Tag Archives: BRICs

Defence And Strategic Affairs Blog

BRICS – India is the biggest loser

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Guest post by Sumantra Maitra

Among other interminable dross that were churned in the recently concluded 5th annual BRICS summit in South Africa, was the idea of a Development bank, by the five ever-rising economic powers. Although the details are vague, like any other diplomatic summit declaration trying to obfuscate the deep fissures within this coalition of unequals, the fact that India agreed to this disaster in the making is a new low in the foreign policy of a country, which is not much known for rational and realistic choices. The idea behind the development bank is indeed noble, “to address…the infrastructure gap in developing countries…”, especially in Africa. But the intention to make it successful or meaningful or the national interest of each member of the coalition is not clear. One thing, which is however clear, is Indian ambivalent skepticism about bandwagoning with any power simultaneously coupled with the Nehruvian idea of being a “messiah of the mass” and trying to be a leader of the third world, which reflects the mindset of Indian bureaucracy and ruling elite, is increasingly drawing India into a dilemma.

The BRIC leaders

The BRICS is not an alliance. It is an arbitrarily formed group, mentioned in passing by an ex-banker, which was so captivating to the ruling elite of the grouped nations that they thought of formalizing it in an institution. Initially starting as rising economies, a perceivable counter balance to the G-8, these economies are no longer rising, with deep structural and institutional flaws, different modes of governance, deteriorating law and order situation and freedom of expression and censorship issues, different economic fundamentals and most importantly, absolutely different and divergent world view and interest. Joshua Keating pointed out why the BRICS couldn’t be more different than each other. The last addition to this coalition, South Africa, is the messiest of them all. The selection of South Africa is ofcourse controversial and political, regarded often as a quota position from the African continent, as it leaves out far more competent and growing economies like Indonesia, Turkey and South Korea. This comes when BRICS are accused of neo-imperialism, and banners like “don’t carve out Africa” were found everywhere near the summit in Durban.

It is well known, that the primary drivers behind the ideation in the BRICS are Russia and China. Russia wants to bandwagon with China to balance the influence of United States. The motivation and Great power nostalgia of Russian elite is simple enough to fathom. The Chinese interest is however far more complex. As a growing hegemon, China actually has interest in Africa, both geo-politically and economically. The resources of Africa are mostly still unexplored, and the market potential of cheap Chinese manufactured goods is enormous. This however comes at a time, when China is increasingly viewed with suspicion in Africa. The last couple of years have seen the murder of Chinese engineers by disgruntled and exploited African labourers, incessant strikes in Chinese operated industries and mines, and the now infamous op-ed by Lamido Sanusi, the governor of Central Bank of Nigeria, where he accused China of having neo-colonial ambitions. China now wants to portray itself as a benevolent and altruistic force, and therefore wanted to soothe Africa under the BRICS front. India, for all its independent and non-aligned foreign policy, is legitimizing Chinese actions.

It is puzzling to fathom why India is following Chinese and Russian lead. For a start, Russia is not what it used to be. It clearly views China as a far superior partner than India, and a market for superior weapons and technology, ironically at the same time when India received massive aid grant from Japan. India and China are not really partners, and as I wrote here before, will probably not be in the near foreseeable future. Nor is Indian business interest in Africa that important, scalable or maintainable. For example, assuming that India invests in some African country under the BRICS development bank, tomorrow if there is some kind of unrest, is India capable or willing to defend its business interest? India never showed any willingness to aggressively promote or defend its business interests, be it Afghanistan, Maldives, or South China Sea, and there is no reason to believe India would do that in Africa. India also lacks such far off power projection capability. Which brings us to question the wisdom; do the benefits of Indian investment in Africa outweigh the cost? What is the incentive of pledging tens of billions of dollars, all Indian taxpayers’ money, in a region which is beset by uncertainty, instability and conflict, or starting a monetary organization, potentially rival to IMF/World Bank which will not be of any direct benefit to the already slowing economy and growth rate?

On the other hand, India will eventually be viewed as just another neo-colonial resource grabbing power like China, if it continues to be with the BRICS. The respect that India enjoyed in Africa, and the goodwill as a potential democratic competitor of China will fade away, with India just being a satellite of Chinese ambitions, a satisfied mid level power in an institution guided by Russian and Chinese geo-political interests. Nor is Indian interest, in the BRICS assisted conflict resolution in Central African Republic understandable. Again, the question is geo-political, what IS India’s interest? Tomorrow if Russia leads the BRICS into conflict resolution in Syria, will India be willing to commit its resources?

As this Economist essay explains, India is utterly confused about its growing clout and new found respect as a rising power, lacks a political will, strategic culture, a status-quo bureaucracy, and timely and fast decision making infrastructure. Added to that is the notorious ambivalence towards aligning with the West, even though being perfectly aware that in the great scheme of the game, China stands as the largest potential rival. This ambivalence and skepticism stems from the utterly discredited NAM mentality which is still somehow widely followed among the Indian foreign policy circles, and the moral, altruistic, socialist Nehruvian world view, without any long term planning or Realist Raison D’etat. With the BRICS now attracting countries like Egypt, a slow and painful repetition of the outdated Indian NAM policies are in the process. Everyone knows how NAM turned out. One can only hope that India’s policymakers realize soon where her interests lie.

(Sumantra Maitra is a freelance journalist from India and a tutor of New Zealand Foreign Policy and Theories of International Relations, at the University of Otago, New Zealand. You can follow him on twitter @dailyworldwatch.)

India-US Relations Blog

Retail Reverberations

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India’s retreat on economic liberalization has broad consequences for the country’s international standing and for U.S.-India relations specifically

Just when it looked like Prime Minister Manmohan Singh would make something out of his second term, he beat an ignominious retreat on opening up India’s huge retail sector to foreign companies. The stunning turnabout — actually more of a debacle –has a number of significant implications for the domestic economic and political landscapes. In particular, it confirms what many have increasingly suspected: Regardless of whether he manages to hang on through the Uttar Pradesh state elections early next year or miraculously serves out his allotted term, Singh is very much a lame duck presiding over a government that is hopelessly adrift and ineffectual. He and his long-time Cabinet associates, once lauded as the “economic dream team,” have proven themselves incapable of making the bold decisions many believe are crucial for India’s future.

The capitulation also has far-reaching consequences for the country’s international standing and for U.S.-India relations specifically. The retail liberalization was hailed as a landmark economic reform, evidence that New Delhi had finally overcome the chronic leadership paralysis and policy contradictions that have made foreign investors wary. This leeriness is the reason India is perpetually unable to lure in the levels of global capital that have fuelled China’s stratospheric economic ascent. It accounts for the marked withdrawal of foreign investment that has caused the rupee’s rapid depreciation in recent months. And it explains why the business community felt it necessary to launch a “Credible India” marketing campaign to address India’s image problem. Yet the retail retreat will only solidify international skepticism.  After the rescindment, the chairman of Microsoft India announced that the country could no longer even be regarded as a magnet for technology investment.

The backtracking similarly reinforces the growing perception that India is the Godot of great powers – its arrival in the top tier of countries is much heralded but never quite happens. The country’s elites speak assuredly of the coming “Indian Century” and yet are haunted by the shadow of the long-defunct East India Company, a corporate entity that is in any case now owned by an Indian entrepreneur. The contrast with China is instructive. Even with its own history of foreign exploitation, Beijing was confident enough about its strengths to allow Walmart, Ikea and other foreign retail enterprises to set up shop more than 15 years ago.

India possesses a multitude of latent resources necessary for national greatness but is conspicuously bereft of strong political institutions capable of mobilizing them in a purposive direction. This absence habitually condemns India to punching far beneath its strategic weight. A few days ago, Jim O’Neill, the progenitor of the now ubiquitous BRICs saga, pronounced India the “most disappointing” member of the quartet and ranked it on par with Russia in terms of governance and corruption. And Jyoti Thottam, Time magazine’s South Asia bureau chief, warns that the reversal “may be remembered as an inflection point in the ‘rising India’ story, a moment when skepticism about India’s future finally started to overshadow optimism.”

The episode will also have repercussions for relations with the United States. It will ensure that bilateral commercial ties remain far below their potential and that U.S.-India trade levels continue to be eclipsed by U.S.-China economic interactions. This is most unfortunate since, as Raymond E. Vickery, Jr. points out in his new book, The Eagle and the Elephant, private-sector linkages are a key driver of the overall U.S.-India relationship.

Many have proposed that Washington launch negotiations on a free trade agreement with New Delhi, while others criticize the Obama administration for dragging its feet on crafting a bilateral investment accord. But the logic of these measures is now in severe doubt. Given the obvious inability of Indian leaders to make the bold decisions that would be necessary, there is no reason why a beleaguered U.S. president would spend precious political capital on ventures that promise so little chance of success.

On the geopolitical level, Singh’s retreat further undermines the seriousness with which Washington views with the current Indian government. From the political soap opera that accompanied the parliamentary debate over the nuclear cooperation agreement three years ago to last year’s nuclear liability law that effectively locks out U.S. involvement in the nuclear energy sector, and from this spring’s rejection of American entrants in the lucrative fighter aircraft competition to this week’s retail rollback, doubts have been steadily rising about New Delhi’s capacity for strategic engagement. It is little wonder why, six months after Ambassador Timothy Roemer departed New Delhi, the Obama administration has yet to bother nominating a successor.

A chorus of critics accuses Washington of being derelict in relations with India. In a just-published article, for example, the Wall Street Journal’s Mary Kissel rebukes the administration for “neglecting” and “ignoring” New Delhi. She’s right that the Team Obama was too slow in distilling rhetorical professions about “indispensable partnership” into meaningful policy initiatives. But even if the administration had been more pro-active and creative, would it have made much of a difference? Sadly, the record of the past few years indicates that leadership dysfunctions in New Delhi would have precluded any sort of serious response.

Ever since President Obama’s inauguration, Indians have vocally complained that he has forsaken them in favor of the Chinese. The grievance has some justice, though many in New Delhi are oblivious to how they too bear some of the blame (see here and here). They would be wise, however, to heed the warning just issued by Ashley J. Tellis, one of the architects of the Bush administration’s strategic entente with New Delhi. In the coming years, he cautions, Washington may become “hard-pressed to justify preferential involvement with India at a time when U.S. relations with China – however problematic they might be on many counts – are turning out to be deeper, more encompassing, and, at least where the production of wealth is concerned, more fruitful.”