Despite pressure from Trump, Iran’s world role will continue to be important

Introduction

Ever since taking over as President, Donald Trump’s approach towards Iran has been excessively rash and lacking in nuance. The US withdrawal from JCPOA (Joint Comprehension for Plan of Action), the imposition of sanctions, and brash statements by Trump have heightened tensions between both countries. Allies of the US, including EU member states (especially Germany and France), have expressed their disapproval of Trump’s Iran policy on numerous occasions.

In August 2019, during the G7 Summit at Biarritz (France), it seemed that Trump might have changed his approach towards Iran. The US President expressed his openness to engaging with Iran and dubbed it as a country of immense potential. After the attack on Saudi Oil facilities, there has been a visible shift in the approach of Germany, France, and the UK towards Iran. All three countries blamed Iran for the attacks. In a meeting on the sidelines of the United Nations General Assembly (UNGA) these three countries issued a statement condemning the attack. They also held Iran squarely responsible for the attack. Said the joint statement:

It is clear to us that Iran bears responsibility for this attack

Why China is giving importance to Iran Continue reading

A short note on Ethiopia and the African continent

Introduction

Ethiopian Prime Minister Abiy Ahmed was awarded the 2019 Nobel Peace Prize. He is the 12th winner from Africa. The Nobel Committee stated that Abiy had been awarded the Nobel for his efforts towards resolving the border conflict with Eritrea (in September 2018, Abiy and Eritrean President Isaias Afwerki signed a peace deal in Jeddah).

A border war in the years between 1998 and 2000 had resulted in the deaths of 100,000 people, and was responsible for the displacement of over one million people and the splintering of many families. The agreement has helped in reducing tensions between both countries and has led to a number of other important steps; it has paved the way for air connectivity (Ethiopian Airlines resumed its flight from Addis Abbaba to Asmara, the capital of Eritrea after two decades), resumption of communications between both countries (telephone lines had been disconnected in 1998), reduction of military hostilities, and most importantly reuniting of families.

Abiy’s reaction

While reacting to the Nobel Committee’s decision, the Ethiopian Prime Minister said that this reward was not merely for Ethiopia, but the whole of Africa, and hoped that leaders in the region would work towards peace-building.

Said the Ethiopian PM:

…It is a prize given to Africa, given to Ethiopia, and I can imagine how the rest of Africa’s leaders will take it positively to work on the peace-building process in our continent.

It would be pertinent to point out that, in recent years, the outside world has begun to take note of Ethiopia for its economic progress – in spite of numerous political challenges.

In recent years — almost a decade — the country’s economic growth has been a whopping 10% according to International Monetary Fund (IMF) estimates. In 2018, Ethiopia’s growth was estimated at well over 8% (8.5), and was the fastest growing economy in Africa. One of the key factors for Ethiopia’s impressive economic performance has been the shift from the agricultural sector to the industry & service sector and favourable demographics.

Reforms introduced by Abiy Ahmed: Political Sphere

Abiy’s election has generated immense hope, as he has seemed genuine in his commitment to political and economic reforms. During his tenure, a number of political prisoners have been released. There is also a reasonable amount of press freedom. There have been no arrests of journalists ever since he has taken over (2018 was the first year since 2004 when not a single journalist was arrested).

Abiy’s reforms – both political and economic – are significant because in many countries which have made economic progress, leaders have exhibited authoritarian tendencies. In many countries with economic promise, leaders have also failed to bite the bullet, as far as big bang economic reforms are concerned. Abiy, on the other hand, has reiterated his commitment to reforms.

Reforms introduced by Abiy Ahmed: Economic Sphere

In September 2019, Abiy unveiled his vision for economic reform titled ‘Home-Grown Economic Reform,’ which focuses on drawing greater public sector participation, reducing debts, and enhancing foreign exchange reserves. While speaking on the occasion of the launch of the roll out of his government’s agenda, Abiy emphasized on the fact that this approach is holistic: pro-job, pro-growth, and pro-inclusivity.

Privatization of a number of state run enterprises, such as Ethiopian Airlines, Ethiopian Electric Power Corporation, and the sole telecom provider, EthioTelecom, has also been high on the agenda of Abiy ever since he has taken over.

Challenges

This is not to say that all is well in Ethiopia. In June 2019, Ethiopia faced two attacks, one in the Amhara regional capital of Bahir Dar and the other in the federal capital of Addis Ababa. While Abiy has made efforts towards reducing acrimony in the country’s polity, there are still numerous ethnic divisions, and a large number of political players are seeking to cash in on these schisms.

Expectations from Abiy are sky high, and the country faces numerous debts. While his agenda for reforms is well-intentioned, and does represent a significant break from the past, it is rather ambitious and it remains to be seen whether stakeholders involved in the implementation will be in sync with the PM.

Africa no longer the Dark Continent

For very long, many Western commentators have consistently adopted a patronizing approach towards Africa. The Nobel Award to the Ethiopian PM comes at an interesting time. At a time when the whole world is becoming insular, 54 African countries have signed the AfCTA (African Continental Free Trade Area) agreement. AfCTA. This is the world’s largest free trade agreement since the World Trade Organisation).

AfCTA is a crucial step towards strengthening intra-regional trade linkages and overall connectivity. AfCTA has the potential of connecting over 1 billion people, creating a bloc worth over an estimated $3 billion and pushing intra-Africa trade by up to 15-25% by 2040 (as of 2018, intra-regional trade was less than 20%).

It would be pertinent to point out that the Ethiopian PM has on repeated occasions reiterated his commitment to Pan-Africanism, and has been one of the most fervent backers of AfCTA.

Africa is also being viewed as the world’s next manufacturing hub (China has already moved in a big way, though of course many countries are looking to other alternatives). Political stability and investor-friendly policies of course are imperative.

Conclusion

One hopes that other leaders in Africa follow Abiy’s footsteps in focusing on economic and political changes which could pave the way for sustainable growth and prosperity.

For long the world’s attention has been driven by a Western narrative, but in recent years Africa along with Asia has begun to draw attention due to high economic growth rates. If Africa can get its act together, and growth in countries like Bangladesh and Vietnam is sustained, we could witness the rise of new Non-Western groupings (consisting of developing countries from different regions). Such groupings will not be driven by geopolitical compulsions, geographic proximity, or sheer size, but by economic consideration and could play a pivotal role in shaping a new narrative, while promoting globalization, connectivity and free trade.

Mexican Productivity and Poverty: a Superficial, Street-Level View

I just spent three and a half weeks in Puerto Vallarta, Mexico (summer 2019). Below are some impressions. First things first; I have to give you the severe limits of my field of vision while I was there.

My wife and I stayed in an old-fashioned, 1950s low-rise hotel on the ocean with a pleasant faded kind of glory. (My wife Krishna does not let me go to Mexico by myself, for obvious reasons!) It was very hot throughout so, we did not go out much except that we had to shop for food every day at the mall across a broad avenue. We took taxis to and from the dentist about fifteen times. I always chat with taxi drivers; they gave us the foundation of sociology, I am sure! We spent a little time in the old touristy market district (where we have friendly acquaintances from past visits). We also walked some on Puerto Vallarta’s beautiful and interesting seafront (the “malecon”). I speak Spanish well, I understand everything in the language; I read it with ease. I read the paper a few times; I watched the Spanish language news on television a few times. I read free brochures on this and that.

There is much to like in Mexico, and especially Mexicans. They are low-key, unexcitable, stoical cordial, affable, and eager to help, and not only vis-à-vis this pleasant, well-disposed gringo, myself. Living for a short time in pleasant, clean Puerto Vallarta, it’s difficult to remember that Mexico’s homicide rate is three times the US rate. It takes the occasional sighting of a truckful of the new, nattily dressed National Guard with automatic weapons to jog your memory. (See notes from a previous visit: “Mexicans in Mexico,” 2017, )

Low productivity

My main observation is a repeat from what I recounted the last time I was there (See my “Mexican Underdevelopment: Pop-Sociology.”) It’s about productivity. For most of our stay, there was work going on on a brick path right beneath my windows. It was mind boggling. At one point, there were seven people working on the same two steps, including a master craftsman. They continued by restoring and cleaning a flat brick path. The thought stuck me that,in California, two, or two-and-a-half of the same Mexican workers (the very same guys) would have done the same work in the same time easily. And, yes, I know something about brick laying, both personally (I used to be very poor; now I am moderately poor), and as a customer. I am talking about a more than fifty per cent rise in productivity obtained by simply moving workers into a different environment. Bosses and economic leaders would easily kill for a change of such magnitude!

Of all the guys on the bricklaying and brick cleaning site, only one had a proper power tool, and it was only operational part of the time. The others labored by hand, mostly on their knees. No one had thought of giving them knee-guards. They had not themselves.

Moderate Poverty

The workers told me they were making about US$23 a day, or $115 for a forty-hour week. That’s not bad given that beginning professional positions – that require a university education – in thriving, manufacturing Monterrey are advertised for US$600 a month. Yet, and although most food, housing, gasoline, and health care are all cheaper in Mexico than in the US, this is still not much money on which to rear a family. But, this is also not dire poverty of the kind we used to see, and sometimes still find in India or in Africa. In that part of Mexico, everyone looks healthy, especially the children. Many adults are obese, more or less like in the US. Everyone is well dressed, by the admittedly low standards of central California where I live.

Over-staffing

Here is striking fact: Wherever you go, you find overstaffed shops, restaurants, etc, often very overstaffed. I mean like three shop attendants doing nothing in the middle of the afternoon. There must be a reasonable number of exceptions because my dentist’s office makes good use of its human resources. The same young women who serve as assistants, also act as receptionists. (I know, know, comparative advantage; don’t get me started, this is not the time or place.)

Productivity and Income

Over-staffing and the failure to provide workers with the best tools matter a great deal if you think, as I do, that incomes roughly follow productivity though often with big time lags, and often not in a linear fashion. Although employers sometimes fail to share the product of productivity gains with workers, the fact is that they cannot share gains that have not occurred. Low productivity pretty much guarantees low wages.

Note what I am not saying. The Mexican work ethic is not the problem. The guys who worked in the hot sun of tropical Mexico for eight hours a day don’t need lessons from anyone on that count. Also, those of us who live in California remember well the recession years when the vegetable picking lines remained nearly all-Mexican (with a handful of Filipinos) while poor Anglos lamented the absence of jobs. Now that wages in the field have increased substantially because of a chronic farm labor shortage, still few college students are flooding in, California sky-high rents or not.

Going back to fairly prosperous Puerto Vallarta, where construction is thriving (because of Canadian refugees from the cold, I am told), there is also the mysterious fact of the invisible zealot pounding stakes close to my hotel at 5:30 AM. I am not complaining. I respect this instance of unreasonable industriousness!

Social Structure and Productivity

Mexicans remain poor, the Mexican economy keeps growing but only slowly. This is, at least in part, I think, because Mexicans have normative standards that do not feed high productivity. These standard maintain a permanent social structure that makes increasing productivity difficult. A vicious/virtuous circle is at work. Labor is cheap because of its low productivity. It’s so cheap that, why not hire an additional worker for the same job? The incentive to hire nonchalantly is probably high because of Mexicans’ high connectivity. Mexicans, even in a fairly new city like Puerto Vallarta appear much more interconnected than Californians. (I don’t know much about the East Coast of the US.) There are many more individuals in one’s life there to please by giving their relatives and liege a job than is the case where I live.

Take the lifelong relationship of “compadre” and “comadre” between adults who are usually not kin to each other. The titles denote the link between a man and a woman who are respectively godfather and godmother to the same child. It easily multiplies by two or three beyond actual relatives the circle of individuals to whom one is to some extent obligated. And, it does not end there. Why, there is even a word in Mexican Spanish to denote the relationship of two people who have the same first name! I forgot the word but I was charmed to discover that I was ##### to any number of “Diegos.” I can even imagine situations where someone would succeed in using that tenuous link to extract a small favor from me (with a probable intention to reciprocate).

High Connectivity not a Specific Feature of Mexico, and Over-Staffing

I don’t think this high connectivity is an idiosyncratic feature of Mexican society. I believe rather that something similar prevails in India (that I know a little). It seems to me that high connectivity was visible also, in rural Brittany when I was a child in the forties and fifties. It was largely absent in Paris by contrast where I lived most of the time (Order my book of socio-historical memoirs of that period: I Used to Be French: An Immature Autobiography; avoid the middle person, go through me.). Having obligations to few rather than to many is a salient feature of modernity (that includes also urbanization, small nuclear families, and a search for formal education).

I speculate that Mexicans, even in comparatively modern places like Puerto Vallarta, have a high tolerance for over-staffing because of the large social networks within which they exist. Over-staffing is thus a primary contributor to low productivity. Low productivity keeps many people poor. Poor people need a supportive network more than do the more prosperous. Long and short of it: to break the cycle would require a degree of de-humanization of Mexican society. It’s not inexorable. Mexicans may collectively choose a bearable level of poverty (see life expectancy below) over the destruction of the emotional comfort larger social networks promote.

Not Following in the Footsteps….

It seems to me that a high degree of familiarity with the negative example of American society next door with its low connectivity – in places – may guide them toward such a choice. In point of fact, I have met a strikingly large number of Mexican men who had worked in the US for several years and who had returned home under their own power, by choice, according to their narratives. (I also note with satisfaction that ten years ago, S. Nikiforov and I had evoked precisely that sort of preference in a big article on Mexican immigration: “If Mexicans and Americans could cross the border freely,” in The Independent Review, 14-1: 101-133 [Summer] 2009.)

There is no law of nature that requires the people of less developed countries to retrace all the steps of their predecessors in development. The cellphone shows us that often, they don’t have to: Several African countries have phone landlines only in the center of their major city but 80% of their population has access to a cellphone. Trying to skip stages is the rational thing to do, of course. I would guess it’s most successful when it depends largely on a myriad of individual decisions, as with cellphones. Nevertheless, it seems to work pretty well – for some reason – even with collective decisions regarding health care, specifically.

Perhaps, societies can pick and choose what features of modernity they actually want thanks to a density of available information and a richness in inter-communications that was unimaginable forty years ago. (That was when I was studying underdevelopment with rigorous methods.) I can picture a partial national consensus forming that says, “We don’t need everything the big guys have; a little bit more of this and of that, and we are OK.” If this scenario is realistic, food, schooling, and health care will probably be its dominant themes. The Mexican food situation appears fine (I will consider contradiction on this.). In my subjective judgment, based on its products, on the average, Mexican K-12 is superior to its American public counterpart.

Illness and Health care

One component of socio-economic underdevelopment and also an obstacle to development in its own right used to be widespread illness. The morbidity figures I saw in the seventies about the situation in the fifties were horrifying. Illness also obstructed development indirectly because it destroyed family units through the death of parents or older siblings, even of aunts and uncles who might have provided. This is largely in the past. The present in poor countries is very different, greatly improved from the narrow standpoint of health. And, it turns out, the Mexican health picture, in particular appears fairly bright.

Single Payer Health Care

Something to think about for my conservative friends: Mexico has single payer healthcare for those who want it. It has a pretty poor reputation, it’s true. A private health network subsists side-by-side with it for the prosperous. (I like that.) Yet, yet, the life expectancy of Mexicans is only 2.6 years lower than that of Americans, same as the difference between the US and the Netherlands (WHO 2015, in Wikipedia). Americans live longer than Mexicans in the same proportion as the Dutch live longer than Americans. So, either, it’s possible to get fairly similar results health-wise at much lower cost than do Americans, or health care does not matter all that much, as far as not dying is concerned. (Hate to twist the knife in the conservative wound but the Dutch also spend much less money than Americans on their health care.)

Incidentally, I am well aware that there are non-economic arguments against entrusting what is now 17% of the US GDP to the government, to any government. But, perhaps, conservatives should restrict themselves to combating govt. health care on political and principle grounds alone. (End of digression.)

Where To?

So, where am I going with this, you may fairly ask? I am expressing my doubts that Mexican society – and other less developed societies – will be forced to undergo the dislocating social change that would be required to improve much its (their) productivity, according to the old schemes. I have to stop here, more or less, but it seems to me that Mexico is more likely to improve first its societal-level productivity by having more women join the work force. The preservation of a high existing level of connectivity – with its baked-in child care and food services – would ease, and facilitate such mass social change, of course.

Italy and the Belt and Road Initiative

There has been a growing scepticism with regard to the Belt and Road Initiative (BRI) project in many quarters, due to the lack of transparency with regards to terms and conditions as well as the economic implications for countries which are part of the project. A report published in April 2018 by the Center for Global Development (CGD) in Washington flagged 8 countries (including Pakistan, Maldives, Laos, and Djibouti) where the level of debts are unsustainable.

Apart from the red flag raised by a number of researchers, the removal of Pro-China leadership in countries like Malaysia, Maldives, and Sri Lanka has also resulted in problems with the BRI project, and China’s economic dealings (which are clearly skewed in favour of Beijing) with other countries is drawing more attention.

The most vocal critic of China’s economic links has been Malaysian Prime Minister Mahathir Mohamad. During a visit to China in August 2018, Mahathir, alluded to China’s trade relations with poorer countries as ‘a new version of colonialism’. Mahathir later on denied that his statement was targeted at China or the BRI. The fact is that the Malaysian Prime Minister did scrap projects estimated at well over $20 billion (which includes a rail project, East Coast Link, as well as two gas pipelines).

Top officials in the Trump Administration, including US Vice President Mike Pence, have also been critical of the BRI project for a variety of reasons. The major criticism from US policy makers has been the economic ‘unsustainability’ of the project as well as the point that the project is skewed in favour of China.

Italy to join BRI Continue reading

Sri Lankan strongmen and Chinese initiatives: India’s neighborhood is as bustling as ever

On October 25, 2018 Sri Lankan President Maithripala Sirisena suspended Parliament (till November 16, 2018) and sacked his Prime Minister, Ranil Wickremesinghe, replacing him with Mahindra Rajapaksa (who served as President of Sri Lanka for a decade, from 2005 till 2015). Sirisena had wrested power from Rajapaksa in 2015. Wickremesinghe decided to battle it out, saying that Sirisena’s decision was illegal since none of the conditions under which a Prime Minister can be removed, under provisions 46(2) and 48 of parliament were applicable to the current situation. Rajapaksa announced that the President will reconvene Parliament on November 5, 2018.

Rajapaksa has been gaining ground in recent months

First, Rajapaksa, who had been written off totally, set up a new political outfit, SLPP (Sri Lanka Podujana Peramuna), which performed well in the local elections of February 2018.

More recently, Sirisena, who was initially considered Pro-China, accused Indian intelligence agency RAW (Research and Analysis Wing) of meddling in Sri Lanka’s affairs and plotting his assassination. He supposed to have denied this in a conversation with Indian Prime Minister Narendra Modi.

As President, Rajapaksa had a close relationship with China (there were allegations of a Chinese company even providing financial assistance for his campaign) and New Delhi was relieved to see his back.

The strategically important Hambantota Port Project was awarded to the Chinese during Rajapaksa’s presidency. China provided assistance to the tune of $190 million, and Sri Lanka had to lease out the project for a period of 99 years to Beijing in 2017, since debts to Beijing are mounting (total Sri Lankan debts to China are estimated at $13 billion). The Hambantota Project is now presented as a symbol of what has been referred to on more than one occasion as China’s debt trap diplomacy.

It would be pertinent to point out that the project had first been offered to New Delhi in 2010, but India declined stating that the project was not economically sustainable.

It would also be pertinent to point out here that, after his removal, Rajapaksa has made some statements in favor of close ties with both Beijing and New Delhi. Indian PM Narendra Modi has met him on both his visits to Sri Lanka. In September 2018 Rajapaksa was himself in New Delhi.

How to approach the China factor

While there is no clarity as to how long this new arrangement will last in Sri Lanka, there are some broader issues which need to be dealt with.

The first question which arises is: should New Delhi view China’s involvement with suspicion or work jointly? While there is absolutely no doubt that, in recent years, India too has tried to come up with its own responses to the China’s Belt and Road Initiative (BRI) in South Asia. This includes promoting greater connectivity within South Asian countries through the BBIN (Bangladesh, Bhutan, India, Nepal) framework on the one hand, while also exploring synergies with Japan in order to check Beijing’s growing clout on the other. This includes not just cooperation under the umbrella of Japan’s PQI (Partnership for Quality Infrastructure) initiative, but also in areas like infrastructure and energy (two key instances being the metro project in Dhaka, where India’s Larsen & Toubro and Japanese companies are working jointly for developing Line 6, as well as an LNG terminal in Sri Lanka where Petronet and Japanese companies are making a joint investment to the tune of $300 million).

During Wuhan Summit one of the important issues discussed was that India and China will work together in Afghanistan (only recently both countries set up a joint training program for Afghan Diplomats). Pakistan has been trying to obstruct any big ticket cooperation between both countries, and that is cited as one of the main reasons why Beijing is shying away from any big ticket investments into a joint project in Afghanistan.

If Japan and China can work together in connectivity projects (Japan has even expressed its willingness to join the BRI), as was discussed during Abe’s recent China visit, New Delhi and Beijing too can explore certain instances where they work together. It would be pertinent to point out that the Global Times made an interesting argument in favor of New Delhi and Beijing working in tandem for Sri Lanka’s infrastructural development. While this may appear to be a pipedream currently, in the long run it can not be ruled out given the changing geopolitical equations.

Apart from this, there are clear lessons for New Delhi: that it should not put all eggs in one basket, and realize that certain leaders will have good relations with China. A former Diplomat, Ashok Kantha, who was India’s envoy to Sri Lanka, made the point that India needed to stop looking at domestic politics from a lens of ‘Pro-India and Pro-China’, as this is too simplistic.

While India was apprehensive about the election of K.P. Oli as Nepalese Prime Minister, he has been speaking about close ties with both Beijing and New Delhi. During his visit to China in June 2018, Oli spoke about the possibility of Nepal emerging as a bridge between China and India.

In conclusion, New Delhi has to watch out for it’s own interests in South Asia, and should certainly ensure that no country has a stranglehold, but paranoia will be of no use. India needs to come up with viable alternatives to the BRI, while also being open to cooperation, as and when feasible. Apart from this, New Delhi needs to realize that countries in the neighborhood will give precedence to their own interests and even if they do maintain close economic linkages with China, it is not always targeted at India.

American protectionism and Asian responses

On October 10, 2018, a senior Chinese diplomat in India underscored the need for New Delhi and Beijing to work jointly in order to counter the policy of trade protectionism being promoted by US President Donald Trump.

It would be pertinent to point out that US had imposed tariffs estimated at $200 billion in September 2018, Beijing imposed tariffs on $60 billion of US imports as a retaliatory measure, and US threatened to impose further tariffs. Interestingly, US trade deficit vis-à-vis China reached $34.1 billion for the month of September (in August 2018, it was $31 billion). Critics of Trump point to this increasing trade deficit vis-à-vis China as a reiteration of the fact that Trump’s economic policies are not working.

Ji Rong, spokesperson of the Chinese Embassy in India, said that tariffs will be detrimental for both India and China and, given the fact that both are engines of economic growth, it is important for both to work together.

The Chinese diplomat’s statement came at an interesting time. Continue reading

The EU’s laudable Asia Connectivity Strategy

The European Union (EU) has put forward a plan for enhancing connectivity within Asia, and has been dubbed as the Asia Connectivity Strategy.

The EU does not want to give an impression that the Asia Connectivity Strategy (ACS) is a counter to the Belt and Road Initiative (BRI). Yet, senior officials of the EU, while commenting on the broad aims and objectives of the project, have categorically stated that the primary goal of the Asia Connectivity Strategy is enhancing connectivity (physical and digital) while also ensuring that local communities benefit from such a project, and that environmental and social norms are not flouted (this is a clear allusion to the shortcomings of the BRI). There are no clear details with regard to the budget, and other modalities of the project (EU member countries are likely to give a go ahead for this project, before the Asia-Europe Meeting in October 2018). The EU has categorically stated that it would like to ensure that the ACS is economically sustainable.

Other alternatives to BRI: the US

It is not just the EU, but also the US, along with Japan and Australia, which are trying to create an alternative vision to the BRI.

Continue reading

India’s approach towards BRI: Need for pragmatism

(new title)

Recently, China’s consular general in Kolkata, Ma Zhanwu, while speaking at a function, proposed a bullet train connecting Kunming (in China’s Yunnan Province) with Kolkata, the capital of India’s eastern state of West Bengal. Said Ma:

With joint efforts of India and China, a high-speed rail link could be established between the two cities.

It would be pertinent to point out that the proposal for a bullet train connecting Kunming and Kolkata had been discussed earlier at the Greater Mekong Subregion (GMS) meet in 2015. In fact, enhancing connectivity between India and China through the Kolkata-Kunming multi-modal corridor (officially the Bangladesh-China-India-Myanmar Economic Corridor, or BCIMEC), which covers a distance of 2,800 kilometres, has been under discussion for over 2 decades, through the Track II K2K (Kolkata-Kunming) dialogue. During former India Prime Minister Manmohan Singh’s China visit, in October 2013, sister city relations were established between Kunming and Kolkata.

In recent years, China has been pro-actively reaching out to West Bengal Chief Minister Mamata Banerjee, and has invited her to visit on repeated occasions, though she has been unable to visit (she was all set to visit in June 2018, but her trip was cancelled at the last moment). Apart from this, a number of Chinese investors have expressed interest in investing in West Bengal and even attended the Bengal Global Business Summit 2018.

Given the increasing emphasis on connectivity with South East Asia, through India’s North East (one of the key aims of India’s ‘Act East Policy’), it was believed that the BCIMEC would tie in neatly with India’s vision for connectivity.

However, tensions between India and China – due to the Doklam standoff as well as Beijing’s insistence that BCIMEC be included in its official Belt and Road Initiative (BRI) –  have contributed to a wane in New Delhi’s interest in the project, at least for the time being. The Rohingya crisis, and more general tensions between Bangladesh and Myanmar, are also a major impediment to the project.

The China Myanmar Economic Corridor: Why New Delhi should pay close attention

While a high speed train is an ambitious project, New Delhi can not be closed to the BCIMEC and should pay close attention to the China-Myanmar Economic Corridor (the Memorandum of Understanding for this project was signed on September 9, 2018). While the China-Myanmar Economic Corridor (CMEC) has been under discussion for some time, there have been numerous debates with regard to the economic implications for Myanmar (the Kyaukphyu Deep Sea Port project, as well as Special Economic Zones, have been contentious). The increasing debate on the issue of ‘debt trap diplomacy’ has only increased apprehensions within sections of the Myanma government (the stake of Chinese conglomerate CITIC in the deep sea port has been reduced from 85 percent to 70 percent due to domestic pressures). Myanmar has also made it clear that it would not like to depend only on Chinese investments, and the recently-signed MOU categorically states that third party investments from Japan, South Korea, and Thailand in CMEC projects are more than welcome. Interestingly, an article on CMEC in Chinese media acknowledges some of the apprehensions vis-à-vis CMEC, and also bats for closer cooperation between China and other Asian and Western countries.

The proposal for the bullet train connecting Kolkata-Kunming came days after the agreement had been signed between China and Myanmar. China would like to extend this corridor all the way to India (while speaking about rail connectivity between Kunming and Kolkata, the Chinese diplomat also spoke about an industrial cluster along the route).

How should New Delhi play it?

While New Delhi’s objections to the BRI are valid, it does need to shed blinkers. It is free not to participate in those components of the project with which it is not comfortable, but there are projects, like the BCIMEC, where it can easily find common ground with China. This will give a boost to India’s infrastructure in the eastern and northeastern part of the country, and complement it’s Act East Policy. If third countries are allowed to invest in CMEC, Indian companies should explore opportunities, as this will enhance their presence in Myanmar while also bolstering the Act East Policy.

China’s narrative in South Asia

Post the Wuhan Summit, there has been a clear change of narrative from the Chinese side. China has expressed its keenness to work jointly with India in Afghanistan – in capacity-building projects. This was unthinkable a few years ago.

China’s burgeoning economic relationship with Nepal has sent alarm signals in New Delhi. China’s decision to give Nepal access to its ports (Tianjin, Shenzhen, Lianyungang and Zhanjiang) raised the hackles in New Delhi. Pragmatists realize that New Delhi can not dictate Nepal’s ties with China, and the fact is that Kathmandu would like to benefit economically from its ties with both China and India.

Interestingly, China has been urging Nepal to strengthen economic ties with India. During his visit to Beijing, Nepal’s Prime Minister, K.P. Oli, made an unequivocal pitch for strong ties between Kathmandu and New Delhi (as well as Kathmandu and Beijing). He stated that the economic progress of both India and China was an opportunity for Nepal, and stated that Nepal wanted to emerge as a bridge between both countries, and would not like to get embedded in zero sum geopolitical games. Nepal’s former Prime Minister, Prachanda, during his visit to India, also referred to the need for close ties with both India and China.

India should also keep in mind a few other points

While many in New Delhi are pointing to Malaysian Prime Minister Mahathir Mohammad’s stand against Chinese projects, it is important to keep in mind that while the Malaysian PM has scrapped a few projects, he has continued to reiterate the relevance of the China-Malaysia relationship (there is need for nuance). Second, it is one thing to point out the shortcomings of the BRI project, but India needs to prove its own track record in big ticket connectivity projects (New Delhi has been extremely slow when it comes to the implementation of connectivity projects within the neighbourhood). Third, there are areas where India is already working with China, so rigidity and paranoia do not make much sense. If even Japan is willing to participate in certain projects of BRI, there is absolutely no reason why India should not at least be open to elements of the project. It is also important to look at connectivity from an economic dimension and not a narrow security prism as large sections of India’s strategic community do. Finally, New Delhi can not put all its eggs in the American basket. While India’s strategic relationship with the US has witnessed an improvement, and Washington has repeatedly spoken about the need for greater connectivity within the ‘Indo-Pacific’, the US is not likely to invest significantly in economic connectivity projects. India thus can not be totally dismissive of Beijing-led connectivity initiatives.

While New Delhi needs to exhibit pragmatism, Beijing on its part needs to address the concerns of India, and other countries, with regard to the BRI.

A short note from New Delhi on the 2018 Eastern Economic Forum

Chinese President Xi Jinping recently attended the Eastern Economic Forum (EEF), hosted by the Russian city of Vladivostok, which was held on September 11th and 12th of 2018. President Xi (who became the first Chinese President to attend the EEF) met with Russian President Vladimir Putin for the third time in as many months. Significantly, Japanese Prime Minister Shinzo Abe also attended the Forum, which was titled “The Russian Far East: Expanding the Range of Possibilities.”

Both Xi and Putin repeatedly referred to not just their close personal rapport (Chinese President Xi Jinping, while referring to their individual ties, stated that his and Putin’s ‘friendship was getting stronger all the time’), but also the deepening of economic and strategic ties between Russia and China, as well as the convergence on key global issues (neither side missed the opportunity to target the US for it’s inward looking economic policies).

China was also participating in military exercises, held in Siberia, which have been dubbed ‘Vostok 2018’ (Beijing clarified that these military exercises were not targeted at any third party). The military exercise (September 11-17, 2018) involves 300,000 troops, 1,000 planes, and a number of warships. China sent over 3,000 People’s Liberation Army personnel for the military exercises.

China-Russia Economic Times

A number of issues were discussed during the course of the Forum. Both sides agreed that there was a need to accelerate bilateral economic ties. Trade has witnessed a significant rise in recent years, while in 2017 it was estimated at over $80 billion. In 2018, bilateral trade could surpass $100 billion. Chinese investments in Russia have also been increasing. According to the Russia-China Investment Fund (RCIF; set up in 2012), 150 representatives from China and Russia have already identified 73 projects estimated at $100 billion. Also according to the RCIF, 7 projects estimated at well over $4 billion have already been undertaken.

Both sides also agreed to promote stronger synergies between the Belt and Road Initiative (BRI) and the Eurasian Economic Union (EEU).

Given the fact that the Forum was held in Russia’s Far Eastern Region (RFE), the need to increase Chinese investment in the RFE was high on the agenda. President Xi stated that China has always been a key participant in development projects in the Eastern parts of Russia. China’s Shandong Hi-Speed Group is also likely to invest in highway projects in the RFE.

Recent years have witnessed an increasing Chinese economic presence in Khabarovsk, which is the second largest city in the Eastern Region and 800 kilometres from Vladivostok. It may also be pertinent to point out that a large number of Russians have been uncomfortable with the growing Chinese economic clout, as well as immigrants. In 2010, the Chinese population in the Russian Far East was estimated at less than 30,000, though according to some estimates the population is much higher.

Protectionism

Both Russia and China warned against growing economic protectionism. Xi stated that he was all for greater international cooperation, and even lashed out at the growing tendency towards protectionism. Xi’s views were echoed by Putin, who stated that ‘the world and global economy are coming up against new forms of protectionism today with different kinds of barriers which are increasing.’

Putin made the point that protectionism was a threat, especially to Asia-Pacific (significantly, the current Trump administration has been using the term ‘Indo-Pacific,’ much to the chagrin of the Chinese).

What was also significant was that Xi came down heavily on ‘unilateralism’ at a time when China itself is being accused of ‘expansionist tendencies’ and promoting ‘Debt Trap Diplomacy.’ What was even more interesting was a reference to ‘UN Charter.’

The message emanating from the forum was clear: that the economic as well as strategic partnership between Moscow and Beijing is likely to strengthen, and both will try to develop an alternative narrative to that currently emerging from Washington.

Significance of meeting: Why India would be watching

New Delhi would be observing the Forum and meetings between Putin and Xi, since it’s own relations between Russia and China are of vital importance. While Russia is important in the security context, economic ties with Beijing are important for New Delhi.

New Delhi attaches immense significance to ties with Moscow

There are many in analysts in New Delhi who argue that India should be cautious in strengthening strategic ties with the US, given that this could cause friction in New Delhi’s relations with Moscow (Russia’s improved defense ties with Pakistan are often cited as a consequence of New Delhi moving too close to Washington DC). There are others who argue that New Delhi’s ties with Moscow are robust and time-tested, and will not be impacted by close ties with Washington DC. Russian President Vladimir Putin will be visiting India in October 2018 (for the 19th annual India-Russia Summit), while Indian External Affairs Minister Sushma Swaraj, during her Moscow visit, met with Deputy Prime Minister Yuri Borisov. Both of them jointly chaired the 23rd India-Russia Inter-Governmental Commission on Trade, Economic, Scientific, Technical, and Cultural Cooperation (IRIGC-TEC) meeting. A number of issues, including the need to boost bilateral trade and enhance people-to-people contact, were discussed. Significantly, this was Swaraj’s third visit to Russia in 11 months and she stated that India accorded ‘high priority’ to ties with Russia.

The fact that Swaraj’s visit to Russia took place after a successful 2+2 dialogue with the US, where a number of important defense agreements including COMCASA were signed, shows that New Delhi realizes the importance of ties with Russia. India is likely to sign a deal with Russia for the procurement of the S-400 air defence system, even though the USA has not given India any assurances with regard to a waiver from CAATSA (Countering America’s Adversaries through Sanctions Act) if India purchases defence equipment from Russia. During the visit, India is also likely to go ahead with an agreement with Russia for four frigates for the Indian Navy. While two of these will be manufactured in Kaliningrad, two will be manufactured in Goa.

New Delhi-Beijing ties

The issue of trade tariffs, which was highlighted by Putin and Xi, has also not gone unnoticed by New Delhi. One of the reasons (apart from the desire for peace and tranquility on borders) why India has been pro-actively reaching out to China is a convergence on economic issues. In fact, days after the 2+2 Summit, US President Trump, while referring to India and China, stated that the US has been providing subsidies to India and China for far too long and can not afford to do so any longer.

In terms of investments, there has not been much progress so far due to political disputes, but there is scope for greater economic cooperation between both countries through enhanced connectivity. New Delhi, on its part, should be open to projects like BCIM Corridor (Bangladesh, China, India, Myanmar). The recent proposal out of Beijing to start a railway line from Kunming to Kolkata may not seem possible in the short run, but in the long run it is definitely worth examining, and would give a boost to economies of India’s Eastern and North Eastern states. Interestingly, on September 9th, 2018, Myanmar signed a memorandum of understanding (MoU) with China for agreeing to establish the China-Myanmar Economic Corridor (CMEC). New Delhi should see this connectivity project as an opportunity rather than an obstacle.

Conclusion

New Delhi, while enhancing strategic cooperation with Washington, needs to keep in mind that there is a plethora of economic as well as other issues of global importance where New Delhi can find common ground with Beijing and Moscow. India bilaterally shares robust economic ties with China, and a strategic relationship with Russia. All three countries are also working closely in BRICS as well as SCO. New Delhi also needs to keep in mind that while strategic ties with Washington are important, Trump’s unpredictability will compel New Delhi to keep all its options open and think in a nuanced manner. While historically New Delhi shares close ties with Moscow, the logic of geography can not be ignored in the context of India-China ties.

China and the liberal vision of the Indo-Pacific

Mike Pompeo’s recent speech (titled ‘America’s Indo-Pacific Economic Vision’) at the Indo-Pacific Business Forum hosted by the US Chamber of Commerce in Washington, DC, has been carefully observed across Asia. Beijing has understandably paid close special attention to it. Pompeo emphasized the need for greater connectivity within the Indo-Pacific, while also highlighting the role which the US was likely to play (including financial investments to the tune of $113 million in areas like infrastructure, energy, and digital economy). The US Secretary of State, while stating that this vision was not targeted at anyone, did make references to China’s hegemonic tendencies, as well as the lacunae of Chinese connectivity projects (especially the economic dimension).

The Chinese reaction to Pompeo’s speech was interesting. Senior Chinese government officials were initially dismissive of the speech, saying that such ideas have been spoken in the past, but produced no tangible results.

A response article in the Global Times is significant here. Titled ‘Indo-Pacific strategy more a geopolitical military alliance’ and published in the communist state’s premier English-language mouthpiece, what emerges clearly from this article is that Beijing is not taking the ‘Indo-Pacific vision’ lightly, and neither does it rule out the possibility of collaboration. The article is unequivocal, though, in expressing its skepticism with regard to the geopolitical aspect of the Indo-Pacific vision. Argues the article:

[…] the geopolitical connotation of the strategy may lead to regional tensions and conflicts and thus put countries in the region on alert.

The piece is optimistic with regard to the geo-economic dimension, saying that American investment would be beneficial and would promote economic growth and prosperity. What must be noted is that while the US vision for an ‘Indo-Pacific’ has been put forward as a counter to the Belt and Road Initiative (BRI) of China, the article also spoke about the possible complementarities between the US vision for an ‘Indo-Pacific’ and China’s version of BRI. While Pompeo had spoken about a crucial role for US private companies in his speech, the article clearly bats in favor of cooperation between the Indian, Japanese, Chinese, and US governments, rather than just private companies. This is interesting, given the fact that China had gone to the extent of dubbing the Indo-Pacific vision as “the foam on the sea […] that gets attention but will soon dissipate.”

While there is absolutely no doubt that there is immense scope for synergies between the Indo-Pacific vision and BRI, especially in the economic sphere, China’s recent openness towards the Indo-Pacific vision needs to be viewed in the following context.

First, the growing resentment against the economic implications of some BRI projects. In South Asia, Sri Lanka is a classical example of China’s debt trap diplomacy, where Beijing provides loans at high interest rates (China has taken over the strategic Hambantota Project, since Sri Lanka has been unable to pay Beijing the whopping $13 billion). Even in the ASEAN grouping, countries are beginning to question the feasibility of BRI projects. Malaysia, which shares close economic ties with Beijing, is reviewing certain Chinese projects (this was one of the first steps undertaken by Mahathir Mohammad after taking over the reigns as Prime Minister of Malaysia).

Secondly, the Indo-Pacific vision has long been dubbed as a mere ‘expression’ that lacks gravitas in the economic context (and even now $113 million is not sufficient). Developments over recent months, including the recent speech by Pompeo, indicate that the American Department of State seems to be keen to dispel this notion that the Indo-Pacific narrative is bereft of substance. Here it would be pertinent to point out that Pompeo’s speech was followed by an Asia visit to Indonesia, Malaysia, and Singapore.

The US needs to walk the course and, apart from investing, it needs to think of involving more countries, including Taiwan and more South Asian countries like Sri Lanka and Bangladesh in the Indo-Pacific partnership.

The Indo-Pacific also speaks in favor of democracy as well as greater integration, but countries are becoming more inward-looking, and their stands on democracy and human rights are more ambiguous than in the past. Japan is trying to change its attitude towards immigration, and is at the forefront of promoting integration and connectivity within the Indo-Pacific. Neither the US, nor India, Japan, or Australia have criticized China for its human rights violations against the Uighur minority in Xinjiang province.

Here it would also be important to state that there is scope for China to be part of the Indo-Pacific, but it needs to look at certain projects beyond the rubric of the BRI. A perfect instance is the Bangladesh, China, India, Myanmar (BCIM) Corridor, which India was willing to join, but China now considers this project as a part of BRI.

In conclusion, Beijing can not be excluded from the ‘Indo-Pacific’ narrative, but it cannot expect to be part of the same, on its own terms. It is also important for countries like the United States and India to speak up more forcefully on key issues pertaining to freedom of speech and diversity (and ensure that these remain robust in their own respective countries), given that one of the objectives of the Indo-Pacific vision is a ‘Free and Open Indo-Pacific’.

Finally, the US is getting serious about the Indo-Pacific

China has not been particularly comfortable with the Trump Administration’s repeated use of the term ‘Indo-Pacific’ instead of ‘Asia-Pacific’ (of late, it has been quite scathing in it’s criticism). The term ‘Indo-Pacific’, which has been used for a few years, has now gained more attention after a few developments:

First, during Trump’s Asia visit in 2017, in which he visited Japan, Vietnam, and attended the ASEAN Summit, he used this term on more than one occasion.

Before his India visit in October 2017, former Secretary of State Rex Tillerson articulated a vision for a ‘Free and Fair Indo-Pacific’. Tillerson, while pitching for a greater role for India in the Indo-Pacific, also highlighted the need for preventing illiberal multilateralism. Said the former US Secretary of State:

We need to collaborate with India to ensure that the Indo-Pacific is increasingly a place of peace, stability, and growing prosperity — so that it does not become a region of disorder, conflict, and predatory economics.

The use of the term ‘Indo-Pacific’ was followed by the revival of the Quad Grouping (India, Australia, US, Japan). Senior officials of these four countries met on the eve of the East Asia Summit, held in Manila, and discussed ways to strengthen cooperation for promotion of a ‘Free and Fair Indo-Pacific’.

There have been a number of meetings between representatives of Japan, the US, and India to discuss a wide range of issues such as maritime cooperation, connectivity, and strengthening collaboration between these countries

China’s criticism of Indo-Pacific and Quad

China dismissed the Indo-Pacific as an ‘attention grabbing idea’, while the Quad too has been criticized by Beijing. Foreign Minister Wang Yi, while commenting on the Quad, likened the Quad to ‘foam on the sea’ that ‘will soon dissipate’ once the attention due to headlines turns elsewhere.

The Indo-Pacific narrative did lack a vision

One issue on which it is hard to disagree with Beijing, and those skeptical about the ‘Indo-Pacific’, is the fact that countries who have joined hands for promoting a Free and Fair Indo-Pacific (as a sort of counter narrative to China’s Belt and Road Initiative), did not have clarity in terms of enhancing connectivity and economic linkages. They have met on a number of occasions to discuss connectivity projects and a myriad of other issues but nothing substantial has emerged so far. This lack of effort, according to many, has been one of the main reasons for the Indo-Pacific narrative not being taken seriously (even by US allies). The other problem, of course, has been the Trump administration’s differences with allies like Japan and South Korea on economic and geopolitical issues.

US rolls out an economic vision for the Indo-Pacific

At the Indo-Pacific Business Forum, organized by the US Chamber of Commerce, Secretary of State Mike Pompeo articulated a broader economic vision for the Indo-Pacific, while also speaking about the likely role of the US in promoting cooperation.

First, Pompeo yet again reiterated the US desire for a Free and Open Indo Pacific, and how the US was fervently opposed to the hegemonic tendencies of certain countries (in a clear reference to China).

Second, at a time when a number of countries, such as Malaysia and Sri Lanka, are beginning to question the financial feasibility of China’s Belt and Road Initiative-related projects, Pompeo’s words are significant. It may also be pointed out that his address at the US Chamber of Commerce was made days before he began his Asia trip (which included visits to Malaysia, Indonesia, and Singapore).

Third, Pompeo spoke about the $113 million investment in areas such as digital economy, energy, and infrastructure. Pompeo dubbed this investment as a ‘…down payment on a new era in US economic commitment to peace and prosperity in the Indo-Pacific region’.

Fourth, the US Secretary of State also spoke about the potential role of the US private sector in promoting economic growth, prosperity, and cooperation in the Indo-Pacific. In an interview with CNBC, Pompeo stated:

We want private industry with the assistance of the United States government, understanding that we’re going to support this effort, we’re going to have private industry go in and develop relationships. When American businesses come to these countries, they’ll thrive

China’s reaction to Pompeo’s speech

China was dismissive of the US commitment towards Indo-Pacific, and Chinese foreign ministry spokesman Geng Shuang stated that even in the past, there has been talk of cooperation between Japan, the US, and Australia working jointly for developing infrastructure, but so far not much has been achieved.

While there is absolutely no doubt that an alternative narrative is needed to China, the US also needs to be more predictable in terms of economic and strategic relations with key players in the Indo-Pacific. One of Washington’s closest allies in the past, Japan, has been extremely uncomfortable with not just the tariffs, but also on Trump’s handling of strategic issues (such as the North Korea issue).

The example of Indian and Japanese Companies in South Asia

If differences can be ironed out, there is clear space for companies of different countries to work together in the Indo-Pacific. India and Japan have already taken the lead in Sri Lanka and Bangladesh (two countries likely to play an important role in the Indo-Pacific). In Bangladesh, Marubeni and Larsen and Toubro shall work jointly for supplying electrical and mechanical railway systems for Phase 6 of the Dhaka Mass Rapid Transport. In Sri Lanka, Petronet, along with Japanese companies, is setting up an LNG terminal near Colombo (L&T has already been working with Marubeni for setting up a 400 MW gas plant in Habibgant district, Bangladesh). Petronet will hold 47.5 per cent stake in the project while Japan’s Mitsubishi and Sojitz Corp will take 37.5 per cent stake, while the remaining 15 percent stake will be held by a Sri Lankan company.

Conclusion

Pompeo’s emphasis – on the need for greater transparency in investments, US support for areas such as technology in the Indo-Pacific, and a more pro-active role for the private sector in the Indo-Pacific – all make sense. A lot will depend upon Donald Trump’s approach on critical geopolitical and economic issues, and whether he is able to take along key allies such as Japan. A lot will also depend upon relations of countries, especially Japan and India, with China. In recent months, Japan and India have been trying to recalibrate economic ties with Beijing (a number of Japanese companies are in fact participating in the BRI). While this in no way implies that the narrative of the Indo-Pacific will lose its relevance, it does remain to be seen whether Japan and India would put it on high priority.

Pompeo’s speech is interesting, and it remains to be seen how companies from other countries react and whether they explore the possibility of investing in big ticket connectivity projects.

The Indo-Pacific narrative, US insularity, and China’s increasing influence

Over the past year, there has been a growing interest with regard to the vision of a Free and Fair ‘Indo-Pacific’. While this term has been used in recent years by policy makers from the US and Australia and has been pushed forward by a number of strategic analysts, a number of developments since last year have resulted in this narrative gaining some sort of traction.

US President Donald Trump, during his visit to South East Asia and East Asia in November 2017, used this term on more than one occasion, much to the discomfort of China (which prefers ‘Asia-Pacific’). On the eve of his visit to India last year, Former Secretary of State Richard Tillerson, while speaking at the Centre for Strategic and International Studies (CSIS, Washington DC), explicitly mentioned a larger role for India in the Indo-Pacific, and the need for India and US to work jointly. Said Tillerson:

The world’s center of gravity is shifting to the heart of the Indo-Pacific. The U.S. and India, with our shared goals of peace, security, freedom of navigation, and a free and open architecture, must serve as the Eastern and Western beacons of the Indo-Pacific, as the port and starboard lights between which the region can reach its greatest and best potential.

In November 2017, the Quad grouping (Australia, US, India, and Japan) met on the sidelines of the ASEAN Summit pitching not just for a rules based order, but also in favour of enhancing connectivity. Commenting on the meeting, an official statement from the US Department of State had said that the discussions were important and members of the Quad were “committed to deepening cooperation, which rests on a foundation of shared democratic values and principles.”

Earlier, too, the four countries had coalesced together, but as a consequence of Chinese pressure, the grouping could not last.

There have also been discussions of coming up with connectivity projects. This was discussed during Australian Prime Minister Malcolm Turnbull’s meeting with Donald Trump in February 2018, and between representatives of Japan, the US, and India in April 2018 when the three sides met in New Delhi, committing themselves to furthering connectivity between the countries.

China Factor

While members of the Quad have continuously denied that the Indo-Pacific concept is specifically targeted at China, it would be naïve to believe this assertion. In fact, during a visit to Australia, French President Emmanuel Macron, who is trying to position himself as one of the frontline protagonists of liberalism in the Western world, spoke about the need for India, Australia, and France to work together in order to ensure a rules-based order. Commenting on the need for India, France and Australia to jointly work for a rules based order, and checking hegemony (alluding to China), the French President stated:

What’s important is to preserve rules-based development in the region… and to preserve necessary balances in the region….It’s important with this new context not to have any hegemony.

Evolving relationship between China-India and China-Japan

While it is good to talk about a rules-based order, and a Free and Fair Indo-Pacific, it is important for members to do a rational appraisal of ensuring that the Indo-Pacific narrative remains relevant, especially in the context of two important events. First, the reset taking place between India-China, and second, the thaw between Japan-China.

This has already resulted in some very interesting developments.

First, Australia was kept out of the Malabar exercises last June (Japan, US, and India participated). Australia is a member of the Quad alliance and has been one of the vocal protagonists of the Free and Fair Indo-Pacific narrative. Canberra has also expressed vocally the need for a greater role for India in the Indo-Pacific. Australia has on more than one occasion expressed its desire to participate in the Malabar Exercises.

Many argue that the decision to exclude Australia from the exercises is a consequence of the significant shift taking place in India-China relations, though India has been dismissive of this argument.

Second, Japan has expressed its openness to participate in China’s Belt and Road Initiative (BRI) as long as international norms are met. During meetings between the Chinese and Japanese Foreign Ministers in April 2018, the Chinese Foreign Minister, Wang Yi, said such a possibility was discussed. Japanese Prime Minister Shinzo Abe, who is seeking to improve ties with China, recently reiterated the potential of the Belt and Road Initiative in giving a boost to the regional economy.

It would be pertinent to point out that a number of Japanese companies are already participating in countries which are part of the Belt and Road Initiative.

Interestingly, the Japanese-led Asian Development Bank (ADB), which has been funding many projects (spearheaded by Japan) projected to be components of the Indo-Pacific strategy, has even gone to the extent of stating that it does not perceive the Chinese-led Asian Infrastructure Investment Bank (AIIB) as a threat. Commenting on the possibility of cooperation between ADB and AIIB, the President of ADB, Takehiko Nakao, stated that “AIIB, it’s not the kind of threat to us. We can cooperate with AIIB because we need larger investment in Asia and we can collaborate.”

Where does the Indo-Pacific move from here?

In terms of strategic issues, especially ensuring that China is not an unfettered influence in the region, the narrative is relevant. The Chinese approach towards Indo-Pacific and Quad as being mere froth is an exaggeration. Addressing a press conference on the sidelines of the National People’s Congress, China’s Foreign Minister, Mr. Wang, had stated that there was “no shortage of headline grabbing ideas” but they were “like the foam on the sea” that “gets attention but will soon dissipate.”

Similarly, in terms of promoting democratic values it certainly makes sense. The real problem is in terms of connectivity projects (beyond India-Japan, none of the members of the Quad have elaborated a coherent vision for connectivity). The US has spoken about an Indo-Pacific Economic Corridor, but given the Trump Administration’s approach, it remains to be seen to what extent this can be taken further. While Australia has been steadfast in its opposition to China’s growing economic clout, it has its limitations, especially in terms of funding any concrete connectivity projects. Possible regions where Australia could play a key role should be identified.

Conclusion

It is fine to speak in terms of certain common values, but to assume that China can be the only glue is a bit of a stretch, especially given the fact that it has strong economic ties with key countries pushing ahead the Indo-Pacific vision. It is also important for the Indo-Pacific to come up with a cohesive connectivity plan. Currently, the narrative seems to be driven excessively by strong bilateral relationships, and the individual vision of leaders.

Recent developments in the context of Indo-Pacific

At a time when a massive churn is taking place in the Donald Trump Administration (HR Mcmaster was replaced as head of the NSA by John Bolton, while Secretary of State Rex Tillerson was replaced with the more hawkish Mike Pompeo), Alex Wong, Deputy Assistant Secretary of State for East Asian and Pacific Affairs, gave a briefing with regard to the US vision for ‘Indo-Pacific’ strategy, on April 3, 2018 (a day before a trilateral dialogue took place between senior officials from India, Japan and US). Wong outlined the contours of the strategy, and spoke not just about the strategic vision, but also the economic vision of the US, with regard to the Indo-Pacific.

A backgrounder to the Indo-Pacific, Quad, and the China Factor

For a long time, the US referred to the region as ‘Asia-Pacific’ (which China prefers), but the current Trump Administration has been using the term ‘Indo-Pacific’. During his visit to East Asia and South East Asia, in November 2017, the US President had used the term more than once (much to the discomfort of China) giving a brief overview of what he meant by a ‘Free and Fair Indo-Pacific’. While speaking to a business delegation at Asia-Pacific Economic Cooperation, Trump spoke about ‘rule of law’ and playing by the rules. Former Secretary of State Rex Tillerson had referred to the Indo-Pacific and the Quad Alliance (consisting of US, India, Japan, and Australia) in an address at the Center for Strategic and International Studies (a Washington think tank)  in October 2017, a week before his India visit.

In order to give a further thrust to the Quad, representatives of all four countries met on the eve of East Asia Summit in Manila. A statement of the Indian Foreign Ministry said: Continue reading