Cameron comes with a different mindset

The new British prime minister is right to start with trade and right to start with Bangalore

Most commentators are putting it mildly, but the numbers show that India-UK trade atrophied in the last decade. From being India’s third largest trading partner at the beginning of this decade, the UK is now the thirteenth, and falling perhaps. Even as India’s overall trade volumes grew at around 26% on an average over the last four years, Britain’s share of the total trade has dropped—from 3.72% in 2004-05 to 2.56% in 2008-09. The growth in absolute numbers, from $7.2 billion to $12.5 billion during the same period masks the marginalisation of Britain as an economic partner.

Mr Cameron hopes to change that trend. The good news is that he has not only arrived in India with a large delegation but also with changed mindset. His government’s decision to remove dogmatic hurdles to trade in civilian nuclear technology and set up a framework for joint research & development in the field exemplifies this. As the British prime minister reminds us in his op-ed in The Hindu:

Beyond the cultural bonds, Britain has practical attractions for India. We speak the world’s language. We are still the world’s sixth largest manufacturer and the best base for companies wanting to do business in Europe. We have some of the best universities in the world and we are a great hub for science and innovation. Britain still has the strengths of its history, not least our democracy, rule of law and strong institutions, but there is also the modern dynamism of the nation that helped pioneer the internet, unravel the DNA code and whose music, films and television are admired the world over. All of these things can mean opportunity for Indian investors and entrepreneurs. [The Hindu]

If Mr Cameron follows through it is likely that he’ll succeed in turning the trade game around. But there’s a deeper, more fundamental reason why there is promise in economic relations between the two countries. Britain is grappling with rising costs of public services and tightening public finances. It will find that India provides the way out of the jam if the “outsourcing” partnerships can be managed well. That is the reason why Mr Cameron did well to start in Bangalore (okay, the beer and Amrut Fusion Single Malt are equally good reasons).

Geopolitics, though, can be a spoiler. The abominable David Miliband has not been forgotten. The Cameron government would do well to steer clear of that kind of gratuitous sanctimony.

Update: In Bangalore, Mr Cameron’s speech in Bangalore will do much to undo the damage Miliband did.

Fattening the Pakistani elite

…might work

In today’s Viewfinder at Yahoo! India columns Amit Varma says he sees “three distinct kinds of forces in Pakistan.”

One, the jehadi groups, which grow larger and more extreme because of self-perpetuating feedback loops, but are by no means the whole country. Two, the military establishment, whose incentives, as I wrote in a column three years ago, are aligned towards continuing the conflict with India. They have supported the jehadis, and have waged proxy wars through them, but are now under pressure to withdraw this support. And three, civil society, which wants what people everywhere want: peace, prosperity and a good future for themselves and their children. This, I believe, is most of Pakistan.

The stronger civil society gets, the weaker the support for extremism, and the more tenuous the military’s hold on the country. This is why I support increased trade and cultural exchanges with Pakistan (which is mutually beneficial anyway, as it’s a positive-sum game). I don’t think it’s contradictory to take a hard line towards Pakistan’s terrorist infrastructure and a soft line towards their artists and businessmen. Both have the same end in mind. [Yahoo! India]

Like Amit, I too support increased trade and cultural exchanges with Pakistan. But for a very different reason.

Far more than civil society, trade—more than culture—will benefit Pakistan’s elite society. To the extent that it does, and further, to the extent that this creates vested interests among Pakistan’s rich and powerful to prefer stable bilateral relations, better trading relations will be good for India.

Since there is no direct empirical evidence, this is only a hypothesis. But it is verifiable, involves modest risks and is reversible. Which is why I have argued that India should consider unilaterally dropping trade restrictions. Cultural exchanges might not work the same way because they won’t fatten up the Pakistani elite as commerce is likely to.

So you do not need to believe that a Pakistani civil society will rise, will challenge extremism and dismantle the military-jihadi complex to consider the merits of the trade argument. But it’s important to recognise that better trading relations will, at best, reduce Pakistani attacks against India. Destroying the military-jihadi complex is an entirely different and a much more important project.

Sunday Levity: Curry, roast beef & Italian wine

Tamil non-vegetarian cuisine two millennia ago

From K T Achaya’s wonderful little book, The Story of Our Food (pages 78-79):

Many animal foods are described with great relish in the early Tamil literature.

Even Brahmins did not lack relish for the meat and toddy served to them at feasts held by the chieftains and princes of the land.

The meat dishes cooked with (black) pepper were called kari in Tamil, a word now used in English as curry. Fried spiced meat was called tallita-kari, fried meat was pori-kari, and meat with a source sauce made of tamarind was termed pulingari

Beef was freely eaten: there are four names for this meat in the early Tamil language, showing that it was a common and well-liked food. In the north, as we have seen, the domestic fowl was not eaten, but there was no such taboo in the south. Other delicacies were the cooked aral fish served piping hot, and the meat of the tortoise, rabbit and hare. Wild boar was hunted using nets; it was then kept in a pit and fattened by feeding it with rice flour to yield pork of exceptional taste.

Here is a description from the Tamil literature of a feast given about 150 AD by a Chola ruler:

Goblets of gold with intoxicating liquor, soft-boiled legs of sheep fed on sweet grass, and hot meat, in large chops, cooked on the points of spits … fine cooked rice which, erect like fingers and with unbroken edges, resemble the buds of the mullai (jasmine) flower, together with curries sweetened with milk.

It is interesting to note the reference to wine and to roast kababs, and the beautiful comparison of shining white rice grains to jasmine buds. Tamil literature also describes the brisk trade with both the east and the west from the ports of south India; one commodity brought in was Italian wine for use by the royalty.

Sunday Levity: Foreign origins of the South Indian breakfast

Can you stomach the truth?

Most people—most of all South Indians—react to this with shock and denial. Some go on and come to terms with it.

What could be more South Indian?
What could be more South Indian? Photo: avlxyz/Alpha

Well, the fact is the idli—a dish that is almost synonymous with South India—was probably an import from what is now Indonesia (and what was then the Sri Vijaya empire). This little morsel comes from the late K Thammu Achaya, food scientist and historian. As Vikram Doctor writes:

It’s…surprising then to read K T Achaya’s theory that idlis are a relatively recent introduction to India. He notes that the word might derive from ‘iddalige’, first mentioned in a Kannada work of 920 AD, but the indications are that this was made from an urad dhal batter only.

The Sanskrit Manasollasa of 1130 AD has ‘iddarika’, but again made from urad dhal flour only. Tamil apparently only first mentions ‘itali’ in the 17th century. All these references, Achaya notes, leave out three key aspects of idlis: “the use of rice grits along with urad dhal; the long fermentation of the mix; and the steaming of the batter to fluffiness.”

Only after 1250 AD are there references to what seem to be idlis as we know them. Achaya’s contention is that this absence from the historical record could mean that idlis are an imported concept — perhaps from Indonesia which has a long tradition of fermented products, like tempeh (fermented soy cakes), kecap (from where we get ketchup) or something called kedli, which Achaya says, is like an idli. This is plausible enough given the many links between Southeast Asia and South India, through Hindu rulers and traders. [ET]

D Balasubramanian had a good report on Dr Achaya’s works in The Hindu and there’s a little discussion on the subject over at Manjunath & Co’s blog. Although two of Dr Achaya’s most well-regarded works on Indian food seem to be out of print, his last book, The Story of our Food is available.

Meanwhile, the chillies in the chutney and the tomatoes in the sambar came from the Americas with the Europeans.

That’s not all though. It was Baba Budan, a 17th century Sufi from Karnataka who broke the Arabian monopoly on coffee. Legend has it that:

On pilgrimage to Mecca in the middle 1600s, Baba Budan, a revered holy man from India, discovered for himself the wonders of coffee. In his zeal to share what he’d found with his fellows at home, he smuggled seven coffee beans out of Arabia, wrapped around his belly. On his return home, he planted the beans in the hills of Mysore, India, and nurtured the young coffee bushes that resulted. Coffee flourished in the hills of India – hills now named after Baba Budan.

In short order, enterprising Dutch traders bought some of these coffee plants, and shipped them to faraway colonies in Indonesia and Ceylon. The Arabian monopoly of the coffee trade was over, and the Western world was waking up to a new aroma… one that would play a fateful role in Europe, and beyond. [Green Mountain Coffee]

Baba Budan gave his name to a hill in Karnataka, and more recently, spread his seeds wide—to cafes in Cincinatti and Melbourne.

Tea? Okay, it was probably grown and consumed in India long before the British came, but you don’t have to be Aakar Patel to accept that tea as we drink it today is largely a gift of British colonial rule.

So there’s more than one ‘foreign hand’ in the ‘traditional’ South Indian breakfast. The sugar that goes into it though–we have on Dr Achaya’s authority—is an Indian invention.

Tailpiece: Mr Balasubramanian notes that “Dr Achaya points out how in 300 BC, the Arthasastra described the balanced meal of a gentleman as 500 g rice, 125 g dal, 56 g oil and salt..(and this) is the same in essentials as the recommended balanced diet that the Indian Council of Medical Research laid down in 1987 AD.”

Why not just put the IPI pipeline to rest?

It’s a bad idea to interlock India’s energy supplies with Pakistan. Period.

It was a stupid idea right from the start. Of course, it looks a lot more stupid now. Swaminathan Aiyar points out why the IPI gas pipeline project should now be officially declared dead. But you don’t have to read Mr Aiyar’s article at all if you had been reading The Acorn during the halcyon days of the ‘peace process’ when it was unfashionable to point out that ideas such as “creating mutual dependencies” with Pakistan are masochistic and that the risk premium will junk the business case in any case.

After explaining why involving Pakistan in a gas purchase deal with Iran is such a bad idea, Mr Aiyar inexplicably proposes a shallow undersea pipeline with a different architecture. It might be better than the overland pipeline but it still carries the risk of a Pakistan hurting itself to hurt India.

It makes far more sense to invest in LNG. This calls for investing in the technology, processing and domestic distribution infrastructure required to handle the imports. This calls for developing a maritime strategy that ensures that India’s LNG supply routes are secure, around the world. And it calls for foreign policy that ensures that LNG becomes the predominant way to ship the world’s natural gas, and the global market becomes competitive.

Of course all this is tall order. But let’s face it—its better than letting Pakistan hold us by the…you know what.

My op-ed in Mint: There is no one China policy

Competition in zero-sum games, co-operation in positive-sum games

My op-ed in today’s Mint is a synthesis of several posts and discussions on this blog. Many of you might rightly say that it is stating the obvious. But sometimes the obvious has to be stated as well (and the need to do so is not always so obvious).

The Five Hundred Swamis of a Thousand Directions

The Indian East Company

Rajendra Chola’s eleventh century naval expedition across the Bay of Bengal and the conquest of Southeast Asian kingdoms was, according to John Keay, one of “those rare examples of Indian aggression beyond the frontiers of the subcontinent”. The question that intrigues historians is just why did the Cholas embark on such a venture?

The ready answer is booty, for many of the Chola military expeditions involved securing wealth from conquered territories that would be generously given away to their subjects. But there is another angle, arising from the links between the Chola state and commercial interests of the merchant guilds. That’s where the Five Hundred Swamis of Aihole, or disai ayirattu ainnurruvar (the five hundred of a thousand directions) enter the scene.

Geoff Wade argues that “there seems little doubt that the Chola attacks waged on Southeast Asia port polities in 1025 and again in the 1070s, as well as the occupation of Sri Lanka in 1080, were all intended to expand the commercial interests of the polity’s merchants and thereby of the polity itself.” According to this theory, the Chola expedition was intended to break the Srivijaya empire’s hold over the straits of Malacca, to advance the interests of the Five Hundred Swamis.

The Five Hundred Swamis were established in Aihole, in the Raichur doab of what is now Karnataka, and had a second base at Pudukottai in Chola kingdom. An “supra-regional” association of itinerant merchants, it followed the conquering Chola armies, first in peninsular India, and then to their overseas forays.

So what became of them? According to some historians, the present day Lingayat community of Karnataka has its roots in the guild of the five hundred of a thousand directions.

Related Link: The Trading World of the Tamil Merchant, by Kanakalatha Mukund, via Google Books; Guilds in ancient India, on Kamat’s Potpourri

Six small states, one big one, and the nuclear cartel

It is easy to take a moral position when there is little cost to it

Before China publicly signaled its opposition to clearing the decks for India at the Nuclear Suppliers Group, six small states were instrumental in throwing a spanner in the works. They opposed the first draft of the proposal to unconditionally lift the ban in export of nuclear material to India. Now emboldened by China’s ‘unofficial’ position, they may yet block the revised draft.

But why are these small states, minor players on the international scene, behaving in this manner? Are they being merely being racist or are they acting as the world’s “conscience keepers” ? Or as Paul Nelson, a professor emeritus at Texas A&M University argues, their domestic perspectives on nuclear power and nuclear weapons may be preventing them from understanding India’s compulsions. [via Idaho Samizdata, which has a good post on this topic]

Whatever it might be, it only reflects that they have calculated that it is inexpensive for them to take the position they did. In fact, they have little to lose, in the short-term, from taking an anti-India position. They are geographically distant and, except for Norwegian peace diplomacy in Sri Lanka, are removed from the geopolitics of India and its neighbourhood. More importantly, India’s trade with these states is miniscule. The Commerce Ministry’s latest trade figures (as of February 2008) explain why these countries could afford to be more concerned about nuclear non-proliferation. Clearly they don’t really have much of a share of emerging India.

Country Exports (%) Imports (%)
Ireland 0.2 0.1
Austria 0.12 0.24
New Zealand 0.09 0.14
Netherlands 3.18 0.84
Norway 0.17 0.67
Switzerland 0.37 4.13

Now, the Netherlands and Switzerland played a role in permitting A Q Khan and the Pakistani nuclear underground to operate for so long and cause so much damage to non-proliferation, the cause they now ostensibly espouse.

But John 8:7 does not apply in international relations. What really makes the Dutch and Swiss stand inexplicable is that there is reasonable inward foreign investment coming into India from these countries, as well as some trade. They are also likely to be beneficiaries from an opening of India’s nuclear power sector to foreign investment. Perhaps their position is designed to extract a quid pro quo at a later date, or indeed motivated by a quid pro quo with other parties.

In any event, by overplaying their hand, the six small states are risking pushing the NSG into irrelevance. The dynamics of cartels being what they are, the interests of the United States, Russia and France being what they are, and the NSG being what it is (a cartel and not a treaty), the question for India is one of timing and convenience.

This episode serves to highlight the need for India to develop deep economic linkages with countries that are a source of fuel supplies and technology. At the same time it is important to ensure that countries do not find taking anti-India positions costless or inexpensive.

My op-ed in Mint: Pomegranates, polls and power

Why India must strengthen its military presence in Afghanistan

In today’s op-ed in Mint Sushant and I call for India to increase its troop levels in Afghanistan. A slightly edited version of the following appeared in print.

Image: Malay Karmakar/Mint
Image: Malay Karmakar/Mint

Afghanistan exported US$1 billion worth of drugs last year. In contrast, its pomegranate exports amounted to only US$1 million. Poppies or pomegranates, the Afghan farmers who grow them earn around the same amount of money—around US$2000 per hectare every year. If somehow they could be made to grow a lot more pomegranates, and a lot less poppy, Afghanistan, India and the world would be a much better place indeed.

That’s because growing pomegranates and other legitimate cash crops requires water, electricity and most importantly access to foreign markets. Now, much of the international assistance flowing into Afghanistan aims to build and repair dams and connect villages to the electricity network. India, for instance, is financing irrigation projects in Northwest Afghanistan and power projects in Herat and Kabul.
But the one Indian project that could transform Afghanistan’s economic landscape is the just completed 218km road link connecting the town of Delaram on the Kandahar-Herat highway to Zaranj adjacent to the border with Iran. From there Iranian roads run to the port of Chabahar on the Persian Gulf. This will be Afghanistan’s fastest overland route to the sea. Last year, because they had to be air-flown, only 1000 of the 40,000 metric tonnes of Afghan pomegranates made it to markets in India, Dubai, Singapore and Pakistan. With the new road, Afghan farmers can export a larger fraction of their produce to the rapidly expanding Indian market. The competition from this route will compel Pakistan to review its policy of throttling the Afghan transit trade. In time, the Zaranj-Delaram road can be expanded into a trade and energy corridor that connects landlocked Central Asia to Indian and global markets.

This sounds wonderful, and it is. The problem, however, is that its success hinges on two key factors: on Afghanistan’s stability and on the nature of relations between India, Iran and the United States.
Continue reading My op-ed in Mint: Pomegranates, polls and power

Trading for peace

Can Pakistan make the change?

While the crisis in Pakistan’s international and domestic politics gets a lot of attention, arguably the more worrisome one is the one enveloping its economy. To even attempt to address these crises, Pakistanis must change their mindsets towards India. Why, there is resistance to even accord India a most-favoured nation (MFN) trading status because many don’t like the sound of it. So it is good to see the Daily Times go all the way and argue for bilateral free-trade.

After decades of subordinating economics to politics we are now at a crossroads. The primary crisis in Pakistan is economic despite the fact that we keep distracting ourselves with other less relevant issues. The politics that has constantly overridden economics has not succeeded but it persists in our mental attitude. Arguments given above have long been refuted by circumstance; only those whose ideology was thus hurt did not care to take account of it. When the embargo was placed on imports from India under General Zia-ul Haq, the reason was political; and the economic wisdom of Dr Mahbubul Haq was defeated by a federal secretary who put forward the theorem that helping India profit from trade with Pakistan was a “betrayal of the Kashmir cause”.

The theory of not relying on Indian imports has been disproved over time, to the disappointment of the intelligence agencies. From Gen Zia’s 40 items we are now importing 1500, most of them strategic raw materials. And we have not been “let down” or become “dependent” on India in any negative way. On the basis of this experience, in fact, we would be well advised to create an “interest group” in India comprising exporters to Pakistan. (There is already a beginning of it in Punjab, Haryana, and Delhi Chamber of Commerce and Industry.) The intermeshing of economic interests is always more reliable compared to political compacts made when there is little mutual trust. On the other hand, the “profit motive” is blind to politics and endures beyond the alarums of war and finally compels states to allow peace to prevail “for profit”.

Pakistan has signed free trade area (FTA) agreements with Iran, China, Sri Lanka and Malaysia, but no increase in Pakistani exports to these countries has occurred because of the unstable situation in Pakistan. Therefore, it is hardly valid, on the basis of this “trade imbalance theory”, to block trade with India. Imports of Indian raw materials and some other items are attractive because transport costs are relatively low across the border. If the increase in Indian imports is expected to be 30 percent, it will displace the import of the same volume of more expensive imports from elsewhere. This will help Pakistan cut its manufacturing costs and reduce the level of inflation. In fact, the whole theory of trade is built on the notion of comparative advantage and there is much advantage to Pakistan in trading with India. [DT]