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]

The Asian Balance: Dealing with a vulnerable China

China’s external, economic and ethnic vulnerabilities are worsening

Here’s today’s Asian Balance column in Business Standard.

This may come as a surprise to many, but China today is at its most vulnerable since the Tiananmen Square protests of 1989. That’s not all; it is unlikely that the country will shake off its vulnerabilities – geopolitical, economic and internal security – over the next three to five years.

The developments in East Asia in the past few weeks, focused around the East Asia Summit at Bali, have put China on the defensive. Not only is the United States reinvesting its military assets into the Indo-Pacific region, but almost all of China’s neighbours have moved to construct bulwarks against China. Even Myanmar is showing signs of wanting out of China’s orbit, and is opening up to India, the United States and Vietnam. If countries of the region are ganging up against China, it is largely Beijing’s fault. Picking a fight with each one of your neighbours at the same time is not the smartest of moves. Yet, that’s what China has done over the past couple of years.

What happened in Beijing’s foreign policy kitchen is anyone’s guess but China no longer enjoys a favourable external environment that it used to for the last two decades.

Let’s come to economics. Not only does China hold more than a trillion dollars of US debt, it is likely to have to increase its dollar holdings given the sovereign debt crises in the euro zone. So a lot of China’s money is, and will be for some time, at the mercy of its biggest strategic rival. Continue reading “The Asian Balance: Dealing with a vulnerable China”

The Asian Balance: Myanmar’s Narasimha Rao moment?

A pleasant surprise from the east

This is the unedited draft of today’s column in the Business Standard:

In a matter of months, Myanmar’s infamous junta diluted itself out of power, a new ‘elected’ government took office, duly freed pro-democracy leader Aung San Suu Kyi from house arrest, lifted some curbs on the local media, unblocked YouTube, declared that censorship ought to go, announced the intention to introduce economic reforms and — hold on to your seats, ladies and gentlemen — bowed to public pressure and suspended construction on a huge hydro-electric dam that Chinese companies were building on the Irrawaddy river.

So far, so remarkable and so quiet have these developments been that even seasoned observers are in a state of surprise. It seems impossible that a country which appeared so utterly hopeless even twelve months ago — with a closed-minded, curmudgeonly junta presiding over the destruction of generations of human capital — has turned around even to this extent. Then again, this is 2011, the year of geopolitical surprises, where the unexpected is a daily occurrence. Myanmar is unique because the changes happened without ceremony, without round-the-clock television coverage, without foreign fighter aircraft flying sorties over the capital, even without that symbol of early twenty-first century revolution — the twitter hashtag. And so far, at least, it has been good news.

The country may be at its own Narasimha Rao moment. President Thein Sein, who was in India last week, was a top-rung general in the previous military regime and had served as prime minister. Like Rao, he is an unlikely figure to open his country to the world. And like Rao, he might well be the most appropriate. It is way too early to declare that Myanmar has climbed out of the pit its generals dug for it. The new government’s moves are tentative, but they are in the right direction. What happens next depends as much on how the world responds to Thein Sein’s overtures as on his ability to carry his country’s armed forces along.

Because some of Thein Sein’s key decisions preceded or coincided with his trip to New Delhi, some have portrayed them as a vindication of New Delhi’s approach of engaging the erstwhile junta despite its odious human rights record. Such an argument, however, must be tempered with the fact that the Myanmarese foreign minister visited Washington, which had shunned and sanctioned the junta, two weeks prior to Thein Sein’s arrival in India.

Others have cast the developments within Myanmar in the context of a grand contest between India and China, with reformist-democratic forces gravitating towards New Delhi just as conservative-authoritarians are aligned to Beijing. This is misleading.

Take for instance the halting of construction of the Myitsone dam that angered the Chinese government. Given the enormity of public opposition to the dam which mainly benefits China while causing environmental damage in Myanmar, the Thein Sein government confronted a choice between antagonising its own people and angering China. That it chose the latter is a credible signal of its approach to governance. That said, the geopolitical consequences of rubbing a powerful neighbour on the wrong side had to be managed, which explain the overtures to India and the United States. This does not mean that Myanmar will now start favouring India over China in commercial dealings. Rather, it will seek greater policy autonomy for itself by balancing its relationships with regional and world powers. This is still a positive for India, but only to the extent that the playing field will be more level that it was earlier.

So it is up to the Indian government and Indian industry to capitalise on the opening promised by the Thein Sein government. China’s success in South East Asia over the past decade has been due to a combination of money and speed. India’s announcement of a $500 million line-of-credit for development projects in Myanmar can make a meaningful different, but the our government is unlikely — for good reason — to be able to match its Chinese counterpart in the spreading of largesse. We should not get into a spending race. But we should not make excuses for the glacial pace at which India’s developmental projects move forward.

The Kaladan Multi-Modal Project, which connects India’s eastern seaboard to its north-eastern states through Myanmar, is of strategic importance. You should be properly horrified to hear that it is proceeding “slowly”. Also, last week, when one of Thein Sein’s cabinet colleagues broached the idea of re-opening the World War II-era Stillwell Road (which connects Assam and Arunachal Pradesh to Myanmar) our minister of development of the north-eastern region’s reply was: “We have told them that Government of India would consider the proposal after it is formally submitted.” In triplicate, he might have added.

We cannot say for sure that the Thein Sein government will sustain its current course. It may only be aiming at gaining greater international legitimacy and foreign investment while only marginally transforming the nature of the regime. In such circumstances, a tit-for-tat strategy — rewarding desirable movement and punishing backsliding — is called for. New Delhi should work in cooperation with the United States, Japan and key South East Asian countries to put Myanmar on an irreversible course towards freedom, democracy and development.

Copyright © 2011. Business Standard. All rights reserved.

China’s moment of vulnerability

China is at its most vulnerable moment since the Tiananmen Square upheaval of 1989.

At a recent panel discussion at the College of Defence Management, Secunderabad, I argued that it is important to include the dimension of China’s vulnerabilities in the way we see the India-China dynamic. The following is a summary of my remarks:

First, it has managed to antagonise almost all major nations–Japan, South Korea, Vietnam, the Philippines and India—in its region, causing them to explore ways to counter-balance it. This has raised the demand for a US presence and strategic engagement in East Asia. The upcoming East Asia Summit will essentially be a framework that will attempt to bind China’s rise in the silken bonds of international norms. [See the East Asian kabuki]

Second, it is locked into geo-economic interdependence with the United States in a situation akin to two people with a gun to each others’ heads. China cannot escape the consequences of a US default or devaluation. [See my colleague V Anantha Nageswaran’s pieces on China’s policy tangle, quest for balance and US default.]

Third, China’s internal stability has been rocked by multiple vectors. The three big ethnic minorities are in various stages of unrest: the Mongolians have joined Tibetans and Uyghurs in mass protests. Rising productivity is exerting upward pressure on wages that the Communist Party is being forced to keep a lid on. Some of the labour grievances have erupted into agitations. Farmers protesting against expropriation and eviction have constituted another vector of instability. While many of these incidents might not make it to televisions, newspapers and even websites due to information control, Beijing still has to deal with them.

Fourth, there is certainly a serious factional war raging within the cloisters of the Chinese Communist Party. The recent drama around the health and whereabouts of Jiang Zemin is the latest in a series of events that suggest China’s policies are outcomes of factional contention. For all its attempts to show otherwise, the Chinese Communist Party leadership is not a monolithic entity. The Shanghai faction, the Youth Communist League Faction and the ‘Princeling’ faction have been identified. Even within the PLA, geographical regional loyalties and the changing balance of power between the PLA and the PLA Navy (PLAN) might be shaping China’s behaviour, not least in the East Asian maritime domain.

What should we make of it?

India should attempt to become a swing power. It should aim to achieve better relations with China and the United States than they enjoy with each other. At the same time, it must have the credible capacity to inflict pain and give pleasure to either of the two. This requires an unprecedented level of foreign policy dexterity.

While there is some empirical evidence that China tends to be more amenable to settling boundary disputes when it is internally weak, India should not be (and should not appear to be) in any haste to rush to a settlement. China is and perceives itself to be much more powerful than India at this time, and is likely to insist that disputes are settled only on its own terms. Instead of over-emphasising the Himalayan frontier, India should engage more deeply in East Asia, and contribute to a stable balance of power there [See the Asian balance and on the East Asian dance floor]. This is the primary means for India to acquire strategic leverage vis-a-vis China, for New Delhi is mostly on a weaker wicket on other issues.

East Asia, yes. Iran, err.

US State Department’s view on India’s regional role

Here’s an excerpt from the transcript of an online Q&A with Robert Blake, US assistant secretary of state for South and Central Asia.

Nitin Pai: You have been one of the few U.S. officials to state that India is part of East Asia. How do you see the partnership between India and the United States shaping up in terms of the balance of power in East Asia? Specifically the South China Sea.

Robert Blake: Thank you for that question. As I said earlier, I expect that how we can expand cooperation and information sharing on activities in Asia will be a real focus of the Strategic Dialogue between the Secretary and External Affairs Minister Krishna. Already we’ve announced that we’re going to have a trilateral dialogue between the United States and India and Japan. And that we look very much forward to India’s increased participation in East Asian institutions such as the East Asia Summit. So I think there’s a tremendous scope for greater collaboration in this area. And again, this will be very much an important focus of the dialogue next week and the week after.

NP: Do you see the India-U.S. strategic relationship as providing a basis for India to attempt reapproachment between U.S. and Iran? After all, if the U.S. and Iran get over their vexed relationship the entire geo-politics of the region would be transformed.

RB: I think the U.S.-Iran relationship is going to be decided on the basis of some of the important efforts that are already underway on the Iranian nuclear program. I don’t expect that India will have a huge role to play in that, although we do value our dialogue with India on Iran. Let me just leave it at that. [State Department]

The entire transcript is here. See reports by Indrani Bagchi, Narayan Lakshman, Indira Kannan, S Rajagopalan and ANI.

The Asian Balance: General Liu can shut his eyelids now

Why does China need an aircraft carrier?

This is the unedited draft of my column in the Business Standard today.

 

China’s new aircraft carrier should surprise only those who were not looking—it has been China’s largest open secret for several years now. It has been apparent, literally,—thanks to Google Earth—, that the partially-completed Soviet-era vessel that China’s Chong Lot Travel Agency purchased for $20m in the late-1990s, complete with designs, was not really going to be used as a floating casino and amusement park. There have been other signs, including facilities and training programmes for naval personnel and aviators, that suggested China intended to operate aircraft carriers. As early as 1987, General Liu Huaqing, the recently deceased father of the modern PLA Navy, said that “Without an aircraft carrier, I will die with my eyelids open; the Chinese Navy needs to build an aircraft carrier.”

So both stated intentions and signs on the ground indicated that an aircraft carrier was on the cards. The only question was why, for the PLA Navy’s strategy over the last two decades has been to counter the United States’ formidable surface fleet through the development of its own submarine force. This strategy—of using submarines to neutralise the power of aircraft carriers and warships—was pioneered by the Soviet Union’s Admiral Sergey Gorshkov. In a remarkable demonstration of irony or its deficiency, the Soviets named one of their aircraft carriers after him, the same that India since purchased and is awaiting delivery of.

If aircraft carriers are a platform for a country to project hard power far beyond its shores, submarines are an effective way deny to them space. China had around 65 operational submarines last year. In 2007, one of them slipped past an array of ships and aircraft into an area in the Pacific Ocean where the US Navy’s aircraft carrier strike group was conducting training exercises. That incident was a stark reminder of the vulnerability of aircraft carriers to the Gorshkov strategy. It was also a signal of the changed maritime balance in the Western Pacific ocean.

The utility of aircraft carriers as a device to project power on the littoral is also undermined by anti-ship missiles. Chinese-made anti-ship missiles or their variants are deployed, among others, by North Korea, Myanmar, Iran, Bangladesh and possibly Pakistan. To the extent that their range, capability and proliferation grows, aircraft carriers become less useful in their traditional roles of power projection.

In other words, aircraft carriers will need to increasingly stay away from hostile shores, limiting their effectiveness. The benefits of deploying an aircraft carrier is likely to diminish over time, even if the costs stay the same. An aircraft carrier may pack a bigger punch, but is also more vulnerable in itself, costlier to protect and causes a greater strategic setback if damaged or destroyed.

After doing so much to neutralise the strategic utility of aircraft carriers why does China want to deploy them? Of course, there is prestige. Another reason is to do with the balance of power within the Chinese Community Party and the People’s Liberation Army, where pro-PLA Navy factions might have strengthened in recent years. That said, it is difficult to conclude if the navy’s growing political clout is the cause or the effect of the geopolitical churn in East Asia. Beyond these explanations there are three broad reasons why China might want to use aircraft carriers for.

The first is Taiwan. The very name proposed for the new carrier, Shi Lang, suggests Taiwan as its intended target. Shi Lang, a Manchu Qing dynasty general, conquered and annexed Taiwan into the Chinese empire in 1683, defeating the Qing dynasty elite who had fled to that island. Lan Ning-Li, a retired Taiwanese admiral notes that “the carrier would be in a position to move in areas surrounding southern and eastern Taiwan…(making it) vulnerable to enemy attacks at sea from both front and rear.” With nuclear weapons and submarines deterring the United States, an aircraft carrier will add to China’s military capabilities in a possible invasion of Taiwan. The PLA’s statement that “even after China owns an aircraft carrier, it is impossible for China to send the carrier into the territories of other countries” does not rule out use against Taiwan, which according to Beijing is part of China, thanks to the original Shi Lang.

Second, an aircraft carrier can be used as a vehicle for China to enforce its territorial claims over the Yellow, East and South China seas. If so, Shi Lang will be replacing fishing trawlers that have engaged in decidedly unfishermanly activities such as carrying surveillance equipment, ramming Japanese patrol boats, entangling with cables connected to Vietnamese exploration vessels and squatting over unpopulated islands. These presumably non-state actors currently perform the function of tripwires, creating incidents that trigger Beijing to assert its maritime claims. Introducing aircraft carriers into this game is dangerous, but the threat to do so could deter the US Navy from entering the fray in support of its allies.

Finally, China’s interests are global. It is likely to want to set up expeditionary forces to operate in distant theatres to pursue those interests. This is normal. However, like “peaceful rise”, a “defensive aircraft carrier” is a layer of sugar coating applied to make the indigestible just a little more palatable.
 

© 2001. Business Standard. All rights reserved.

The Asian Balance: Temples, rivers and other disputes

The list of regional security issues where ASEAN is falling short is growing

Excerpts from today’s Business Standard column:

Yet, ASEAN, a regional grouping often celebrated for its pragmatism and competence, has been unable to keep two of its members from going to war with each other. It will now try to play peacemaker, but it is unlikely that it can achieve anything beyond temporary damage control. Cambodia has legal title, but Thailand is more powerful. Preah Vihear is intertwined with Thailand’s domestic political turmoil, and because ASEAN cannot interfere in the internal affairs of its members, meaningful mediation will have to wait until the unrest, intrigue and ferment in Bangkok subsides. Even then, there is no guarantee that the Thais will allow their relative power advantage to be neutralised by accepting third-party arbitration.

ASEAN’s failure to prevent the Thai-Cambodian border dispute from escalating into a shooting war calls into question its ability to take on the more challenging project of anchoring East Asia’s security architecture. That’s not all. ASEAN states have been extremely reluctant to maintain solidarity with their counterparts in the latter’s disputes with non-ASEAN states. It is to the US that Vietnam and the Philippines turned last year when China upped the ante over the maritime territorial disputes in the South China Sea.

But Laos, Cambodia, Thailand and Vietnam—lower riparians of the Mekong river—have no one to turn to in the dispute over water sharing with China. [Business Standard]

Related Links: More on the Mekong dams, from this interview with Ame Trandem. I also cite Timo Menniken’s academic paper on lessons from the Mekong on China’s behaviour in international resource politics.

Damming the Mekong

Who can resist China?

While researching for today’s Business Standard column I came across Ame Trandem’s article in Vietnam’s Than Nien newspaper on the controversy relating to the Xayaboury (Xayaburi) dam in Laos. Here’s an excerpt of my subsequent email interview with Ms Trandem:

Nitin Pai: What is China’s position on the downstream dams that Laos is building & Thailand is financing? China is not in the Mekong River Commission (MRC) but are they playing a role in the shadows?

Ame Trandem: While China is not a member of the MRC, it is a dialogue partner. However China’s own upstream dam construction on the Mekong has helped pave the way for the Lower Mekong mainstream dams to re-emerge on the region’s agenda. With four dams built on the mainstream in China, its dams have begun changing the river’s hydrology and sediment flow, which has helped ease past reluctance in mainstream dam building.
Continue reading “Damming the Mekong”

The Asian Balance: The East Asian kabuki

A curtain-raiser to this year’s geopolitical drama in five acts

Excerpts from Business Standard column today:

The first act began a few days ago when some online military buffs posted images of a new stealth aircraft, tested on the very day Robert Gates, US defence secretary, was in Beijing to discuss, well, military cooperation. The test surprised a lot of people — including, apparently, Mr Hu himself. The underlying message, however, should not. Powerful political constituencies within the People’s Republic not only see the US-China relationship as adversarial, but have developed the capacity to challenge US military power in East Asia and beyond. In recent years we have seen the People’s Liberation Army (PLA) deploy a submarine fleet that can counter the US Navy’s surface combatants, develop missiles that can destroy aircraft carriers and satellites, and now test next-generation fighter aircraft.

No, it is extremely unlikely that the United States and China will get into a war — hot or cold — in the near future, but China is attempting to shape a military balance that will give it greater leverage over Japan, South Korea and their primary protector, the United States. At the same time, Vietnam, Australia, Indonesia and India will either feel awed, more insecure or both. North Korea, Pakistan, Myanmar and Iran will be emboldened. Like the slow, initial act of traditional Japanese theatre, this sets the stage for the remaining acts of the unfolding drama. There are four more acts in this East Asian kabuki. [Business Standard]