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India ‘Looks East’ as history July 7, 2010

Posted by southasiamasala in : Gordon, Sandy, India , trackback

Sandy Gordon

This paper was presented  at a workshop titled ‘India Looks East’ hosted by the Australia India Institute and Institute of South Asian Studies, Singapore, at the University of Melbourne, on 4 July 2010.

India’s Look East policy was initiated out of failure: the failure of India’s Cold War strategy of ‘playing both ends against the middle’ while at the same time attempting to adopt a pro-Soviet ‘tilt’; and the failure of India’s command economy, which by 1990 had managed to command only 0.4% of world trade – insufficient to cushion India from the 1989-90 oil shock.  While the collapse of the Soviet Union was no fault of India, it left New Delhi searching for an alternative set of economic and strategic approaches. The ‘Look East’ policy seemed to fit both needs.

India, however, initially had a hard job to claw its way back into those parts of Asia to its east.  ASEAN itself was borne out of concern about an encroaching communist bloc and tempered in the fires of the Vietnam War.  It viewed India’s still clunky economy and former Soviet bloc ‘tilt’ with suspicion.

India also took some time to learn Asian diplomatic mores.  In 1994, in a major address in Singapore, Indian Prime Minister Narasimha Rao expressed surprise at the title of the speech he had been given – India’s ‘new’ relationship with Asia.  Rao pointed out India’s influence in Asia was hardly ‘new’ – indeed Indian religion and culture lay at he heart of today’s South East Asia.  True enough, but to miss the point from ASEAN’s perspective. The ASEANs were a bunch of hard-nosed pragmatists intent on getting on with the job – and the job was making money and development.

Of course, ASEAN was only part of India’s Look East policy.  Vietnam and Burma had not yet jointed the Association.  India had a friendship with the first and was already rivals with China over the second.  And Japan was being eyed off as a source of technology and Direct Foreign Investment as early as the birth Sanjay Gandhi’s ‘Indian’ Maruti in 1981 – which was, of course nothing more than a semi-knock kit of a Suzuki.

But in Asia – and especially ASEAN – nothing succeeds like success.  ASEAN only really sat up and took notice of India once the latter appeared (before the GFC) to be locked into 8-9% growth, a pattern now seemingly to have resumed. India is now much more highly regarded in ASEAN than in the 1990s.  It is part of the ARF, ASEM and the EAS. Not yet in APEC, it has good prospects there too.  It has extensive defence dealings with Singapore, Australia and Japan and defence relationships with Malaysia, Indonesia and Vietnam.

Yet for all this recent success, the India-ASEAN Free Trade Association was extremely hard-won. India’s farmers were committing suicide at unprecedented levels over supposedly unbridled agricultural imports caused by globalisation.  The FTA, when it finally emerged in 2009, was not only intensely criticised in India but also highly protective of Indian agriculture, especially edible oils.  It took over six years to negotiate and will not be fully implemented for non-sensitive goods till 2016 (later for poorer countries, and India).

Moreover, ironically, at the very time India has gained significant traction in ASEAN and other East Asian forums, those venues are being overshadowed by larger, and some would say ominous, regional developments.  ASEAN, ARF, ASEAN plus 3, the EAS and even APEC are no longer the only games in town – if they ever were.

Increasingly the debate has devolved onto the growing strategic, diplomatic and financial critical mass of China.  Kevin Rudd saw this early on and tried to hone Asian security architecture to accommodate a rising China and provide it with a forum to be, if not first among equals, then equal among equals.  The profound implication of this purpose was that all major powers should be part of that architecture, not least India.

Increasingly, however, it looks as if the horses have fled from this particular stable.  Rudd lost interest in his Asian architecture in favour of the G20 –perhaps correctly in the context of the GFC – but nonetheless unfortunately.  More importantly, the rise of China and to a lesser extent India has ‘gone around the edges’ of existing Asian architecture. Not that architecture is irrelevant in the debate about rising China, but rather that any architecture that might evolve is likely to provide a venue for other systems of power relations such as a ‘concert of powers’ or ‘power balancing’ rather than critically shaping those systems.

This de-emphasising of security architecture leaves us with a different kind of debate and, potentially, a different kind of role for India.

Initially at least, it looks as if China holds the key.  How China chooses to rise to power in Asia will be the seminal factor in the future of Asian security.  And further, how Sino-US relations unfold – especially in the Asian context – will be seminal to the process of how China rises.

India is definitely there in the equation but not till some way down the track.  Meanwhile, it is the Sino-US relationship that will define the character of China’s rise more than any other single factor excepting, of course, the innate character of the Chinese polity.

So where does India fit?

The US knows it will lose power in Asia and even globally to China over the longer-term.  Hence the ‘strategic’ quality of the India-US relationship, the fact that the Indo-US deal nuclear deal was intended above all to enable the US to provide strategic military assistance (read hi-tech weapons) to India, and that Washington remains unabashed that its intention is to build India over this century as a major strategic factor in Asia.  Read for this, traditional power balancing against China.

At the moment India is especially weak vis à vis China.  China can play virtually at will in India’s South Asian back yard.  For all India’s economic success, the Chinese economy and its defence spending are still growing more rapidly.  That is to say, a China that is already far more powerful than India is actually pulling away.

China’s great long-term enemy is, of course demography.  Not only will India be larger by 2030 but more significantly, it will have a higher proportion of young people than China.  But to take advantage, it needs to set in place labour and infrastructure policies to position it to become the new labour-intensive workshop of the world. And despite India’s long-term demographic advantage, China may well ‘do a Japan’ and use its enormous capital reserves to substitute for labour.

While Sino-US relations will initially hold the key, Sino-Indian relations will emerge as increasingly important as India gains in strength, increasing the prospect of an emerging ‘strategic triangle’ between China, the US and India.  At present, the US and India each uses the other as a ‘hedge’ against a difficult rise for China in Asia.  Thus what may one day become a ‘strategic triangle’ cannot yet be accorded that label.

Such a negative prospect depends both on how Sino-US and Sino-Indian relations develop.  In terms of the Sino-Indian relationship, the most favourable term that could be used is ‘ambiguous’. On the negative side, China has changed its position in relation to the border issue – now resolutely sticking to its claim to Arunachal Pradesh, populated with 1.1 million Indians, located below the strategic barrier of the Himalayas and source of much of the water of Bangaldesh and India’s north east.  China is actively involved in the South Asian countries surrounding India, which is Beijing’s way of hedging against the possibility its vital energy SLOCs might one day come under pressure in time of high tension or conflict.

This is profoundly unsettling for India, whatever it may say publicly about blossoming people-to-people relations and trade – the positive side of the ledger.  Anyway, trade is a double-edged sword for India, with India being heavily in deficit in the US 57 billion trade.

Seen in this light, there is a depressing prospect of a slide from the idea of a ‘concert of powers’ in Asia to traditional power balancing.  Were this to occur (and virtually nobody, including the key players, would want it to happen), Dick Cheney’s ‘Quadrilateral’ could actually be revived as a strategic entity.

Certainly, New Delhi would rather India were part of a concert of powers in Asia. Although India will continue to get what it can from the US and Israel on hi-tech such as space, computation and anti-ballistic missile technologies, New Delhi believes India is too large ever to be any other country’s ally.  India will also seek to have a range of relations with other large powers, including Russia, the EU, Japan and China.  It avidly seeks to engage more successfully in resources competition in Central Asia, the Middle East and Africa.

But in either case – that of a concert of powers or of power balancing – it seems that The ‘Look East’ policy may retreat to a moment in history – a moment when a tentative India was feeling its way, a relationship on the rebound, as it were.

That is not to say, of course, that South East Asia will not remain extremely important to India in the strategic and to a lesser extent the economic spheres.  In the strategic context, the two share interests and responsibilities in the North East Indian Ocean – a region beset by non-conventional security challenges.  India has a growing role in the Andaman Sea and is expanding its naval capacities centred on Port Blair.  ASEAN also has important responsibilities for security in the Straits of Malacca.

It is to say, rather, that South East Asia will be only one of many regions of importance to a rising, global power such as India.

Comments

1. Ian Hall - July 16, 2010

This is a timely and a powerful argument, but it arguably leaves a few elements out of the equations. Two stand out: Russia and Japan.
First, the decline of ‘Look East’ corresponds with Russia’s reemergence as a significant, if not a major power, and with India’s rediscovery of the virtues – as it sees it – of its old ally. Russia might never again be an effective counterweight in East Asia to China, nor will it be a source of FDI like SE Asia, but its political clout, its energy reserves, its military hardware and its intrinsic suspicion of China are valuable to India.
Second, ‘Look East’ was never just about SE Asia – it was about engaging states in East Asia too. India’s overtures to China might have been rebuffed, but its relations with Japan have improved markedly. Bilateral trade is now of a comparable value to that between India and China. Japan is providing aid, grants, loans and expertise for a series of major infrastructure projects, including the Delhi metro and a new rail corridor from Delhi to Mumbai. Moreover, the 2006 strategic partnership agreement concluded between New Delhi and Tokyo foreshadows far stronger military and strategic cooperation.
The wider point is that ‘Look East’ was primarily about economic development rather than strategic issues, particularly when it came to SE Asia. It was about FDI, labour movement and remittances, rather than creating a counterweight to China. Seen in that light, its relative decline after the conclusion of the FTA, in particular, is understandable, and represents less of a failure that I think Sandy perhaps suggests.

2. sandygordon - July 19, 2010

Ian, thanks for your comment, but actually I feel a little bit ‘verballed’ here. I never actually said the LEP was a ‘failure’, but rather that it was born of policies of failure. In fact, in paragraph five I make it quite clear I believe it has been a success.

Rather than arguing it has been a failure, I’m arguing that now that India is emerging as a globally significant power with global interests, the the need for the LEP has passed. Your comments on Russia are quite correct. But my feeling is that India’s relationship with Russia – which is not and never was part of the LEP – along with its energy and resource interests in the CARs, the Middle East and Africa, and its relationships with China and the US, are all indicative of a power that is not focusing on any specific geographic region.

Nor do I ignore Japan and the non-ASEANS. I mention that India has had an interest in Japan since 1981 and I mention East Asian powers that were not part of ASEAN at the time. But it remains a fact that DFI from Japan has been a disappointment when compared with the massive flow of technology and capital from Japan into East Asia. True, there are have been a couple of big signature projects.

While I agree with you that the LEP was primarily about economic rather than strategic issues at the time of its inception, I think that mix is actually changing as India emerges as a power. I try to chronicle some of the aspects of those changes. Sandy

3. Ian Hall - July 20, 2010

Sorry Sandy! I didn’t intend to sledge. My impression is that while India asopires to be a global power and to have global interests, in fact its capacity to do this remains severely limited by the diplomatic resources it has available. Hence the decline of LEP relative to other concerns may be reflective of the re-direction of very scarce resources. The other factor at play, however, seems to be generational change within the foreign policy-making elite, from an older group that insisted India’s proper focus should be South Asia first, and then East and Southeast Asia, as well as Russia, to a younger one that wants to break out of a dysfunctional region and build ties elsewhere. Either way, I think you are absolutely right to sound the death knell for the LEP.