Creating Economic Ballast For Better Ties

Updated: Dec 29 2002, 05:30am hrs
The world changed on September 11, 2001, and the events following 9/11 cast a long shadow on world events in 2002, shaping, not surprisingly, Indias relations with the world, especially the Big PowersUnited States, European Union, Russia, China and Japanas well.

The war in Afghanistan and India-Pakistan tensions emerged as two key elements defining Indias external relations with the Big Powers, especially the US. The ripples from the repositioning of Pakistan as a US ally and now a frontline state in the war against terrorism reached India, causing some uncertain moments. Pro-Pakistan elements in the US state department tried to manoeuvre the US-Pakistan relationship in a manner that may have proved detrimental to India. Managing this threat was a major foreign policy challenge.

Against this background, the year began with a high profile interaction at Udaipur in January 2002 between Indian and US scholars, ex-diplomats, strategic policy analysts, editors, columnists and business leaders to assess the impact of 9/11 and the war on terrorism on India-US relations. This dialogue was jointly sponsored by the Confederation of Indian Industry and the Aspen Strategy Group (Washington DC).

While the war against terrorism will undoubtedly cast its shadow on India-US relations, the participants agreed there was a huge unattended agenda of business, economics and cultural interaction that could keep India and the US occupied for a long time. There was agreement on what the two should be talking about and doing, but US ambassador to India Robert Blackwill complained several months into the year that the India-US economic relationship was as flat as a chapati!

Creating a larger economic ballast to bilateral relationships remained Indias biggest challenge in 2002, not just with the US, but with other powers, too. One country with which India saw a huge increase in economic activity was China. Taming the dragon was its second toughest foreign policy challenge!

The fastest growth in bilateral trade in 2001-02 was between India and Greater China (mainland plus Hong Kong). Newspapers were full of reports about the second invasion of India by Chinese goods! However, exaggerated reports regarding the China threat gave place to more balanced reporting on emerging market opportunities for Indian business in China and The Financial Express tracked this through a series of reports, titled Behind The Great Wall.

Business pushed the unpleasantness about Chinas support for Pakistans nuclear activity into the background. When Chinese Premier Zhu Rongji visited India, he headed straight for Bangalore and Mumbai, underscoring the growing relevance of business in the relationship. Chinas own worries about terrorism in the Xinkiang region moderated its position on the terrorist threat to Indias advantage.

The Copenhagen summit brought into sharp focus the utter disarray in the EUs relations with India. There is particular warmth at the moment between India and France, largely a result of the French effort to construct a multipolar world in an increasingly unipolar one. Things also improved for the better between Britain and India because the Tony Blair government showed remarkable sensitivity to Indias terrorism concerns.

India and Netherlands marked 400 years of contact; the Dutch wanted to celebrate the relationship till they were reminded that for a greater part of the 400 years, the relationship was not a particularly balanced one! The Scandinavians were still recovering from the after-effects of trying to sanction India after the nuclear tests, and just as things were getting better, there was a spat in Copenhagen when Prime Minister Atal Behari Vajpayee visited Denmark for the India-EU summit.

Russia was back in focus in New Delhi in 2002. First, the general improvement in Russia after President Putins medicine began to rejig the economy; second, Russias increased support for India in the war against terrorism; and, finally, Moscows increased focus on improved economic relations with India. These underscored Mr Putins visit to New Delhi in December 2002.

However, both India and Russia have realised that in the post-Cold War world, it is economics that drives bilateral relations, never mind their shared desire to build a multipolar world and fight terrorism. If India-US business relations were as flat as a chapati in 2002, the dough has not even been kneaded for India and Russia.

Japan continued to complain in 2002. While the two countries celebrated 50 years of diplomatic relations, there was a striking contrast between the high profile events that marked the 30th anniversary of Japan-China relations and the 50th anniversary with India. What made all the difference was the level of trade. Despite disinvestment minister Arun Shourie handing Maruti back to Suzuki, Japanese businessmen were still studying India in 2002!

Will 2003 be any different Unlikely. Trade and business will continue to define the depth and range of Indias relations with the Big Powers. The proposed war in Iraq will force India to make some hard choices, though it is likely to stand on the side of the US, as it did in 1990, concerns for its citizens and energy security notwithstanding.

There may be a prime ministerial visit from India to China and if China addresses Indias security and territorial concerns, it could prove to be a historical one, coming 40 years after the 1962 war. Depending on what happens in West Asia, President George Bush could come down to New Delhi. That would make 2003 different.