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]

Pragati May 2008: Towards liberal nationalism

Issue 14 - Apr 2008

Issue Contents

PERSPECTIVE

Liberals, culture and nationalism Ravikiran S Rao
An opportunity exists for a new politics

Changing the broken wheel Raj Cherubal
The secular-right must champion economic freedom

Towards “that heaven of freedom” Gautam Bastian
A free nation of free citizens

Out of court Rohit Pradhan, Shashi Shekhar & Mukul Asher
Carry on the battle, but respect the court’s verdict

FILTER

India as a rising great power; climate change and national security; India-Iran relations; to the brink; and trade across the Line of Control

IN DEPTH

The new currency of power Nitin Pai & Aruna Urs
A discussion on strategic affairs with K Subrahmanyam

ROUNDUP

Use the Tibet card Zorawar Daulet Singh
To settle the India-China dispute

Consensus must endure Dinesh Wagle
Maoists have the upper hand in the construction of the republic

Bottom-up dynamics Sushant K Singh
What attracts Africa to India and how it can be strengthened

Pressed by inflation Gulzar Natarajan
Easing supply bottlenecks is the right way to go

BOOKS

Memories of 1971 Amardeep Singh
A review of Tahmima Anam’s A Golden Age

Read excerpts | Download

The Indian difference in Africa

It’s about 53 countries, not one continent

It is, no doubt, a convenient shorthand to refer to “Africa policy”. But it is really about developing relations with over 50 countries that make up the African continent. There are signs that India is recognising this relatively better than other countries.

In an op-ed in Mint, Mukul Asher and Sushant Singh argue that the India and African countries should build “a long-haul developmental partnership, based on application of knowledge economy, development of human resources and deeper domestic linkages…(that will diversify) their global risks (and increase) their leverage in the global affairs.”

Excerpts:

India’s economic and strategic diplomacy towards Africa has been consistent. Many initiatives launched in the final years of the National Democratic Alliance government have not only continued but also flourished during the United Progressive Alliance regime.

India’s academic and research institutions, however, need to develop much greater understanding of individual African countries and broaden linkages with their counterparts in Africa. There is also an urgent need to create a larger pool of Indians in all spheres with familiarities with languages spoken in Africa. Such familiarity and empathy for Africa’s challenges can provide India with valuable competitive edge.

India’s economic model and its approach to engaging Africa is consistent with what former World Bank economist William Easterly, in his 2006 book The White Man’s Burden, called “searchers”. They, unlike “planners”, eschew global blueprints and seek to meet the demand of customers in a way that uses decentralized and customized approaches, while applying an existing stock of knowledge in a practical way to reduce resource costs and improve efficiency. [Mint]

Related Links: Wages of hyphenation; India in West Africa

Using Bollywood for regime change

Why Tarun Khanna is wrong about Burma and confused about geopolitical power

The India-China hyphenation is doubly dangerous: one the one hand, the conflation of China and India (and its unspeakable, dreadful portmanteau) ignores the differences in the outlook, policies and global impact of these two countries. On the other, stretching the differentiation indiscriminately can lead to some very flawed policy prescriptions.

Like Tarun Khanna’s. In Mint, he argues that India should not try to match China in embracing the junta but rather extend “unstinting support” for democracy. Because because “India is congenitally incapable of deploying hard power” and because “India’s true strength lies in projecting soft power”, and because “trying to play China’s game against China is folly, not to mention unprincipled”.

Mr Khanna’s analysis, unfortunately, is drowned in cliches and unfortunate generalisations. On the face of it, it sounds reasonable that trying to beat China in its own game might not be a good idea. But what if it is not really China’s game, and that China is a player in a game that has its own age-old rules. Like the balance of power game, for instance. It certainly doesn’t make sense to suggest that India should not play the game just because China is playing it better. Does this mean that India should cuddle the junta? Not quite, as this blog has argued, but for very different reasons. [See this op-ed and this post]

There is something disturbing in Mr Khanna’s assertion that India is congenitally incapable of deploying hard power. He seems to have forgotten Hyderabad 1948, Goa 1961, Bangladesh 1971, Maldives 1988 and Sri Lanka 1987-1991. The claim that India is structurally incapable of deploying hard power does not hold water. Moreover, Mr Khanna misses a very important point: projecting “hard” power is not quite the same as using military force. Nuclear weapons, ballistic and cruise missiles and a blue water navy project hard power. None of this means that India must even threaten their use, much less use them.

Whenever commentators call for the “projection of soft power”, one listens to see how exactly they propose this could be done. In Mr Khanna’s case, India would do this by an unstinting support for democracy and you-can’t-be-serious-ly through Bollywood. Here he is incredibly mixed up. Now unless India is willing to support democratic forces with financial and military support (“hard power”) they can’t conceivably overthrow the junta, not least because it will turn to China for support. And at this juncture, the fact that there are Bollywood lovers in Burma isn’t going to matter much. In other words, talk about moral support for democracy is certainly about softness, but won’t work without real power.

Moreover, it is naive to believe that turning Burma into a democracy will necessarily transform it into a pro-India country. Democratic governments can play one power against another, just as well as dictatorships can.

Mr Khanna begins his essay by pointing out how Chinese influence has supplanted Indian influence in Burma. This is not as much because of politics as it is because of economics. China’s economic growth has given it the clout it has. India can regain the clout at the ground level in the same manner. Like geopolitics and balance of power, the trade and investment game is also not “China’s game”.

There is a case for India to support democracy in Burma but not on the grounds Mr Khanna has laid out. And as a foreign policy prescription, it is dangerous to propose that all that is needed towards this end is “a projection of soft power”.

Weekday Squib: Pashmina and plagiarism

What’s some cross-border plagiarism?

On January 10th this year, the Wall Street Journal carried a report by Vibhuti Agarwal on Pakistan’s taking issue an Indian move to register a Geographical Indicator tag for Kashmiri pashmina. Doing so would accord the real pashmina with legal protection, not least against those synthetic China-made shawls that make the exotic fabric affordable for all. Now, since pashmina is produced on both sides of the Line of Control, Pakistani manufacturers would stand to lose if they can’t sell their stuff as Kashmiri pashmina. That dispute is being sorted out by a tribunal.

There’s a post about this on a new blog started by reporters at Dawn, the well-regarded Pakistani newspaper. Ironically, in a post about an IPR dispute, it has taken a few lines from the WSJ report without due attribution. Here’s the Dawn blog:

The tribunal is expected to decide on the issue some time soon. It may bring it down to a compromise that allows both India and Pakistan to use the term or the tribunal may ask India to re-file a joint application with Pakistan. If the decision ends up in India’s favour, already bitter relations could get even worse. [The Dawn blog]

And here’s the original:

The tribunal is expected to decide on the issue as soon as mid-January. It may stitch together a compromise and allow both India and Pakistan to use the term. Or it may ask India to refile a joint application with Pakistan. Or it could sour relations further by declaring a victory for India. [WSJ]

Like the pashmina, not quite the same. But not that different either.

Update: The good people at the Dawn blog have since linked to the WSJ article.

Three thoughts for the Republic

On justice, trade for security and ending competitive intolerance

For reflection on Republic Day: No turns in justice; Security lies in trade; on putting an end to competitive intolerance;

Related Links: Three thoughts on Independence Day 2007, 2006, 2005, 2004 & on Republic Day 2007, 2006, 2005

Look East, and frown at Malaysia

Malaysia has the right to decide its own immigration policy. And India has the right to react

Update: Malaysia clarifies that there is no ban on Indian workers

It is laughable. A day after the Indian defence minister completes his trip to Malaysia, that country announces a ban on the intake of workers from India. Existing workers will be asked to return to India after their work permits expire. The Malaysian government took this decision—it claims—in late December 2007. It probably held back the announcement to ensure A K Antony’s visit took place. Yet, the timing of the announcement—a day after India agreed to train Malaysian air force pilots, among other things—should be embarassing for Mr Antony. Continue reading “Look East, and frown at Malaysia”

On recrafting Australia’s relations with India

It’s as much about institutional capacity as it is about issues of the day

Rory Medcalf from Sydney’s Lowy Institute for International Policy wrote an open letter to Australia’s new foreign minister. Excerpts:

Your Government has the opportunity to ensure that Australia becomes permanently serious about India, and to manage any ill-feeling that might arise in New Delhi from ruling out uranium sales.

Early reassurance, at the highest level, that Australia wants qualitatively improved ties with India. Any misperception that Australia might focus on China at India’s expense needs to be scotched.

Proper resourcing of Australia’s diplomacy with India: this has several facets. India is not just another country. The billion-plus scale of its population is echoed in its cultural and geographic diversity and the size and complexity of its mass media, political and business interests. In this context, and if your agenda is ambitious, the tradition of representing Australia’s interests in India with modest diplomatic, bureaucratic and financial resources cannot last. It is time to consider a full India branch in the Department of Foreign Affairs and Trade (DFAT) and a diplomatic presence beyond New Delhi. If Canberra sees fit to deploy diplomats (rather than narrowly-focused trade representatives) in Shanghai, Guangzhou and Hong Kong, why not Mumbai, Chennai or Kolkata? Finally, DFAT has not cultivated a single Hindi-speaker in a decade. Yes, India’s elite speaks English. But much of the political life of the country uses the vernacular, and to consider it not to be worth schooling a single Australian diplomat in that language is a false economy, not to mention an insult to a major world civilisation. (Hindi is also a backdoor to Urdu, and Australia’s diplomatic and security agencies desperately need talent in that language.) [Lowy Interpreter]

Medcalf’s arguments echo what this blog wrote during the Mohammed Haneef imbroglio: Australia must invest in institutional capacity that to engage India. Mr Stephen Smith would do well heed the contents of Rory Medcalf’s memo.

Narendra Modi’s foreign affairs

The Gujjus of Astrakhan

Newspaper columns this week are mostly about Narendra Modi, and mostly about domestic issues. Those interested in foreign affairs will find K P Nayar’s piece in The Telegraph of interest:

While India’s strategic community and sections of the media have been obsessed with the India-United States of America nuclear deal, it has largely escaped their attention that Modi travelled twice to Moscow to cash in on traditional Indo-Russian links, going against the recent fashion in New Delhi of running down such commercial-cum-cultural ties with Russia in an eagerness to suck up to Washington. No one should be surprised if it is Modi who has the last laugh at the Americans, who denied him a visa in a moment of extreme bad judgment and short-sightedness in Washington. Continue reading “Narendra Modi’s foreign affairs”