Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

Return of the G2

Feb 07 2013, 03:28 IST
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SummaryWith Kerry succeeding Clinton, the US may opt for closer ties with China

With Kerry succeeding Clinton, the US may opt for closer ties with China

Is the United States set to adopt, once again, a “G2” worldview? As key foreign policy positions change hands in Washington, the debate surrounding American policy on the Asia-Pacific is being reignited. The outcome could potentially compromise the interests of India and other countries across the region that harbour latent concerns about China’s rise.

The concept of a G2, in circulation for much of the past five years, gives priority to preserving close US-China ties at the expense of other key relationships. Proponents of a G2 argue that an accommodation between the US and China, as the two largest economic and military powers, can best address regional and global challenges, political or economic, existential or institutional. However, this covenant risks compromising liberal values and the interests of other emerging powers, led by India, as well as of long-standing US regional allies, such as Japan and South Korea. Uncertainty surrounding the nature of the US presence and role in Asia also risks intensifying security competition between China and other Asian states, thus undermining an environment conducive to commerce and regional growth.

The G2 was a defining feature of US policy when Barack Obama first assumed the presidency in 2009. But attempts at strategically reassuring China backfired; Beijing responded with high-handedness during Obama’s visit to China and at the Copenhagen climate summit later that year. Although Washington accommodated Chinese concerns, and risked the ire of states along China’s periphery, Beijing refused to reciprocate, a product of its premature triumphalism in the aftermath of the global financial crisis. China also responded with greater assertiveness in its dealings with its neighbourhood, whether it was on the South China Sea or the disputed Senkaku/Diaoyu islands. In time, a G2-oriented approach gave way to the stated American goal of a “pivot” to Asia, an integrate-but-hedge policy constituting a reallocation of military assets, a stronger commercial presence, and closer relations with states across the Asia-Pacific.

The second Obama administration brings with it a change in personnel, a transition often accompanied by changes in policy. Some of the most vocal proponents of the pivot within the US government, including the former secretary of state, Hillary Clinton, and Assistant Secretary for East Asian and Pacific Affairs Kurt Campbell, are moving on. Former Senator John Kerry has succeeded Clinton in the role of America’s top diplomat, and several

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