prisoners here, of our own narratives.

What does Taiwan’s election result mean for India?

Ma’s victory and India’s dilemma

Yesterday’s Asian Balance column in Business Standard.

Taiwan’s presidential elections, since they first started in 1996, have in large part been referendums on the “One China” policy. Voters have been offered two deviations from the delicious ambiguity of the status quo: either a path towards eventual re-unification with mainland China or a dangerous path towards independence. Taiwan’s grand old party, the Kuomintang (KMT), espouses the former, while the Opposition Democratic Progressive Party (DPP) favours the latter.

The stakes, obviously, are high for Beijing — whose leaders have tried, unsuccessfully, bullying, coercion and suasion to influence the Taiwanese voter. But the stakes are also high for the Indo-Pacific region because Taiwan is critical to the stability of US-China relations, especially at a time when they both are attempting to move away from the confrontation of the past two years.

Neither China nor the United States wants the Taiwanese voter to rock the boat. Both had let it be known that they would prefer the incumbent president, the KMT’s Ma Ying-jeou, to win. In the event, on Saturday, the Taiwanese people agreed. But not before pre-election opinion polls showed that the election would go down to the wire, prompting thousands of expatriate Taiwanese from places like Silicon Valley to crowd into flights back to the island to cast their ballot.

That Ma found himself neck-to-neck with Tsai Ing-yen, his DPP challenger, is interesting. Four years ago, he was voted in after people felt that the DPP’s Chen Shui-bian was taking Taiwan into dangerous waters with his pro-independence line. Ma delivered on his campaign promise of closer ties with the mainland, sealing a major trade deal with China in 2010, boosting trade, travel, communications and investments.

China-Taiwan trade is currently around $160 billion. Taiwanese investors pumped in close to $40 billion in the four years of Ma’s first term. Chinese investors reciprocated, albeit only to the tune of $170 million. Increasing the number of direct flights to almost 100 a day brought in 2 million Chinese tourists and $3 billion in receipts. There has been a parallel improvement in official relations between Beijing and Taipei, as much in form as in substance.

Why then did Ma face a tough election? One answer is what we would call an anti-incumbency effect. As he admitted last month, there were some economic goals his government failed to achieve, especially those relating to employment and income growth. The other answer, one that goes beyond economic angst and back to the China-Taiwan question, might be a preference by voters to drag deviations from the status quo to the middle. As Russell Hsiao, a political analyst, wrote in the Jamestown Foundation’s “China Brief” last month, a majority of Taiwanese people want to perpetuate the status quo and will punish politicians who stray too far from it. This might also explain both the closeness of the contest and the verdict itself.

Over in Beijing, Ma’s victory is seen as vindication and a political triumph for President Hu Jintao. In the internal dynamics of the Communist Party of China, it is likely to empower individuals and factions close to Hu, influencing the pecking order of the new administration that will take over after this year’s party congress. Also, as Willy Lam, a Hong Kong-based commentator, points out, “if the KMT continues to rule, one can assume that tensions will be lowered further and the [People’s Liberation Army] will have no reason to ask for a higher budget.” To the extent that the issue of Taiwan’s status becomes less of a thorn in Beijing’s side, the political salience of the hawkish factions will, on the margin, diminish. This in turn can help reduce tensions with the United States.

In Washington, some commentators have already begun asking whether it makes sense to continue to allow Taiwan to poison relations between the United States and China. While it is unlikely that such a policy reversal is in the offing, it is already clear that Washington would prefer a Taiwan that doesn’t raise the temperature in East Asia. Washington’s strategic calculus, like that of the other major powers in Indo-Pacific, is about shaping a favourable balance of power, not triggering a military confrontation.

India faces a dilemma. On the one hand, the geopolitical stability suggested by a KMT government means greater economic opportunities for India to engage Taiwan. Compared to Japan, South Korea and Singapore, our bilateral trade and investment with Taiwan is negligible. The country accounts for one per cent of India’s foreign trade. At 0.03 per cent of the total foreign direct investment in India, Taiwan ranks below countries like Chile and Turkey. Bilateral trade agreements can help, but only if domestic reforms make India relatively more attractive as an investment destination.

On the other hand, a Beijing less preoccupied with issues in its backyard will find it easier to project power elsewhere, including against India.

Geoeconomic opportunities are, thus, stacked against geopolitical risks. So unless New Delhi uses the space created by Saturday’s elections to rapidly scale up economic ties, India will have little upside from Ma’s success.
Copyright © 2012. Business Standard. All Rights Reserved. [Business Standard]