US-CHINA RELATIONS: INDIA AT CROSSROADS

As I am writing this, the Shanghai Co-operation Organisation (SCO) is having its annual summit in Goa. The Indian Foreign Minister who is arguably one of the best foreign ministers in the world (opinion courtesy: Imran Khan!) is having an important multilateral meeting. This meeting is taking place along with the parallel proposal that BRICS nations planning to float an international currency that would supplement (surely, it cannot replace) the US Dollar as the dominant currency for global trade. China has a serious ambition to become the biggest economy in the world, pushing US to the second place. India has plans to become the third-biggest economy in the world within this decade. It is in this context we have to look at the role of India in global trade and in the better maintenance of peace, security and good order in the world.

2. China is our neighbour. Right from the time of independence, India has been having territorial and border disputes with China. The 1962 war between these 2 countries (a best-selling American author described it as India’s China war) was a humiliating experience for the Union of India. Technically, China has not gone on a war or even an Armed Conflict in the last 4 decades. But China has border disputes with all its neighbours and its attempt to misappropriate huge territories in the South China Sea has attracted wide international condemnation.  In fact, many other neighbours of China are contemplating importing arms (more particularly missiles, aircraft and MBRL(Multi-Barrel Rocket Launchers) etc. India which is one of the biggest importers of armaments is aspiring to become an important exporter of arms. This will be a big tactical shift. This would involve India becoming part of the Global Military Industrial Complex (MIC). This has resulted in substantial structural changes in the strategic environment prevailing in Asia. China remains one of the biggest trading partners of India. It enjoys substantial surplus in its trade with India. Unusually, after a brief lull, there has been intense military activity in the Northern and Eastern sectors of the Indian Border which has pushed Pakistan to the second place as an adversary of India. If India can achieve a situation where most of the border disputes with China are resolved, India can devote more time, energy, and resources to ensuring equitable development for all the residents in the subcontinent, which includes Bangladesh, Nepal, Sri Lanka, Maldives (and if you are ambitious, Burma and Afghanistan). After all, one should also appreciate that once India resolves her problems with China, problems with Pakistan will come down appreciably as Pakistan is now becoming a vassal state/colony of China!

 

3.  Recently, I listened to a video of conversations wherein the panellists Dr Prof. Muqtedar Khan and Lt. Gen. V P Singh of India discussed a foreign policy publication by Dr Ashley Tellis. Dr Ashley Tellis, an Indian origin-American national, and part of the American think tank ‘Carnegie Foundation’, has come up with a paper that articulates the view that India may be a bad foreign policy bet for America. India is unlikely to become a Military Partner of the United States and may not be too willing to support the USA in case of a serious conflict with China while at the same time continuing its efforts to become an alternative to China in meeting the American demands for manufactured goods. Interestingly, both Dr Khan and Dr Tellis are American nationals. Their loyalties are to the US Constitution and its foreign policy objectives, this is to be expected and all should respect that. There is a general indication that if India is to become an important player in the global arms market, then the transfer of cutting-edge technology from the USA will be essential. Hence, there should be a trade-off between the current Indian global position in terms of becoming a more serious and more committed member of the Quad(QSD-Quadrilateral Security Dialogue, commonly known as Quad) , even if involves military cooperation as demanded by the United States of America in light of the then prevailing foreign policy objectives of the USA. Actually, if Trump replaces Biden, god knows what changes will take place in the future!

 

4.  Henry Kissinger once remarked that to be the adversary of the United States of America is just dangerous. But, to become its friend is fatal.  The, USA right from the very beginning of Indian Independence, has been a greater friend and a military partner of Pakistan. Together UK and USA ensured that the state of Pakistan spent a substantial part of its life as a country under right-wing military rulers. The 3 major wars fought by Pakistan against India were possible only because of the military support from the UK (during 1948) and the USA (during the 1965 and 1971 conflicts). Consistently, the USA refused to sell arms to India. In any case, US arms are very expensive and would require continuous maintenance expenses for which the recipients would remain obliged to the American arms companies who have been used to very huge profit margins. Only during the Kargil conflict did the United States take a position which compelled Pakistan to pull back to the old positions. Even during the Kargil conflict, the United States allowed the conflict to continue for some time and watched exactly how the conflict progressed. Only when it became certain that India would continue to push for a military solution did the United States ensure that the Nawaz Sharif government ordered the withdrawal of forces that resulted in the exit of General Pervez Musharraf from Pakistani soil. Traditionally, in the UN General Assembly, India was more in agreement with the USSR than the USA, notwithstanding the Indian claim of being nonaligned. USSR and India were at the forefront of the battle for the decolonisation of the world and the elimination of apartheid in South Africa. Even today, India depends on Russia to the extent of 60% of its military supplies. Technically, India will come under the scrutiny of CATSAA (Countering America’s Adversaries Through Sanctions Act), and India has just got a reprieve because of the Presidential veto. In the past, the USA kept India on its Military Sanctions list and tried its best to scuttle Indian Space, Cryogenic and Nuclear Technologies. But most Indians are thankful to the USA because India managed to achieve a reasonable level of self-sufficiency in these sectors thanks to American sanctions!!!

 

5.  Undoubtedly, the USA is one of the best places in the world in terms of its constitutional framework, commitment to democracy, Rule of Law, Human Rights, and highly efficient government institutions. It has substantial ability to influence global affairs because it remains the most dominant consumer/biggest market in the world. For any country that wants to progress economically and achieve economic development,  trade with the United States is an absolute necessity. The United States really became a major power only after the First and Second World Wars. It is an open secret that it is the Military-Industrial Complex of the United States that propelled the USA to become the most dominant economic power in the world. So, any country that wants to take the MIC route for economic development, has to be a competitor or a partner of USA. China and Russia took the competitor route. Scandinavian countries, Japan, and Germany did not so much depend on the MIC route for their economic developments. But, the most crucial question is, “Should India become a technology partner to the United States for it to receive cutting edge Military Technology for a higher share of exports in the global arms sale?”.  Or should India shed its hostility to China, and continue to remain non-aligned in a multi-polar world doing business with all the countries. Should it become part of the global MIC? Or should it remain strategically independent as it has done during the present Ukraine crisis? 

 

6.  During the 1960s the USA realised that trade with China would enable it to create a stronger buffer against USSR (China at that time had serious disputes with Russia). In fact, Pakistan and China became all-weather friends only because Pakistan managed to deliver China to USA and vice-versa. China today has become the biggest creditor of the United States of America because of its humongous investments in US treasury bonds’. Because the dollar remains a stable international currency, countries must have adequate foreign exchange in dollars (Dollar Reserves). As and when the USA has any disputes with any country, it will prevent that country using Dollars for its global trade. Countries like Cuba, Iran, Venezuela and even North Korea have substantially stunted levels of economic development only because the US had prohibited these countries to deal in Dollars for their Global Trade. The Ukraine war and the consequent economic sanctions against Russia that included the total freeze of approximately 400 billion dollars of Russian Foreign Exchange set alarm bells ringing amongst all countries that hold their foreign exchange essentially in US dollars.  Most of these countries have now realised how vulnerable they are if they put all their eggs in one basket. It is this realisation which has prompted BRICS to come up with a Global Alternate Currency. At least, 28 important nations have agreed to use this alternate currency along with USD. Hence, India's role in sponsoring an alternate global currency will be keenly watched by the USA. Because it would have a substantial impact in supplementing/replacing the Dollar as the Global Trade Currency.

 

7. For India, it is at a threshold where it has to make a very crucial decision as to whether it should try for peace with China bearing in its mind “its long-term interests” or align with USA even without a military alliance, in order for India to have better market access and transfer high technology that would enable it to become exporter of arms in global trade. Unfortunately, India is under a compulsion to commit more and more resources for beefing up its security in view of the threat perception from its northern neighbour who spends at least 4 times more money on its defence budget. Thus, India is under a compulsion to become part of a state driven by Military Industrial Complex. Tough times are ahead for India’s nationhood. Which way India should go; we will discuss in Part 2 of the Blog.