Thursday, May 28, 2015

First Year: Modi Invigorates Indian Economy and Foreign Policy

Lisa Curtis

Marking one year in office this week, Indian Prime Minister Narendra Modi gets high marks for reviving India’s foundering economy and energizing foreign relations with global powers and regional neighbors. The government has experienced some setbacks in implementing its ambitious agenda, like failure (so far) to pass the land acquisition and GST bills, but overall the scales tip toward a largely successful first year. This is good news for the U.S., which is rooting for India to develop a more robust economic, political, and military role in the region and beyond.

With the growth rate projected at 7.5 percent (outpacing China for the first time in 15 years), inflation down, and the current account deficit shrinking, Prime Minister Modi has stuck to his campaign pledge to revive the Indian economy. The opening of the insurance and defense markets and aggressive push of the “Make in India” campaign is generating optimism that the government is moving in the right direction on the economy.

Equally impressive have been Modi’s foreign policy accomplishments. Logging 19 foreign trips, Modi has reasserted India’s role as a regional and global power. While prioritizing moving the U.S.-India relationship on a firmer footing, he also has methodically built up ties with Asian partners like Japan and Australia and tended to relationships with neighbors, Sri Lanka, Bangladesh, and Nepal.
Remarkably, PM Modi and U.S. President Barack Obama held two rounds of meetings within a five-month period, including Obama making the first-ever U.S. appearance as Chief Guest at India’s Republic Day parade. The two sides made progress on military cooperation, agreeing to renew the 10-year Framework for the U.S.-India Defense Relationship and announcing joint projects, including the co-production of unmanned aerial vehicles (UAVs) and specialized equipment for military transport aircraft and establishment of contact groups to explore co-development of aircraft carrier and jet engine technology.

Although characterized as a “breakthrough in understanding,” the two sides made less progress than meets the eye on the Indo-U.S. civil nuclear deal. U.S. companies are still wary about investing in India’s civil nuclear sector, indicating there remain serious sticking points on the liability issue.

Forming the backdrop of progress on Indo-U.S. defense and strategic ties is undoubtedly the military and economic rise of China. One of the most striking aspects of Obama’s India visit was their joint statement on cooperation in the Asia Pacific, including a reference to the South China Sea, an unambiguous upbraiding of China’s increasingly assertive posture on its maritime claims.

Modi’s highly productive visit to Japan last fall was an elaboration of his strategy to strengthen India’s hand with regard to the China challenge. During that visit, PM Modi and Japanese Prime Minister Shinzo Abe agreed to elevate their dialogue to a “Special Strategic and Global Partnership” and Japan committed to investing $35 billion in Indian projects over the next five years.

He also was the first Indian prime minister to visit Australia in 30 years, a further example of his bold foreign policy agenda. He addressed the Australian parliament and talked about the two countries being natural partners who both depended on the oceans as “lifelines.”

Modi’s successful visit to China earlier this month can be viewed as a vindication of his tougher policy on their border disputes. While speaking candidly about their unresolved border issues, Modi also courted Chinese trade and investment. The two countries signed 24 agreements and nearly $30 billion in business deals. He stopped short of accepting China's invitation to join its “One Belt, One Road” initiative, however, demonstrating they will continue to compete for regional influence.

The Modi government has made some headway on the goal to modernize and bolster the military. It raised defense spending by 11 percent to around $40 billion for the Indian fiscal year beginning April 1st, although defense analysts generally view this figure as still too low, especially when compared to the $140 billion China spends annually on its defense. The finalizing of the fighter jet deal with France accomplished during Modi's visit there last month will help India in its modernization push. Raising FDI caps in the defense sector could eventually help to indigenize Indian defense production, but poor infrastructure, continued bureaucratic obstacles, and failure to allow the private sector to lead the way on research and technological innovation will hinder significant progress and guarantee India continues to rely primarily on imports for its defense requirements.

Backtracks on Pakistan and Religious Freedom

Relations with Pakistan have been on a downward trajectory ever since Modi called off Foreign-Secretary level talks last summer due to a Pakistani official’s meeting with Kashmiri separatists. There has been an uptick in cross-border firing with Pakistani forces along the Line of Control and a slight increase in terrorist activity in Kashmir over the last several months.

Pakistan has done its part to contribute to the downward spiral in relations by releasing from jail in April the mastermind of the 2008 Mumbai attacks, Zakiur Rehman Lakhvi.

A crisis with Pakistan would distract Modi from his broader foreign policy agenda. But New Delhi would also likely win international sympathy, particularly if Pakistan-based terrorists precipitated the crisis as in the three-day terrorist siege of Mumbai in 2008.

Another issue on which there has been some disappointment with Modi is that of religious freedom. He was late in reining in some of the hardcore Hindutva elements of his party when they pursued mass conversion ceremonies in which Muslims and Christians are converted to Hinduism. The so-called “reconversion” ceremonies and a spate of desecrations of churches in New Delhi last December put Modi on the spot.

He responded by reaffirming his government’s commitment to religious freedom during a speech to Christian leaders in February and has apparently quietly discouraged the reconversion ceremonies. But he must find more opportunities to demonstrate he has left communal politics behind for good and will focus instead on protecting religious minorities.

Ready to Assert Influence

U.S. officials look to India to project power and influence in the Asia Pacific to help promote free trade and a stable, democratic order. An assessment of the Modi government’s first year on the job indicates India is beginning to take on this role more readily.

The author is Senior Research Fellow at The Heritage Foundation.
(The Heritage Foundation, United States & VIF have a collaboration on matters of mutual interest)

Published Date: 28th May 2015, Image Source:

Wednesday, May 27, 2015

US Remains Central to China's Military Strategy

Nitin A Gokhale, 
Editor & Senior Fellow, VIF

Two almost simultaneous announcements in Beijing on Tuesday gives a glimpse into China’s greater emphasis on expanding its navy and taking all its adversaries in the volatile South China area head on. While the much awaited white paper on "China's Military Strategy", issued by the State Council Information Office, spoke about greater naval presence further from its shores, the foreign ministry also announced the construction of two lighthouses on Huayang and Chigua reefs in the Nansha Islands.

The two 50-meter lighthouses, with lanterns of 4.5 meters in diameter, are designed to have a light range of 22 nautical miles. China must fulfill international obligations on maritime search and rescue, disaster prevention and mitigation, marine research, meteorological observation, environmental protection, navigation security and fishery production,” a foreign ministry spokesperson said in Beijing. This comes a week after the United States flew reconnaissance planes over these islands, eliciting strong protests from China.

"A tiny few maintain constant close-in air and sea surveillance and reconnaissance against China," the white paper said. "It is thus a long-standing task for China to safeguard its maritime rights and interests.” Although the white paper avoided naming smaller countries like Vietnam and Philippines it pointedly named the United States and Japan, and was explicit in its aim of increasing Chinese Naval combat power. The paper, said the PLA Navy would gradually expand its "offshore waters defence" to include "open seas protection".

“As the world economic and strategic center of gravity is shifting ever more rapidly to the Asia-Pacific region, the US carries on its "rebalancing" strategy and enhances its military presence and its military alliances in this region. Japan is sparing no effort to dodge the post-war mechanism, overhauling its military and security policies. Such development has caused grave concerns among other countries in the region. On the issues concerning China's territorial sovereignty and maritime rights and interests, some of its offshore neighbours take provocative actions and reinforce their military presence on China's reefs and islands that they have illegally occupied. Some external countries are also busy meddling in South China Sea affairs; a tiny few maintain constant close-in air and sea surveillance and reconnaissance against China. It is thus a long-standing task for China to safeguard its maritime rights and interests,” the paper warned.

A report in the US had claimed last week that China electronically jammed Global Hawk long-range surveillance drones spying on China's Nansha Islands, a possible attempt to capture it by causing one to crash in shallow waters, or to snatch one in flight using a manned aircraft.

This reports became public even as a US P-8A anti-submarine and maritime surveillance aircraft flew Nansha Islands last Wednesday. Two days after the incident, Hong Lei, a spokesman for China's Ministry of Foreign affairs told a regular press conference: “"The reconnaissance conducted by the US military aircraft poses a potential threat to the security of China's maritime features, and is highly likely to cause miscalculation, or even untoward maritime and aerial incidents."

The white paper, much different from the one issued two years ago, reflects China’s growing self-confidence as one of the two major players (the other being the United States) in internal affairs. Unlike the 2013 paper, China has once again spoken about not entering into a nuclear arms race. “The nuclear force is a strategic cornerstone for safeguarding national sovereignty and security. China has always pursued the policy of no first use of nuclear weapons and adhered to a self-defensive nuclear strategy that is defensive in nature. China will unconditionally not use or threaten to use nuclear weapons against non-nuclear-weapon states or in nuclear-weapon-free zones, and will never enter into a nuclear arms race with any other country,” the paper says.

The paper has no direct mention of India although one line—“Certain disputes over land territory are still smoldering,”—is a dead giveaway since China has only two land boundary disputes pending. One is with the tiny Bhutan and the other with India. The other big takeaway is China’s open acknowledgement about trouble within its own border—in Tibet and in Xinxiang. “China faces a formidable task to maintain political security and social stability. Separatist forces for "East Turkistan independence" and "Tibet independence" have inflicted serious damage, particularly with escalating violent terrorist activities by "East Turkistan independence" forces,” the paper admits.

Interestingly, the white paper outlines new requirements for national defence. “In response to the new requirement of safeguarding national security and development interests, China's armed forces will work harder to create a favorable strategic posture with more emphasis on the employment of military forces and means, and provide a solid security guarantee for the country's peaceful development. In response to the new requirement arising from the changing security situation, the armed forces will constantly innovate strategic guidance and operational thoughts so as to ensure the capabilities of fighting and winning. In response to the new requirement arising from the worldwide RMA, the armed forces will pay close attention to the challenges in new security domains, and work hard to seize the strategic initiative in military competition. In response to the new requirement coming from the country's growing strategic interests, the armed forces will actively participate in both regional and international security cooperation and effectively secure China's overseas interests,” the paper reveals and goes on to outline the following tasks for its armed forces:

  • To deal with a wide range of emergencies and military threats, and effectively safeguard the sovereignty and security of China's territorial land, air and sea;
  • To resolutely safeguard the unification of the motherland; -- To safeguard China's security and interests in new domains;
  • To safeguard the security of China's overseas interests;
  • To maintain strategic deterrence and carry out nuclear counterattack;
  • To participate in regional and international security cooperation and maintain regional and world peace;
  • To strengthen efforts in operations against infiltration, separatism and terrorism so as to maintain China's political security and social stability; and
  • To perform such tasks as emergency rescue and disaster relief, rights and interests protection, guard duties, and support for national economic and social development
Commenting on the white paper The Global Times had a curious conclusion: It said on Wednesday: “All rising powers need strategic space. Different from emerging powers in the past, China has been trying hard to avoid a zero-sum game and achieving win-win situations has become the underlining concern of China's strategy. We have been well aware that if the expansion of China squeezes the strategic space of others, the peaceful rise of China is unlikely to reach and conflicts will be unavoidable. Therefore, China must realize strategic breakthroughs through win-win solutions.

“Are the US and Japan willing to achieve win-win with China? There is no proof that China's expanding construction on reefs and islets of the Nansha Islands is aimed at excluding US influence from the region, but the US, hopping mad about China's legitimate action, has clamored to hold China back. If the US perceives China's rise with such strategic thinking, the bilateral relationship in the 21st century will be shrouded in shadow.

“The white paper makes China's military more transparent. We hope this will help promote communication between China and the US.”

Clearly, the United States and its presence in Asia-Pacific, continues to remains at the centre of China’s military strategy.​

Published Date: 27th May 2015, Image Source:

Tuesday, May 26, 2015

The Trajectory of India’s Nuclear Deterrence since May 1998

Brig Gurmeet Kanwal, 
Visiting Fellow, VIF

India conducted five nuclear tests over two days on May 11 and 13, 1998, and declared itself a state armed with nuclear weapons. Since then, India’s nuclear deterrence has been effectively operationalised.

With a pacifist strategic culture steeped in Gandhian non-violence, India is a reluctant nuclear power. It shares borders with China and Pakistan, two nuclear-armed neighbours, with both of which it has territorial disputes. India had sought but had been denied nuclear guarantees and had no option but to acquire nuclear weapons. India believes that nuclear weapons are political weapons, not weapons of warfighting. Their sole purpose is to deter the use and threat of use of nuclear weapons.

India’s nuclear doctrine is built around the concept of ‘credible minimum deterrence’ and a ‘no first use’ posture. As a corollary to its ‘no first use’ posture, India has declared its intention of launching massive retaliation following a first strike on India. Consequently, India follows a policy of ‘deterrence by punishment’ through a ‘counter value’ targeting strategy aimed at inflicting unacceptable damage, as against a ‘counter force’ strategy aimed at destroying the adversary’s nuclear forces.

Over the last decade and a half, some analysts have questioned the desirability of absorbing punishment in a first strike. The BJP’s manifesto for the 2014 elections to Parliament had promised to review the doctrine; however, Narendra Modi, the BJP’s candidate for the post of Prime Minister, was quick to announce that India’s ‘no first use’ pledge will not change.

India’s nuclear force structure is based on a land, sea and air-based triad: Prithvi I & II SRBMs and Agni-I to IV IRBMs manned by the Missile Groups of the Indian Army; nuclear glide bombs under-slung on Mirage 2000 and SU-30 MKI fighter-bomber aircraft of the Indian Air Force; and, in due course, SLBMs on SSBNs with the Indian Navy. While INS Arihant, the first indigenously designed SSBN, is undergoing sea trials at present, the second SSBN is reported to be under construction.

India has willingly abjured the use of ‘tactical’ or ‘battlefield’ nuclear weapons as these are inherently destabilising. Tactical nuclear weapons are mainly employed against armed forces targets in the TBA (tactical battle area) and tend to lower the threshold of use due to the proclivity to ‘use them or lose them’. These also involve complicated command and control mechanisms, enhance the risk of unauthorised and accidental launches and are complex and costly to manufacture and maintain.

The total number of warheads that India needs for credible minimum deterrence in a no first use scenario, has not been articulated by the government. In the views of Indian analysts the requirement varies from a few dozen warheads at the lower end of the scale to over 400 warheads at the upper end. In terms of yield these range from 10 to 12 kilotons to megaton monsters.

After the Pokhran nuclear tests of May 1998, in which warheads based on both fission and fusion designs were tested, India claimed that it had acquired the capability to manufacture nuclear warheads with yields varying from sub-kiloton to a maximum of 200 kilotons. Notably, India’s nuclear capabilities are completely indigenous despite the stringent technology denial regimes and sanctions that India has been subjected to since 1974 when a ‘peaceful nuclear explosion’ (PNE) was conducted ostensibly for civilian purposes. While some of these sanctions have been lifted, many others still remain in place.

Unlike in China, which has an authoritarian regime, and in Pakistan, where the army calls the shots on key policy issues, India’s nuclear weapons are firmly under civilian control. The Nuclear Command Authority (NCA) is the apex body of India’s nuclear command and control system. The Political Council of the NCA is chaired by the Prime Minister. All policy decisions, including the decision to employ nuclear weapons, are vested in the Political Council. The Executive Council is headed by the National Security Advisor (NSA). It provides inputs to the Political Council for nuclear decision making and executes its directives.

The Chiefs of Staff of the army, the navy and the air force are members of the Executive Council, but India does not yet have a Chief of Defence Staff to provide single-point military advice to the government. It is imperative that the appointment of CDS be approved as early as possible. The Strategic Planning Staff provides secretariat support to the NCA and the NSA.

The Commander-in-Chief, Strategic Forces Command (SFC) advises the Chiefs of Staff Committee (CoSC) on all aspects of nuclear deterrence and exercises operational and technical control over the nuclear forces. The nuclear delivery assets (ballistic missiles groups, fighter-bomber squadrons and the SSBNs) are raised, manned, equipped and maintained by respective Services HQ.

A chain of succession has been formulated. India has established a National Command Post (NCP) that will also act as a tri-Service operations centre during war. Rehearsals and joint exercises involving simulated retaliatory nuclear strikes are carried out periodically.

Adequate checks and balances for the safety and security of nuclear warheads, the prevention of unauthorised use and the minimisation of the possibility of accidental detonation have been built into standard operating procedures (SOPs) for the custody, storage, handling and transportation of nuclear warheads during peace time. Nuclear warheads are kept unmated and are stored separately from the launchers. The nuclear cores are in the custody of personnel of the Atomic Energy Commission (AEC) and the high explosive triggers are in the custody of the Defence Research and Development Organisation (DRDO).

With the ‘cannisterisation’ of some of the ballistic missiles carried on mobile launchers, it would be prudent to assume that limited mating of warheads would have taken place, but with permissive action links (PALs – electronic locks) having been installed to arm the missiles and the warheads. The launch platforms are manned by the armed forces and are not deployed till necessary. This reduces the risk of accidental and inadvertent launch and enhances peace time safety.

India has consistently been a strong advocate of total or universal nuclear disarmament. This policy, enunciated by the Nehru government after independence in 1947, did not change even after the Pokhran tests of May 1998 as nuclear disarmament is seen to be in India’s interest. Despite not having signed the NPT, the CTBT and the MTCR, India has complied with all the provisions of these treaties and supports the early conclusion of discussions on the FMCT.

India views these international treaties as important enablers of non-proliferation, arms control and disarmament measures that are necessary for regional and international peace and stability. India has voluntarily renounced further nuclear testing and has an unblemished non-proliferation record among the nuclear weapons powers.
India has invested deeply in strategic stability; this is reflected in the nuclear doctrine, the no first use posture, the force structure and the arrangements for command and control. India has never flaunted its nuclear weapons and has exercised immense strategic restraint despite grave provocation, particularly from Pakistan – by way of a quarter century old proxy war being conducted through state-sponsored terrorism.

The Indian government opted not to cross the LoC during the Kargil conflict in 1999. In the 2001-02 stand-off, though the armed forces were mobilised, India did not retaliate militarily despite a terrorist attack on the country’s Parliament in December 2001 and on the army’s family quarters at a base in Jammu and Kashmir. Since then, a major terrorist strike was launched by the ISI-backed LeT on multiple targets in Mumbai in November 2008. However, neither the Indian political leadership nor the people of India are likely to tolerate another major terrorist strike that is sponsored by the Pakistan government or any of its organs. Military retribution for such a strike will inevitably follow.
India is willing to discuss and institute nuclear confidence building measures (CBMs) and nuclear risk reduction measures (NRRMs) with both China and Pakistan, but its overtures have not been suitably reciprocated by either of them. In fact, China still does not recognise India as a nuclear power and refuses to discuss nuclear CBMs. The nuclear CBMs in place with Pakistan are cosmetic in nature and need to be upgraded to more substantive ones.

India’s conduct as a responsible nuclear power was recognised in the US-India Civil Nuclear Cooperation Agreement signed by Prime Minister Manmohan Singh and President George W. Bush in July 2005. Since then, India has signed and ratified an Additional Protocol to its safeguards agreements with the International Atomic Energy Agency (IAEA) and placed its nuclear reactors under international safeguards, with the exception of those that are committed to the nuclear weapons programme. India has now fulfilled all obligations necessary to be given membership of the NSG, the MTCR, the Australia Group and the Wassenaar arrangement as a state armed with nuclear weapons.

Monday, May 25, 2015

Firm Correctness will yield Positive Results with China

Amb Prabhat P Shukla, 
Distinguished Fellow, VIF

A clear-eyed assessment of the Prime Minister’s visit to China from 14 to 16 May must conclude that it has its pluses, no doubt, but there are also negatives that require attention. This will entail a detailed discussion on three major aspects of the visit: the border question, the economic engagement, and the broader strategy underlying the approaches of the two countries.

Before that, however, a few words would be in order to discuss some of the other aspects of the visit. The protocol, for instance, was remarkable. Probably not since Nehru has an Indian leader been given this level of attention and warmth – and publicity. This last being totally controlled, it is clear that all of this had official sanction. The words used by President Xi Jinping rang true, and surely reflected the good feelings he had after his warm reception in India last September.

However, there were sour notes too, and all of them came from The Global Times, which has consistently been sceptical and even hard-line on India. Accusing Modi of “little tricks” along the border, revealing that he had prevented the BJP President from meeting the Dalai Lama – a plus from the Chinese side, but embarrassing for the Prime Minister within the country - all these were meant to apply a corrective to the positive build-up to the visit. In similar vein, there was the display on Chinese TV of the map of India, without J&K and Arunachal.

This time there were no incidents along the border areas, as happened both when Li Keqiang came here in 2013, and when Xi came in 2014; from press accounts, this was because there was regular contact at high levels between the border commands and units on both sides in the run-up to the visit.
Based on just the above evidence, and there is more, it would not be too far-fetched to suggest that there is some policy debate on how to approach relations with India among the Chinese leaders. This itself is nothing to be surprised at: the former Secretary-General of the Ministry of External Affairs, RK Nehru, who had served as Ambassador to China in the 1950’s and continued to deal actively with them as Secretary-General in the early 1960’s, and was seen as too willing to conciliate, admitted in later years that they had all missed the internal differences within the Chinese leadership, and hence were unable to see the war coming in 1962.

Notwithstanding all the sniping, what is an undoubted gain from the visit is the good personal rapport that Mr Modi has achieved with both the top Chinese leaders. And, barring the unforeseen, they will have at least another four years in which to leverage these relations to get past the problems clouding the bilateral ties. In fact, it is probably the warm personal ties that have enabled Modi to speak bluntly and publicly on these issues, in a way no previous Indian leader has done. It is also a reflection of the developing trust at the leaders’ level that has enabled some forward movement on the operational matters that are reflected in the Joint Statement issued during the visit.

And yet, the frank words of Modi appear not to have registered. His call to China to take the strategic view, and to re-evaluate its policies on issues that are holding back ties quite clearly did not carry persuasion with his hosts. We have only Modi’s own word that the Chinese leaders were “responsive” – and even that does not tell us much. To the contrary, the leadership pair in China both had almost identical words to describe what they wanted from India – to steer the global situation in a more democratic and fair direction. This is treated in detail a bit later. Also worth a mention is that the recommendation favouring a strategic and long-term view emanated from Xi Jinping, during their meeting in Xian.

The Chinese were more forthcoming than in the past on India’s membership of international and regional organisations. Thus we have, for the first time, positive references to the Nuclear Suppliers’ Group (NSG); to the Shanghai Cooperation Organisation (SCO); and to the Asia-Pacific Economic Cooperation (APEC) organisation; and, of course, there was the standard formulation on the UN Security Council (UNSC) permanent membership.

But here, a comparison with the formulations used with the Pakistanis during the visit of President Xi in the month of April will sober up the more optimistic interpretations. Whereas the Chinese agreed to “actively support” Pakistani membership in SCO, they only welcomed India’s application. And for the UNSC, what they have agreed to over the years for India, is negatived by the terms used with the Pakistanis, where they call for any change to accommodate the concerns of all the members, and to be adopted only after obtaining “extensive support” among the member-states. In effect, they are endorsing the position of those member-states, like Pakistan, who oppose any new permanent members of UNSC.

There is also talk of an Asian Security Concept in the Joint Statement issued with Pakistan. The exact words in the document are, “[t]hey will actively advocate the Asian security concept featuring common, comprehensive, cooperative and sustainable security.” What this means is not clear, and this concept does not feature in the statements made by the Chinese leaders on their Asian or general foreign policy.

Anyhow, Pakistan figured in the pre-visit activity as well: the Indian side had lodged a demarche against Chinese activity in Pakistan-Occupied Kashmir, as most recently declared under the China-Pakistan Economic Corridor. Equally important, the US had also stated, on the eve of Modi’s visit, that China was violating its NSG commitments by continuing to supply nuclear reactors to Pakistan. Again, there is no indication that any of this was raised in the talks, either in Xian or Beijing.

Then there are the hoary old chestnuts that have been mentioned in our joint documents over the years, even though they have become devoid of any meaning owing to the actions of the two countries. One such is the commitment to respect the sensitivities and concerns of the other side. How much operational significance this has was on display during President Xi’s visit to Pakistan, just about a month before Modi arrived in Xian. The CPEC has already been mentioned; there are also references in the China-Pakistan Joint Statement to Pakistan’s record of promoting peace in the region, to its mainstreaming its non-proliferation activities. And just a few days ago, Prince Turki al-Feisal, the former Saudi intelligence head, announced that they were looking to Pakistan to supply nuclear weapons, to enable them to keep up with Iran.

What was new this time was a stand-alone statement on climate change. In a sense, this was a mirror-image, or response, to the US-China statement on the subject, issued in November 2014, when President Obama visited China for the APEC Summit. China has moved forward a bit, by declaring a peaking year, but little else; we have not even committed to a peaking year. And yet, both are committed to providing some commitments, not later than October, for the coming Paris Conference of Parties in the first half of December 2015. The principles are well-recognised, but it would appear that both countries have agreed to providing the so-called Intended National Development Contributions.

While on the subject of the Environment, the continuing discussion on trans-border rivers finds it usual place in the press-meet and the joint document. The bigger problem is the Chinese plan for diverting some of rivers. This has not been reflected in any of the materials publicly available, and it would be understandable that China would resist any discussion, much less a commitment, on this score.

With the above as background, it is time to turn to the three main outcomes of the visit. The first concerns economic and business ties. It is clear that, at least since the September 2014 visit of President Xi, this component has become the most important aspect of our overall ties. In the words of the 2014 Joint Statement, “[t]he leaders agreed to make this developmental partnership a core component of the Strategic and Cooperative Partnership for Peace and Prosperity”.

Before going further into this, it would be useful to examine the state of the Chinese economy. This will help understand what they are trying to achieve in their economic strategy. The headline fact is that the economy is slowing down, and quite rapidly. This is coming after a spectacular burst of growth in the last three decades, and so some slowing down is natural – the base effect in reverse. But what is coming to the fore is the structural flaw in the development model – with its excessive dependence on Government-led investment, and export of the FDI-led manufacturing capacity. Since the days of Premier Zhu Rongji, the Chinese leaders have been talking about the need to change these fundamentals, and move to a greater reliance on domestic consumption, and services. Not much has changed despite policy pronouncements.

Investment, now financed by credit, is still the dominant factor in the growth of the economy. This, in turn, has led to a situation where the national debt is $ 28 trillion – close to 300 per cent of the GDP. Its external debt is another $1.6 trillion. Together, these numbers dwarf the foreign currency reserves, and these themselves are also falling – from a peak of a bit over $4 trillion, they are now down to $3.7 trillion. In absolute terms, and in trend, these are not healthy numbers, and no one is more open about it than the Chinese leaders themselves.

The foreign reserves are also largely committed, and would not normally be liquidated in a hurry. Just over $1 trillion is committed to US Government bonds, plus a little more in GSE’s – Government-Sponsored Enterprises – Fannie Mae and Freddie Mac. Add the amounts committed to Africa, South America, Pakistan, the BRICS funds, the Asia Infrastructure Investment Bank, and the Silk Road Fund, and that gives some idea of the true picture of the Chinese economy. Not all of this is to be spent immediately, of course, but all this gives a better idea of the amounts available for future investments. In fact, the numbers for India are not very encouraging so far – each has invested some $300 million in the other country so far.

In the real economy, too, the situation is a source of concern to the Chinese leaders. Corporate profits are declining, and the Housing sector [accounting for some 20per cent of the economy – by contrast, the Housing sector was less than 10 per cent of the US economy in 2008] is also stagnant or heading down. There have already been the early defaults on corporate loans, and there is the danger of more to come. The People’s Bank of China has cut interest rates thrice in the last six months, and dropped the Reserve Ratio Requirement for the banks.

The export sector is also showing signs of stagnation. Although the balance of trade is as high as ever, there are two noteworthy features of this. One is that turnover is declining, and the balance is positive only because imports are falling faster than exports. The second is that, but for the surplus with the US, China’s overall trade balance would be negative with the rest of the world. And given the shifting policies in the US, especially the prospect of higher interest rates, the Chinese want to reduce their dependence on the US.

This is one of the senses in which India becomes important. It is one of the few partners of China whose trade turnover is increasing [or at least not falling, depending on whose figures one looks at], in contrast, say, to Brazil or even Russia. And it is one of the few countries which is providing increasing surpluses to China. True, the scale is small, but the prospects are for even better days to come – one estimate is that the deficit India will face by FY 2018 could be $ 60 billion, if correctives are not put in place.

The idea of this brief survey of the Chinese economy is not just to make a sober assessment of the reality [because it is so lacking in most of our commentary], but also to suggest that the narrative of the past few years needs to change in line with the new reality. China is not the unstoppable juggernaut, which is predestined to overwhelm the rest of the world; no, it has problems, and difficult ones. On the plus side, it also has a leadership that is not trammelled by internal pulls and pressures, and is therefore able to take tough corrective measures. Only, these are not working so far. Therefore, we should calibrate our exposure in line with the assessment we make of the future course of events.
Two final points: firstly, none of the foregoing is to deny the fact that Chinese investments in India would be helpful to India. This is particularly applicable to infrastructure, especially those areas that are deemed not vulnerable from the security angle. Roads and Railways have been identified as good prospects, and it should be possible to identify some other areas too. Selected port development would be a good candidate for several reasons.

And second, the trade deficit that we have faced for years now should be addressed. This has been under discussion over close to a decade, but resolution remains elusive. In a sense, a bilateral deficit is not necessarily bad, and even China has run deficits with many of the raw material suppliers who powered their economy in the last decade. But where the deficit is due to access issues, as in Indian Pharmaceuticals, or agricultural products, through Non-Tariff Barriers – there we have a legitimate complaint.

The next basket covers the border question. First off, there are two interlinked parts of the discussion here. The first is the border per se, the second is the Line of Actual Control [LAC]. The latter is easily disposed of; though the Indian side has raised this consistently, the Chinese have equally been firm on not answering our point. After 2006, that is, after the visit of President Hu Jintao, the Chinese have never even referred to the LAC in any joint document. This pattern was repeated both in September 2014 and this time as well. The Prime Minister raised the issue, but there was no reply, and no reference in the Joint Statement. It ought to be clear that they will not move on this issue. The background to this has been brought out in the public domain, and there is nothing more to add to that. The important point to note is that, in the absence of an agreed understanding of the LAC, all the agreements on managing the border areas since 1993 are meaningless.

As to the border, we have the 2005 Agreement on the political parameters and guiding principles, which set out the terms on which a settlement is to be reached. This Agreement has had a tangled history: shortly after it was finalised between Prime Minister Manmohan Singh and Premier Wen Jiabao, it was undermined by a statement by the Chinese Ambassador in Delhi who argued, on the eve of President Hu’s visit, that Arunachal Pradesh was Chinese – negating the agreement on not disturbing settled populations. Since then, the 2005 framework has been under continual challenge in different ways. Sometimes, it takes the form as mentioned, of questioning the status of Arunachal; at other times, the Chinese suggest that the India-China border is only 2000 km long, thus removing J&K altogether from the discussion; at still other times, it takes the form of maps which depict both J&K and Arunachal outside of India, as was done during Modi’s visit this time. On this last, there has been some defence of the Chinese action by arguing that they were doing no more than displaying their known claims. But that is like arguing that the Prime Minister could have met the Dalai Lama on the eve of his departure for China, since he does meet him from time to time anyway. No, it is perfectly possible to cover the news without displaying the map in full – the international TV channels have routinely done with the India-Pakistan and the India-China maps.

However, this was also the first time that there was no reference to the 2005 Agreement. It has been part of the liturgy of the India-China diplomatic engagement that the 2005 Agreement figures in all the summit-level documents. The first sign of dilution came in 2013, when Prime Minister Manmohan Singh went to Beijing in October. The joint document on that visit merely encouraged the two Special Representatives to continue their efforts to explore a framework for a settlement. This was the second summit with the new Chinese leaders, and Premier Li was the principal interlocutor.
This position was reversed during the visit of President Xi – this time dealing with a new Indian Prime Minister – and the document of September 2014 contains not just the usual formulations, but in stronger form. It repeated the 2005 Agreement’s original wording, and said that a settlement “shall” be pursued as a strategic objective – going further than even the words used in the 2005 Agreement. For good measure, President Xi, speaking at the joint press-conference with Mr Modi added that this should be done “at an early date”, a phrase that was cut out by some media outlets in China, including Global Times. Moreover, some weeks later, addressing the Australian Parliament, President Xi said that China had settled its land borders with 12 of its 14 neighbours, and was hoping to settle the other two as well – meaning India and Bhutan.

The omission of a reference to the 2005 Agreement, therefore, requires closer examination. Sadly, that will not be possible without some sense of how the negotiations went, and also who the principal negotiators were. What is worth noting is that, once again, it was in Beijing, and Premier Li was the principal interlocutor in Beijing, since President Xi had finished his engagement in Xian. But at the moment, there is not enough evidence to go any further than to note this curious development. It will, however, bear watching, how future documents treat of this issue.

What makes this all the more noteworthy is that this is happening at a time when India is subtly changing its position on Tibet, to make it more palatable to China. On the Indian side, since 2010, it has stopped making reference to both One China and to Tibet as part of China. While the former remains unchanged, the latter did change in 2014. In the context of the alternative route to Kailash-Mansarovar, the Indian side has taken to thanking the Government of the Tibet Autonomous Region of the People’s Republic of China for opening this route. To China, this is much the more important desideratum, since we have little to contribute on the Taiwan issue anyway. There is no evident reason for this shift in the Indian position, and there seems to be no pay-back.

Finally, the big picture: from the Chinese side, the principal purpose behind the outreach to India is to keep us from joining in the US Rebalance, and the new formations taking shape in the Pacific, most importantly the Trans-Pacific Partnership, which is the economic counterpart of the Rebalance. This was most evident in the remarks Xi made to the PLA top echelons after he returned home from India last September. Among other matters, he admonished them to understand the strategic situation shaping up around China, in an indirect reference to China’s growing diplomatic isolation in the region. The message was repeated when Prime Minister Modi was in China: both Xi and Li urged the two countries to work together to promote a more just and reasonable international order. According to the People’s Daily, ‘Xi called on the two countries to look at their ties from a long-term perspective, strengthen coordination on global and regional affairs, and "steer the international order to develop in a fairer direction"’.

Premier Li expressed similar aims; according to the South China Morning Post, “We have the ability to make the global political and economic order move in a more just and balanced direction,” Li said. It does not require much mind-space to recognise that the target of such remarks is the US.

The Chinese leaders have done more than just talk about the strategic challenge they face. To counter the Rebalance, they have put forward the Maritime Silk Road; to the challenge of the Trans-Pacific Partnership, from which they are excluded by design, they have advanced the Asia-Pacific Free Trade Area, under the aegis of APEC, in which they are one of the more influential players, though the US and Japan are also members, and reluctant about the Chinese initiative (there is also the Regional Comprehensive Economic Partnership, led by ASEAN, from which the US is excluded); and to the role of the IMF, the World Bank, and the Asian Development Bank, they have set up a counter-weight in the various Banks and Funds they have established. These are all admittedly on a smaller scale, but for now, the Chinese target areas are also smaller.

This is the dynamic in which the India-China summit took place. What is striking is that there is no word on any of these issues in the joint document, in stark contrast to the document issued after President Obama’s visit in January. President Xi did refer, in his meeting with Prime Minister Modi, to the similarities between our “Act East” and their Road-and-Belt proposal, but none of this finds reflection in the document. There is good reason for this: India appears in the Belt only in the context of the Bangladesh-China-India-Myanmar link, and this pre-dates the Road-and-Belt initiative. Elsewhere, India really does not figure, and the CPEC, apart from the sin of running through Indian territory under illegal occupation by Pakistan, also cuts across many of the schemes that would link India with Afghanistan and beyond. This is the strategic import of the Belt connections the Chinese are hoping to establish. Russia too is concerned about some of this, but is working to get itself into a position where it can play a blocking role where necessary – not with much success so far. As far as the Maritime aspect is concerned, it is equally clear that a more active Chinese presence in the Indian Ocean is contrary to our interests.

That is not all: the divergence of perception on maritime issues finds reflection in another way too. Over the years, especially since the new leaders took office in 2012-13, the common ground on the Asia-Pacific appears to be shrinking. In 2013, during the visit of Premier Li, there was detailed treatment of the subject, including a reference to the importance of the need for the “observance of the basic principles of international law”. From 2014 on, this has been whittled down, and this time it finds no place in the joint document.

This is where China looks to Indian policy choices with some sense of apprehension. Should India choose to throw in its lot with the US Rebalance and the TPP (and this does not mean an alliance]), as it appeared to do during the visit of President Obama in January this year, that would be a serious negative for China. As it is, much of the western Pacific region – Japan, the Philippines, Vietnam, and several other ASEAN countries, Taiwan – are moving closer to the US in the face of the new-found Chinese aggressiveness. Prime Minister Modi appeared to give his hosts some sense of comfort in his speech at Tsinghua University when he declared that the age of alliances had passed, and added that, “Neither of us can be contained or become part of anyone’s plans”.

Another absentee, equally important, is Afghanistan. And here, too, the pattern is the same. After the Li visit in 2013, we mentioned the importance of a settlement on Afghanistan which should be Afghan-led and Afghan-owned, a clumsy phrase that is now common coin. This time, there is not a word on this, although Prime Minister Modi referred to it in his remarks at the joint press-conference with Premier Li. Here the import is obvious and unsettling. As the western draw-down of forces proceeds, it is Pakistan and China, working together, that are seeking the dominant role, and in bringing the Taliban to a power-sharing arrangement with the new Government in Kabul. The China-Pakistan document issued in April 2015 at the end of the visit of President Xi, spoke of their agreement to strengthen their cooperation for promoting peace in Afghanistan and the region. The message in the absence of any reference to this issue here is that India does not have any role to play in Afghanistan, in Chinese calculations.

Putting all this together, it is clear that there is a difference in the strategic assessments and approaches of the two countries. From the Belt-and-Road drive to the border issue, with Afghanistan, river diversion, illegal dealings with Pakistan, and the trade deficit in between, the differences are material ones, and will need to be fixed – and this has not happened so far despite decades of effort. Prime Minister Modi, to his credit, has been open about these, and has not hesitated to send out the message in public. There is some evidence to indicate that President Xi is willing to make the extra effort needed, but this will also depend on the handling of these issues from the Indian side. Firm correctness will yield positive results.

The style of this last document is also worth noting. For the first time, there is none of the usual talk about Panch Sheel, and the earlier documents, none of which have been implemented in practice. The tone is more brisk, and states, early in the document, that it is the historic imperative (that should properly be historical imperative) that the two countries enrich their bilateral ties – and then gets down to business. As mentioned, the only significant omission in shearing the deadwood of the past verbiage is the 2005 Agreement. Hopefully, it will be restored to its proper relevance in future documents.

Published Date: 25th May 2015, Image Source:

Putting India Emphatically on Global Map

Amb Kanwal Sibal, 
Dean, Centre for International Relations and Diplomacy, VIF

Prime Minister Modi has surprised his own people and, no doubt, external observers, by his foreign policy activism since he took office. In his year in power he has travelled abroad 16 times- and 19 if the forthcoming visits to China, Mongolia and South Korea are included- inviting some criticism that these peregrinations have meant less attention devoted to domestic affairs. This is misplaced criticism because today, with the change in the nature of diplomacy, the heads of governments play a critical role in external affairs. Frequent personal contacts at the highest political level have now become the norm, leaders often are on first name terms and difficult knots are untied by exertions at their level, sometimes in an unorthodox manner. Modi, even if seemingly inexperienced in the foreign policy domain, has had to, therefore, wade into the deep waters of diplomacy as soon as he took over because his position has demanded this. But no one was prepared for a Modi with a natural flair for diplomacy, to which he has brought a surprising degree of imagination and self-assurance. From the start, he seemed to have a clear idea of where the interests of his country lay and the initiatives needed to advance them.

All Indian Prime Ministers on taking over give priority to ties with neighbouring countries. The belief is that either India has neglected its neighbours or has been insensitive and overbearing, leading to their alienation and consequent opportunities for external powers to intervene at the cost of India’s interests. Modi too began by reaching out to the neighbours, but in a manner not anticipated. He invited all the SAARC leaders to his swearing-in, with the intention no doubt to signal that his elevation to power would usher in a new era of South Asian relations, that the clear victory in elections of a supposedly nationalist party did not denote a more muscular policy towards neighbours and that, on the contrary, India intended to work together with them to move the whole region forward towards peace and prosperity. This gesture had most meaning for India-Pakistan relations, and Nawaz Sharif’s decision to attend the swearing-in was “rewarded” with the announcement of FS level talks between the two countries.

Continuing the emphasis on the neighbourhood, he chose Bhutan as the first country to visit in June 2014. This made sense as Bhutan is the only neighbour that has not played an external card against us or politically resisted building ties of mutual benefit. His August 2014 visit to Nepal made a notable impact in local political and popular thinking about India as a well-wisher. His extempore address to the Nepalese parliament was a tour de force. He handled sensitive issues during his visit with finesse and played the cultural and religious card dextrously. External Affairs Minister Sushma Swaraj visited Bangladesh in June 2014. A very notable development is the approval of the Land Boundary Agreement with Bangladesh approved by the Indian parliament in May 2015. Modi visited Myanmar in November 2014 to take part in the East Asia summit and for bilateral discussions with this strategically placed neighbour whose honeymoon with China is waning.

SAARC figures prominently in Modi's foreign policy vision. He invited all SAARC leaders to his swearing-in ceremony, which was unprecedented. It is true that SAARC is one of the least integrated regions economically speaking, which means that the potential of the region remains unexploited. This also means that external actors find it easier to intrude into the loose equations in the subcontinent. While in terms of aspirations for the region, Modi is right in imagining a more tightly textured SAARC, India’s capacity to do this is limited in the face of Pakistani recalcitrance. A strengthened SAARC means a stronger Indian role in it, which is anathema to a Pakistan that is obsessed with countering Indian “hegemony” in South Asia. Pakistan will be reduced to its true importance if it ceases to confront India, which is why it will continue its confrontational policies. it also means that Afghanistan will not be adequately integrated into SAARC structures as that is contingent on Pakistan’s willingness to facilitate access to this landlocked country. At the Kathmandu SAARC summit in November 2014, Modi encouraged neighbours to benefit from opportunities provided by India’s growth, promised a special funding vehicle overseen by India to finance infrastructure projects in the region and announced India’s readiness to develop a satellite specifically for the region by 2016. He warned at the Kathmandu summit that regional integration will proceed with all or without some, which suggested that if Pakistan did not cooperate, others could go ahead without it, though under the SAARC charter this is not possible and other countries may not support a strategy of isolating Pakistan.

Modi seems to admire China’s economic achievements, which would not be surprising given China’s spectacular rise. His several visits to China as Gujarat Chief Minister no doubt gave him familiarity with the country and take its pulse. His view that economic cooperation is the key driver in relations between countries and that all countries give more importance to economic growth and prosperity for their peoples than creating conditions of conflict evidently guides his thinking towards China. He was quick to court China after assuming power, with reinforcement of economic ties as the primary objective. The huge financial resources at China’s disposal, its expertise in infrastructure building, its need for external markets for off-loading the excess capacity it has built in certain sectors has made cooperation with China a theoretically win-win situation. The Chinese Foreign Minister was the first foreign dignitary to be received by Modi. He invited the Chinese President to make a state visit to India in September 2014, during which unprecedented personal gestures were made to him in an informal setting in Ahmedabad on Modi’s birthday. This imaginative courting was marred by the serious border incident in Ladakh coinciding with Xi’s visit- one more case of China reaching out to India and simultaneously staging a provocation so that India remains unsure about China’s intentions and finds it difficult to make a clear choice about what policy to pursue, and in the process has to accept faits accomplis that are to China’s advantage.

Unlike the timidity of the previous government to treat such incidents as acne on the beautiful face of India-China relations, Modi raised the border issue frontally with XI at their joint press conference, expressing “our serious concern over repeated incidents along the border”. His call for resuming the stalled process of clarifying the Line of Actual Control (LAC) and mention of “India's concerns relating to China's visa policy and Trans Border Rivers” while standing alongside Xi Jinping at the joint press conference indicated a refreshing change from the past in terms of a more open expression of India’s concerns. With regard to Bangladesh-China-India-Myanmar Economic Corridor that China has been pushing hard, Modi was cautious. Why we accepted to discuss such a proposal in a working group in the first place is a puzzle. Engagement with China ought not to mean that we let it set the agenda when the downsides to us of what it seeks are clear. Equally importantly, he did not back another pet proposal of Xi: the Maritime Silk Road, which is a repackaged version of the notorious “string of pearls” strategy, as the joint statement omitted any mention of it. Since then China is pushing its One Belt One Road (OBOR) proposal which seeks to tie Asian and Eurasian economies to China, create opportunities for Chinese companies to bag major projects in this region financed by the Asian Infrastructure Investment Bank (AIIB) that China has floated. This ambitious concept is intended to establish China’s hegemony in Asia and outflank India strategically.

On a more positive side, during Xi’s visit, the two sides agreed to further consolidate their Strategic and Cooperative Partnership, recognised that their developments goals are interlinked and agreed to make this developmental partnership a core component of this partnership. It defies logic that a country that is considered as our most serious adversary and whose policies in our region has done us incalculable strategic harm should have been accepted as India’s strategic partner during Manmohan Singh’s time. Such a concession that clouds realities serves China’s purpose and once given cannot be reversed. Pursuant to discussions already held during the tenure of the previous government, the Chinese announced during Xi’s visit the establishment of two industrial parks in India, one in Gujarat and the other in Maharashtra, and the “endeavour to realise” an investment of US $ 20 billion in the next five years in various industrial and infrastructure development projects in India, including in the railways sector. The Chinese Prime Minister’s statement just before Modi goes to China on May 14 that China is looking for preferential policies and investment facilitation for its businesses to make this investment suggests that the promised investment may not materialise in a hurry. While the decision during Xi’s visit to continue defence contacts is useful in order to obtain an insight into PLA’s thinking and capacities at first hand, the agreement, carried forward from Manmohan Singh’s time, to explore possibilities of civilian nuclear cooperation puzzles because this helps to legitimise China’s nuclear cooperation with Pakistan.

Even as Modi has been making his overall interest in forging stronger ties with China clear, he has not shied away from allusions to Chinese expansionism, not only on Indian soil but also during his visit to Japan. During his own visit to US in September 2014 and President Obama’s visit to India in January 2015, the joint statements issued have language on South China Sea and Asia-Pacific which is China-directed. A stand alone US-India Joint Vision for Asia Pacific and the Indian Ocean Region issued during Obama’s Delhi visit was a departure from previous Indian reticence to show convergence with the US on China-related issues. India has now indirectly accepted a link between its Act East policy and US rebalance towards Asia. The Chinese have officially chosen to overlook these statements as they would want to wean away India from too strong a US embrace. During Sushma Swaraj’s call on Xi during her visit to China in February 2015 she seems to have pushed for an early resolution of the border issue, with out-of-the-box thinking between the two strong leaders that lead their respective countries today. Turning the Chinese formulation on its head, she called for leaving a resolved border issue for future generations.

It is not clear what the External Affairs Minister had in mind when she advocated “out-of-the-box” thinking, as such an approach can recoil on us. That China has no intention to look at any out-of-the-box solution has been made clear by the unusual vehemence of its reaction to Modi’s visit to Arunachal Pradesh in February 2015 to inaugurate two development projects on the anniversary of the state’s formation in 1987. The pressure will be on us to do out-of-the-box thinking as it is we who suggested this approach. China is making clear that it considers Arunachal Pradesh not “disputed territory” but China’s sovereign territory. This intemperate Chinese reaction came despite Modi’s visit to China in May. The 18th round of talks between the Special Representatives (SRs) on the boundary question has taken place without any significant result, which is not surprising in view of China’s position on the border. The Chinese PM has recited the mantra a few days ago of settling the boundary issue “as early as possible” and has referred to “the historical responsibility that falls on both governments” to resolve the issue, which means nothing in practical terms. As against this, India has chosen to remain silent on the China-Pakistan Economic Corridor (CPEC) which will traverse territory that is legally Indian, and which even the 1963 China-Pakistan border agreement recognises as territory whose legal status has not been finally settled. The CPEC cannot be built if China were to respect its own position with regard to “disputed” territories which it applies aggressively to Arunachal Pradesh. Why we are hesitant to put China under pressure on this subject is another puzzle.

Modi’s visit to Seychelles, Mauritius and Sri Lanka in March 2015 signified heightened attention to our critical interests in the Indian Ocean area. The bulk of our trade- 77% by value and 90% by volume- is seaborne. Modi was the first Indian Prime Minister to visit Seychelles in 34 years, which demonstrates our neglect of the Indian Ocean area at high political level and Modi’s strategic sense in making political amends. During his visit Modi focused on maritime security with agreement on a Coastal Surveillance Radar Project and the supply of another Dornier aircraft. In Mauritius, Modi signed an agreement on the development of Agalega Island and also attended the commissioning of the Barracuda, a 1300 tonne Indian-built patrol vessel ship for the country’s National Coast Guard, with more such vessels to follow. According to Sushma Swaraj, Modi’s visit to Seychelles and Mauritius was intended to integrate these two countries in our trilateral maritime cooperation with Sri Lanka and Maldives.

In Pakistan’s case, Modi too seems unsure of the policy he should follow- whether he should wait for Pakistan to change its conduct before engaging it or engage it nevertheless in the hope that its conduct will change for the better in the future. Modi announced FS level talks with Pakistan when Nawaz Sharif visited Delhi for the swearing-in ceremony, even though Pakistan had made no moves to control the activities of Hafiz Saeed and the jihadi groups in Pakistan. The Pakistani argument that Nawaz Sharif was bold in visiting India for the occasion and that he has not been politically rewarded for it is a bogus one. He had a choice to attend or not attend, and it was no favour to India that he did. Indeed he did a favour to himself as Pakistan would have voluntarily isolated itself. The FS level talks were cancelled when just before they were to be held when the Pakistan High Commissioner met the Hurriyet leaders in Delhi. Pakistan’s argument that we over-reacted is again dishonest because it wanted to retrieve the ground it thought it had lost when Nawaz Sharif did not meet the Hurriyet leaders in March 2014.

Modi ordered a robust response to Pakistani cease-fire violations across the LOC and the international border during the year, which suggested less tolerance of Pakistan’s provocative conduct. We have also been stating that talks and terrorism cannot go together. Yet, in a repetition of a wavering approach, the government sent the FS to Islamabad in March 2015 on a so-called “SAARC Yatra”. Pakistan responded by releasing the mastermind of the Mumbai attack, Lakhvi, on bail and followed it up by several provocative statements on recent demonstrations by pro-Pakistani separatists in Srinagar, without any real response from our side. Surprisingly, in an internal political document involving the BJP and the PDP in J&K, we agreed to include a reference to engaging Pakistan in a dialogue as part of a common minimum programme, undermining our diplomacy with Pakistan in the process.

Pakistan believes that it is US intervention that spurred India to take the initiative to send the FS to Pakistan, which is why it feels it can remain intransigent. Pakistan chose to make the bilateral agenda even more contentious after the visit by the FS by raising not only the Kashmir cause, but also Indian involvement in Balochistan and FATA. On our side, we raised the issue of cross border terrorism, the Mumbai terror trial and LOC violations, with only negative statements on these issues by Pakistan. Since then the Pakistani army chief has accused India of abetting terrorism in Pakistan. The huge gulf in our respective positions will not enable us to “find common ground and narrow differences” in further rounds of dialogue, about which the Pakistani High Commissioner in Delhi is now publicly sceptical.
Even though one is used to Pakistan’s pathological hostility towards India, the tantrums that Nawaz Sharif’s Foreign Policy Adviser, Sartaj Aziz, threw after President Obama’s successful visit to India were unconscionable. He objected to US support for India’s permanent seat in the UNSC and to its membership of the Nuclear Suppliers Group (NSG). He castigated the Indo-US nuclear deal, projecting it as directed against Pakistan and threatened to take all necessary steps to safeguard Pakistan’s security- in other words, to continue to expand its nuclear arsenal.

Chinese President Xi’s April 2015 visit to Pakistan risks to entrench Pakistan in all its negative attitudes towards India. The huge investments China intends making through POK constitutes a major security threat to India. China is boosting a militarily dominated, terrorist infested, jihadi riven country marked by sectarian conflict and one that is fast expanding its nuclear arsenal, including the development of tactical nuclear weapons, without much reaction from the West. President Ashraf Ghani’s assumption of power in Afghanistan and his tilt towards Pakistan and China, as well as the West’s support for accommodating the Taliban in Afghanistan with Pakistan’s help will further bolster Pakistan’s negative strategic policies directed at India. Ghani’s delayed visit to India in April 2015 has not helped to clarify the scenario in Afghanistan for us, as no change of course in Ghani’s policies can be expected unless Pakistan compels him to do by overplaying its hand in his country. Modi is right in biding his time in Afghanistan and not expressing any undue anxiety about developments there while continuing our policies of assistance so that the goodwill we have earned there is nurtured.

Prime Minister Modi, belying expectations, moved rapidly and decisively towards the US on assuming office. He blindsided political analysts by putting aside his personal feelings at having been denied a visa to visit the US for nine years for violating the US law on religious freedoms. Many thought that he would wait for the US to make proper amends before he went across. As it happened, the first foreign visit by Modi to be announced was that to the US. Clearly, he came to power with the belief that strong relations with the US gives India greater strategic space in foreign affairs and its support is crucial for realising his developmental agenda for India.

As in the case of his policies towards other countries, his policy towards the US is a continuation of policies by previous governments, right from Narasimha Rao’s time. Rao initiated economic reforms and wooed US investments in critical sectors. Vajpayee described India and the US “natural allies”, a language Modi has used in his interview with Time magazine in May 2015. Manmohan Singh was seen as too pro-US, but while he was criticised for it Modi is not, which shows that the public is confident that Modi will be his own master and that his India First slogan resonates with popular opinion. The difference in Modi’s case also is that his foreign policy carries a strong imprint of his personality, his capacity to strike a personal rapport and deal with foreign leaders with visible self-assurance and a sense of equality. A special feature of his US visit in September 2014 was his dramatic outreach to the Indian community, which organised an event for him where he was literally treated like a rock-star. This become since then a pattern in his visits abroad, whether in Australia or Canada, and even in Beijing, as planned.

Modi has set the future agenda of the relationship with the US, some of which is achievable and some probably not, with some inevitable hiccups on the way given the lack of convergence in thinking and policies on many issues still. This includes increasing trade five fold in the next five years, involving US companies in infrastructure development in India and boosting US investment in general, offering US companies lead partnership in three smart cities, addressing IPR related issues, inviting US companies to participate in developing India’s defence industry, renewing for 10 years more the 2005 Framework for US-India Defence Relations, with defence teams of the two countries directed to “develop plans” for more ambitious programmes, including enhanced technology partnerships for India’s Navy. While the joint manufacturing plans under the Defence Technology and Trade Initiative (DTTI) are modest in scope, the US is now offering aircraft carrier technology. Here too it should be noted that the big jump in defence trade with the US occurred during the Manmohan Singh’s regime. The difference is in Modi wanting to push the “Make in India” project in defence manufacturing.

The unusually strong personal element in Modi’s diplomacy towards the US came apparent when during his Washington visit, when, in a bold and imaginative move, he invited Obama to be the chief guest at our Republic Day on January 26, 2015. Modi and Obama evidently struck a good personal equation, with the earlier alienation supplanted by empathy, as was shown by Obama’s unprecedented gesture of accompanying Modi to the Martin Luther King Memorial in Washington during the September 2014 visit. This personal gesture was reciprocated by Modi during Obama’s January visit to Delhi by the “chai pe charcha” and “mun ki baat” choreography.

More substantively, on the occasion of Obama’s January visit, Modi moved decisively on the nuclear front in order to underline his commitment to a strategic partnership with the US, especially as the BJP had opposed the nuclear deal and had announced that it would seek to revise it if it came to power. During the visit, the “breakthrough understandings” on the nuclear liability issue and that of administrative arrangements to track US supplied nuclear material or third party material passing through US supplied reactors, became the highlight of its success, with Modi himself calling nuclear cooperation issues as central to India-US ties. However, the larger question of the commercial viability of US supplied reactors remains, a point that Modi alluded to in joint press conference. On the whole, whatever the ambiguities that remain, removing this contentious issue from the bilateral agenda was wise on Modi’s part.

Defence cooperation has been another touchstone for the US to measure India’s willingness to deepen the strategic partnership. Less than expected progress was made in this area during Obama’s visit, with the announcement of four “pathfinder” projects under the DTTI involving minor technologies during the visit, with cooperation in the area of aircraft engines and aircraft carrier technologies to be explored later. Subsequently, a Joint Working Group has been set up to explore cooperation in aircraft carrier technology, which the US will use to make a case for selling the naval version of its F 35 aircraft to India.

The US-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region signed during the visit and issued as a standalone document highlights the growing strategic convergences between the two countries, with full awareness of how this might be interpreted by other countries, in particular China. It affirms the “importance of safeguarding maritime security and ensuring freedom of navigation and overflight throughout the region , especially in the South China Sea”. This is a direct message addressed to China, reflecting less inhibition on India’s part both to pronounce on the subject and do it jointly with the US. Under the Modi government, India has become more affirmative in its statements about the situation in the western Pacific and the commonalities of interests between India and the US and other countries in the Indo-Pacific region. The government has decided to “Act East”, to strengthen strategic ties with Japan and Australia, as well as Vietnam, conduct more military exercises bilaterally with the US armed forces as well as naval exercises trilaterally with Japan.

Obama’s visit also demonstrated the consolidation of the good personal rapport established between him and Modi. That Obama agreed to pen a portrait of Modi for the Time magazine in April 2015 was a political boost for the latter. This personal rapport should assist in greater White House oversight over the Administration’s policies towards India, which experience shows greatly benefits the bilateral relationship.

Counter-terrorism is always highlighted as an expanding area of India-US cooperation because of shared threats. The joint statement in Delhi spoke dramatically of making the US-India partnership in this area a “defining” relationship for the 21st century. However, unless the US takes a clear cut and robust position on Pakistan’s involvement in terrorism against India, such cooperation will remain limited, though in technical and forensic areas it can proceed to our advantage. The reluctance of the US to sanction Pakistan and declare the Taliban as a terrorist organisation- which its conduct in Afghanistan would justify- our cooperation in dealing with threats to our security will remain deficient.

That the US has a way to upset its partners was demonstrated by Obama’s objectionable lecture at Siri Fort on religious freedom in India and his pointed reference to Article 25 of our Constitution. This was obviously prompted by Christian evangelist lobbies and showed a remarkable ignorance of India’s religious traditions. The government chose to ignore this as it would have detracted from the overall success of the visit. On return to Washington Obama pursued his line of exaggerating incidents of religious intolerance in India. Obama’s claim that the US can be India’s “best partner” remains to be tested as many contradictions in US policy towards India persist. The statements coming the US and its ambassador here on the decision by the government to tighten the application of its laws with regard to foreign funding of Indian NGOs could become another irritant. The Modi government will face the test of managing closer strategic relations with the US- which are in part directed against China- and forging closer ties with China at the same time. The challenge in this difficult diplomatic exercise is that China has stronger ties with the US than what the latter can have with India in the foreseeable future, though the threat that China presents to US interests is far bigger than what India could pose, if at all. 

It was important that in the process of establishing stronger strategic ties with the US and its allies, India’s relationship with Russia should not be ignored, as Russia remains vital for the balance of our external ties. This was doubly important at a time when the West has unleashed its diplomatic and financial fury against Russia because of the Ukraine crisis. President Putin’s visit in December 2014 to India served an important purpose, that of underlining politically that Russia remains a key strategic partner for India. With perceived stagnation in India-Russia ties, improving India-US ties and a sharp deterioration in US-Russia relations in view, for Modi it was opportune to signal this internationally. Modi was effusive about our Russia relationship during Putin’s visit, underlining that Russia has been a “pillar of strength for India’s development, security and international relations”, that we have a “friendship of unmatched mutual confidence, trust and goodwill” and a “Strategic Partnership that is incomparable in content”. He has affirmed pointedly that changes in international relations will not affect “the importance of this relationship and its unique place in India's foreign policy”.

Russia has been unhappy about losing out in competitive bidding for defence contracts in some recent cases. Modi was therefore careful to convey the important message that even as India’s options for defence cooperation had widened today, “Russia will remain our most important defence partner”. While discussing new defence projects with Putin, Modi asked for alignment of India-Russia defence relations with “India’s own priorities, including Make in India”. Russia’s offer “to fully manufacture in India one of its most advanced helicopters” would suggest that the project for light utility helicopters that India badly needs to replace the French-licensed Cheetah and Chetak helicopters would, after two failed tenders, now go Russia’s way. That Putin responded “very positively” to Modi’s proposal that Russia locate manufacturing facilities in India for spares and components for defence equipment it has supplied is noteworthy in the context of persistent complaints by India of Russia’s product support deficiencies, though the time lines for resolving this nagging issue remain unclear.

Russia is already ahead of other contenders with regard to civilian nuclear cooperation with India, which it wants to conserve. After arduous negotiations, it was agreed that Russia will build “at least” 10 more reactors in India beyond the existing two at Kudankulam: 6 in total at Kudankulam and 6 at another site to be identified expeditiously, with the important proviso of manufacture of equipment and components in India, joint extraction of natural uranium and production of nuclear fuel. This implies that India-Russia cooperation in a sensitive strategic area is assured in the years ahead.

Modi was right to flag our disappointment at the limited India-Russia collaboration in the hydrocarbon sector, despite Russia being a top producer of hydrocarbons and India a top importer. A big handicap, of course, is the lack of geographical continuity between the two countries, unlike in the case of Russia and China. The outlook has improved with an agreement that envisages joint exploration and production of hydrocarbons in the Russian Arctic shelf, long term LNG supplies (to begin in 2017 or latest by 2021), as well as a hydrocarbon pipeline system connecting the two countries, even though Putin himself doubts its commercial feasibility. To Modi’s credit, Putin declared that he was highly satisfied with his visit and its results, while Modi stated that the summit had reinforced his conviction in the extraordinary value and strength of the India-Russia partnership. The US made some inopportune statements before and after Putin’s visit cautioning against “business as usual” with Russia, but Modi rightly ignored them. The decision to send President Mukherjee to attend the May 9 celebrations in Moscow and have an Indian military contingent participate in the parade in the Red Square at a time when the West wants to isolate Putin was a politically wise one.

Modi has followed in the footsteps of his predecessors in bolstering relations with Japan. Narasimha Rao’s Look East policy had Japan in view and Manmohan Singh gave high importance to economic ties with that country. Modi has, in addition, established a good personal relationship with Shinzo Abe. During Modi’s visit to Japan in September 2014 Abe announced $35 billion of public and private investment in India. Japan is in good position to advance Modi’s Make in India agenda and help set up manufacturing facilities in India as it has the money, technology and political interest. However, Japan is awaiting steps by the government to move forward on the ground with the promised economic reforms. Japan is looking at India with renewed interest as a partner, as India is the only country in a position to balance China in Asia. Here too, Modi will face the delicate diplomatic challenge to forge closer ties with Japan and not let that complicate his desire to increase economic engagement with China.

While Japan is keen to sell its US 2 amphibian rescue aircraft as a start in defence related cooperation, India wants Japan to be more open about defence cooperation, especially in terms of specific defence technologies that Japan has developed. During Modi’s visit it was agreed to upgrade defence relations and a Memorandum of Defence Cooperation and Exchanges was signed. It was also decided to have regular bilateral maritime exercises and India-US-Japan Malabar naval exercises. Defence Minister Parrikar’s visit to Japan in March 2015 where he got himself photographed on a Japanese warship was good political messaging for the region.

On the nuclear side, Japan is not ready to sign an agreement with India, which is necessary for India-US, or for that matter, Indo-French civilian nuclear cooperation as the nuclear wings of Westinghouse and GE are owned by Japanese companies and critical parts for Areva are provided by them too. This is a negative element in our relations that detracts from a veritable strategic partnership. On the other hand, Japan has lifted sanctions on many Indian entities imposed because of our nuclear programme. Japan's cooperation for enhanced connectivity and development in Northeast India and linking the region to other economic corridors in India and to Southeast Asia is important and needs to be pursued vigorously.

Modi’s visit to France and Germany in April 2015 was overdue to remove the impression that Europe is not high in his foreign policy priorities. This is a wrong impression as Modi’s other foreign policy initiatives were either focused on the immediate neighbourhood or were aimed at reinvigorating a flagging relationship of key importance or stabilising difficult ones. With key European countries India’s relations are stable. The European Union, allegedly under Italian pressure, missed an opportunity to receive Modi at Brussels during his visit to Europe to move the India-EU dialogue forward. Modi did well to give a boost to the strategic partnership with France by ensuring concrete progress in the key areas of defence and nuclear cooperation. As is his wont, Modi sprung a surprise during the visit by announcing that in view of the critical operational needs of the Air Force he had requested the French President for an expeditious supply of 36 Rafale jets in flyaway condition through an intergovernmental agreement on terms better than demanded by Dassault “as part of a separate process underway”. The Rafale deal, even if truncated, will help to attenuate feelings of frustration in French political and defence manufacturing circles about doing business with India owing to inordinate delays and lack of clarity in decision making, despite political level assurances. This deal strengthens Modi’s reputation as a decisive leader capable of cutting through dilatory decision making processes.

In the other strategic area of cooperation- the nuclear one- Modi’s visit saw progress with the signing of the MOU between AREVA and L&T, which was welcomed by Modi as widening the scope of industrial cooperation and creating indigenous capacities in India, besides the conclusion of pre-engineering studies agreement between Areva and NPCIL. The objective of the agreement with L&T is to manufacture high technology reactor equipment in India in order to bring down costs and make the project economically viable.

Paris is hosting the next Climate Change summit in December this year. The challenge before India would be to resist concerted pressure by others to accept emission reduction commitments at the cost of its national interest and yet not be seen as being non-cooperative on an increasingly obsessive issue for the West. The US is determined to exert pressure on India on this score and Modi’s agreement with Obama that the two sides will work together to make the Paris conference a success could constrain India’s manoeuvrability there.

Modi’s bilateral visit to Canada in April 2015 was the first by an Indian PM in 45 years. The two countries have decided to elevate their bilateral relations to a strategic partnership. The most important agreement signed was that between the Indian Department of Atomic Energy and Cameco of Canada for long-term supply of uranium to India to meet its energy needs. Canada will sell 3220 metric tonnes of uranium to India over 5 years in a $ 350 million deal.

Relations with the Islamic world have not received the required attention from Modi during the year. The Emir of Qatar has visited India in March 2015, opening prospects for Qatari investments in India. Sushma Swaraj has been to the UAE whose Emir is likely to visit India later in the year. The political investment made by the previous government in Saudi Arabia helped India to obtain its cooperation to extract our people from Yemen. Gadkari has been to Iran in May 2015 to sign the agreement on Chabahar. Modi has done well to avoid any entanglement in the Saudi-Iran and Shia-Sunni rivalry in West Asia. Given the close ties developed between BJP/RSS circles with Israel over the years, it is not surprising that the only foreign leader, other than leaders from neighbouring countries, that Modi met on the sidelines of the UNGA meeting in September last year was Israeli Prime Minister Netanyahu. Significantly, the Israeli Defence Minister visited India on the occasion of the Air Show in Bengaluru in February 2015. Modi made a confident debut at the BRICS summit in Brazil in July 2014. he also took a pragmatic decision to become a founding member of the China-led Asian Infrastructure Investment Bank.

Altogether, Modi has handled India’s foreign policy in his first year impressively. He has put India on the global map emphatically because of his self-confidence and faith in India’s future as a partner of promise for other countries.

Published Date: 23rd May 2015, Image Source: