The United States attended the Aero India defence show, hoping to profit from India's hunger for military equipment; it wants to make India a counterweight to China. The relationship between China, India and the US is ill-defined; in a region that bristles with weapons, India also will have to contend with Japan and Russia.
An elephant can run very fast.India would sooner or later resume its place in the world. They were more divided over whether the Indian elephant could overtake the Chinese dragon, yet all dreamed of power.
Indian civilisation once rivalled China and was pre-eminent in Asia; in 1700 it led the world financially (1). Yet by 1820 its share of global income had fallen from 22.6% to 15.7%, half that of China (which then followed it into decline). By 1980 India, with 3.4% of global income, and China, with 5%, had been marginalised. China has now shown that a country can bounce back and India wants to catch up as fast as it can.
India has decided to throw in its lot with the United States in a spirit of pragmatism rather than any ideological conviction (2). Navtej Singh Sarna, foreign ministry spokesman, in his 1960s Soviet-style office in New Delhi, said carefully: "The US is the dominant superpower, so it is logical that we should seek to develop good relations with it." This normalisation follows decades of non-alignment spent in the diplomatic shadow of the Soviet Union and resented by the US.
India's trade with the US rose to almost 11% of the Indian total in 2005-6; trade with Russia, which was formerly its main partner, was only just over 1%.
India wants a lot more. Stunned by the speed with which the economy of China has taken off (3), India makes no secret of its desire to utilise its new relationship with the US to attract the investment that it lacks. In 2005 foreign direct investment (FDI) into China rose to $72.4bn; India's FDI was only $6.6bn, although this may be an underestimate, since not all capital movements are recorded. The Indian government did proudly point out that it received 40% of FDI in information technology in developing countries, while China had only 11%. Even so, an abyss separates them.
Copying China
The government of Prime Minister Manmohan Singh has copied China's example: among other measures it has set up special, near tax-free economic zones, waived social protection and lowered customs duties. These measures have yielded results. There has been investment in IT services and in cars; in November 2006 Renault announced the construction of an assembly plant. The major supermarkets -- Wal-Mart, Tesco, Carrefour -- are planning to move in: who cares if the arrival of their vast stores kills local businesses and overwhelms landscapes that have so far been spared the monotonous urbanisation of the West?
"Modernisation" is under way. The US leads the investors, followed by the island tax haven of Mauritius, Britain, Japan and South Korea.
However, political preoccupations rather than economic ambitions drive the Indian government: it wants recognition as an Asian and global superpower. Hence the importance of the deal over civilian nuclear technologies which, following ratification by both sides of the US Congress in 2006, will come into effect early this year, in time for President George Bush's visit to New Delhi in March.
The embargo introduced in response to India's widely condemned nuclear tests in 1998 will be lifted, although India still refuses to sign the nuclear non-proliferation treaty on the grounds that it is "discriminatory"; in an assertion of its independence, it denies international inspectors access to more than 33% of its installations. The US and its allies continue to apply this demand to Pakistan, North Korea and Iran.
India will now be able to import sensitive materials and use nuclear power to generate electricity to meet its rapidly expanding energy needs. The prominent diplomat, Shashi Tharoor, the United Nations under-secretary general who campaigned unsuccessfully to succeed Kofi Annan, explained: "There is a more important issue than energy supply: the agreement recognises India as a significant nuclear power in its own right. It marks the recognition of the Indian exception by the US and the official nuclear powers."
It is self-evident that "India is not a country like any other"; this saying has become a mantra.
After independence in 1947 India's unique status, epitomised by its policy of non-alignment, made it a moral force that stood out from other third world countries in the process of decolonisation. Now India is beginning to look like a US-approved military power. Some Indians fear that it may be falling into the alignment trap. The prime minister responded by saying: "I am often disappointed by the lack of adequate appreciation in our country, including among our political leaders, of the changing nature of our relationship with the world. Very often we adopt political postures that are based in the past" (4).
Although some US senators have deplored the nuclear deal and there has been concern that it "may enhance India's ability to produce fissile material for weapons" (5), it has its supporters in Washington. The Bush administration has already expressed its disapproval of a gas pipeline project with Iran, although this would supply a significant proportion of India's energy needs and have the enormous diplomatic benefit of forcing India to negotiate with its main enemy, Pakistan, through which the pipeline would pass.
In the words of Edward Luce, a former adviser to Bill Clinton, writing in the Financial Times : "The pipeline would give Islamabad a strong incentive to maintain stability with New Delhi" (6). For now, Manmohan Singh is using Iran's excessive price demands as an excuse to leave the issue unresolved, but this can only be a short-term solution.
Nothing is settled
India must also come to an understanding with China. Either the two giants build a regional understanding that will influence Asian and international politics, or they fight it out, which seems the more likely possibility. Nothing is settled; there are really three parties in the ring, including the US, or four including Japan.
The US was prepared to risk undermining the nuclear non-proliferation treaty in order to encourage India to become a counterweight to China, whose economic, military and diplomatic rise threatens the long-term hegemony of the US in the region. The US also has a problem with some traditional allies -- such as South Korea, which has refused to adopt a sufficiently aggressive stance against North Korea. India, wary of its vast neighbour, is happy to cooperate with the Bush administration for now.
China's prime minister, Wen Jiabao, visited New Delhi in April 2005. Showing an impressive sense of history, he pointed out that for 99.9% of the past 2,200 years the countries had lived in harmony (7). The discordant 0.1% was the war of 1962 (8), an unexpected defeat that heralded the end of the Nehru era and still rankles in India.
The economist Amartya Sen has suggested that the earliest Sino-Indian relations were initiated by trade rather than Buddhism; after the 1962 war, economic and trading links restored good relations (9). Trade remained marginal, at $3bn a year, until 2000; it was expected to reach $22bn in 2006. China sells more than it buys and wants to exploit synergies between the economies to make good its technological deficit. It is pushing for a free-trade agreement that India, which has only 33% of Chinese GDP and is fearful of being flooded by Chinese imports, rejects.
India's priority is to consolidate its ageing and relatively weak industrial sector. It recognises that it cannot guarantee national development if it continues to rely financially upon the contribution of outsourced call centres, sub-contracted services for English-speaking businesses around the world and IT. Nevertheless, during the visit of the Chinese president, Hu Jintao, in November 2006, it signed 13 agreements to cooperate in finance, agriculture, IT and energy.
Another potential area for detente is energy, with its rapidly increasing demands. The two countries are in competition for energy resources with China well ahead, especially in Africa. At the end of 2005 the China National Petroleum Corporation and India's Oil and Natural Gas Corporation (ONGC) reached an agreement to invest in the exploitation of Syrian oil reserves. Also in 2006 the Chinese and Indian oil ministers discussed creating a buyers' cartel to influence prices, a fresh idea that was thwarted when the Indian minister, Mani Shankar Aiyar, was sacked.
The joint declaration that accompanied Hu Jintao's visit emphasised the need to "encourage collaboration between their enterprises, including through joint exploration and development of hydrocarbon resources in third countries" (10). The full significance of the declaration emerged in the context of US protests to the Indian government about its investment in Syria. The declaration also announced that "the two sides agree to promote cooperation in the field of nuclear energy, consistent with their respective international commitments". The terms of the agreement were left vague, unlike the agreement Hu Jintao signed with Pakistan a few days later, yet this was the first official reference to nuclear cooperation (11). China, while acknowledging India's agreement with the US, was trying to prevent it from establishing itself as the US's privileged partner.
An anti-China axis?
Despite these developments, border issues remain unresolved. China continues to claim part of Arunachal Pradesh in northeast India, while India claims Aksai Chin on its northwest frontier: the commission established to settle these disputes has made little progress. China accepted the incorporation of the former Buddhist kingdom of Sikkim into India in 1975. More importantly, India has recognised Chinese sovereignty over Tibet since 2003, although India continues to play host to the Dalai Lama and more than 100,000 Tibetan refugees.
In July 2006 the Nathu La pass in the Himalayas reopened after more than 40 years of closure, restoring a section of the old Silk Road. Traffic still falls far short of the early 20th century, when more than 75% of trade between India and China used the pass, but there are grounds for hope that merchants will slowly displace soldiers.
Even so, India remains suspicious and fearful of encirclement. To the north, China has long offered unconditional support to Pakistan in its conflict with India over Kashmir (12), and it is now investing in the construction of a deep sea port at Gwadar, on Pakistan's coast, close to the entrance to the Persian Gulf. To India's southeast, China is funding Burma's navy. China claims that it is merely trying to secure sea access in order to guarantee the security of its imports.
India remains unconvinced and has conducted several military exercises with US forces, including some on the Chinese border and in the Indian Ocean, as far east as the vital oil-tanker route through the Strait of Malacca. It is also conducting joint operations with Japan, which has been adopting a more aggressive military posture (13).
India wants to show off its muscles. The Bush administration wants India to be a rampart against China, a job that most of India's openly pro-US political elite are happy to take on. Some members of the business community are less enthusiastic. As Shyamal Gupta, a senior executive with the leading Indian manufacturer Tata Sons, insisted: "What we will see is not India against China but India plus China" (14). Some politicians share this reticence, including Jairam Ramesh, a member of the governing Congress party and a former minister, who has published a sensational book, Making Sense of Chindia.
Nobody, of course, is proposing the construction of a Sino-Indian alliance against the US. Everybody is mindful that Chinese leaders are banking on a close relationship with the US, upon which China is economically dependent. Asia is nevertheless a region where military expenditure has recently soared: China is the world's second-biggest military spender, Japan the fourth, and India the eighth. So giving real substance to the declared Sino-Indian intention to "explore a new architecture for closer regional cooperation in Asia" has become a priority.
As The Hindu's famous columnist Siddarth Varadarajan said: "Asia is too big to be dominated by a single power. China, India and Japan should not even think of controlling the region, whether on their own or with the support of an external power." Like many progressive intellectuals, Varadarajan advocates more active Indian participation in regional organisations.
Russia sidelined?
Russia, previously a cornerstone of Indian diplomacy, seems to have been sidelined. Joint declarations have been guarded and bilateral relations tepid. Despite the collapse of the early 1990s, trade has resumed, especially in the military sector where it reached $6.5bn in 2005. Professor Anuradha M Chenoy of the School of International Studies at JNU told me: "India is the only country that has a programme of technical and military cooperation with Russia." Russia sells the most weapons to India, ahead of Israel, with which the previous Hindu nationalist government established close diplomatic relations (15).
The quest for oil and gas supplies also encourages cooperation with Russia. In 2004 the oil minister, Aiyar, announced: "In the half-century of Indian independence, Russia has guaranteed our territorial integrity, and in the second half-century it may be able to guarantee our energy security. I am talking about the strategic alliance with Russia in energy security, which is becoming for India at least as important as national security" (16).
This may not be the official position, but the ONGC is involved in the Sakhalin I and II oil and gas fields. For Russia, which has agreed to supply India with 60 tonnes of uranium, energy has become a weapon in its attempt to reassert itself as a leading global player.
As Yu Bin of the International Relations Centre explained it: "The once super military power has now become the super petro-power under Putin, whose mission is to remake Russia as a world power to be respected, if not feared" (17).
So is the "CIA triangle", as its detractors call it, of China, India and the US, about to be supplanted by an alliance between China, India and Russia? Not yet. India has decided to join the Shanghai Cooperation Organisation (SCO) as an observer, along with Pakistan and Iran. This body includes four central Asian republics (Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan), plus China and Russia, which are trying to build up its diplomatic muscle in the face of increasing US influence in the region.
India does not yet seem capable of any spectacular strategic initiative. The writer Sunil Khilnani said shrewdly: "We have become enamoured of the idea that we are soon to become a permanent invitee to the perpetual soiree of great powers, and so must dust ourselves off and dress for the part . . . But we need to deliberate over what the role should be, and how we can most effectively achieve it" (18).
Border issues
India is at present expending much energy in resolving border issues. Although it feels no great pressure to engage in equal relations with smaller neighbours, it did at least join Bangladesh, Bhutan, the Maldives, Nepal, Pakistan and Sri Lanka in setting up the South Asian Association for Regional Cooperation (Saarc) in 1985. Economic cooperation remains marginal (less than 10% of trade) and the struggling organisation is unable to transcend its own conflicts.
The strained relations between India and Pakistan contribute to this. The talks that began over Kashmir in 2004 have made little headway, but some trade has resumed. Discussions were suspended after the July 2006 train bombings in Bombay, which killed 200; India blamed them on Pakistan's secret services. The talks resumed in October and in December Pakistan's President Pervez Musharraf announced that, for the first time, Pakistan was ready to abandon its claim to Kashmir if India would do the same. The proposal was welcomed "with interest" by Manmohan Singh. People on both sides of the control line in Kashmir are not holding their breath.
India's relations with other immediate neighbours are less conflictual, but by no means unproblematic, although an agreement in Nepal in November between government forces and the Maoists could improve the situation. The uncertainties in Bangladesh and continued fighting in Sri Lanka are a problem for India: there are thought to be 20,000 Bangladeshi refugees in India, and 10,000 Sri Lankan Tamils crammed into camps in the southern state of Tamil Nadu. Many are destitute; they fuel the activities of violent groups and serve to justify police abuses.
Poverty feeds the Naxalite (Maoist) movement, particularly in West Bengal, Orissa, Telangana (Andhra Pradesh) and, further north, in the state of Bihar on the frontier with Nepal, where calls for independence are getting louder. According to Singh, this is India's most serious security problem. Indian borders are porous, but Singh forgets to mention the social causes of friction, especially the disastrous effects of "modernisation" upon rural areas. More than 10,000 farmers killed themselves in 2005, most often by swallowing pesticides, because they could not meet their debts. India exports cereals, yet more than 50% of its children are malnourished; 40% of Indians can neither read nor write (only 10% of Chinese are illiterate). India ranks 126th on the UN Human Development Index, well below China in 81st place.
The few measures that the government has attempted have often been undermined by widescale corruption; neither the government nor the upper classes seem concerned about the divide that separates the majority of Indians from the 60-70 million people (5-6% of the population) who have achieved a standard of living comparable to that in Europe.
Shashi Tharoor is one of the few who acknowledge this situation: "We must do something for the other India . . . We must invest in hardware [roads, ports and airports, all in a pitiful state], but also in software, the human beings to whom we must give what they need. It is a question of civilisation." Wholesale exclusion is the vulnerable point of India, which seeks to present itself as the largest democracy in the world.
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