Warning: Creating default object from empty value in /nfs/c03/h07/mnt/56080/domains/filtercoffee.nationalinterest.in/html/wp-content/themes/canvas/functions/admin-hooks.php on line 160
Archive | March, 2011

The Khaleej and India

How will the instability in the Gulf impact India’s economy?

Political instability in the Middle East will likely have an impact on India.  We have already seen how the uprisings in Egypt and Libya have affected the lives of the over 18,000 Indians living in that part of the world.  The potential impact of the deteriorating situation in Bahrain will be far greater, where about 300,000 Indian expatriates live.  GCC countries today are home to about 4.3 million Indians.  This, of course, does not include the many undocumented (mostly blue collar) Indian workers in the region.  In some cases (as in Dubai, which experienced an influx of workers in the last decade), the number of undocumented workers as a percentage of the total population of expatriate Indians will be considerable.

But beyond the potential effects to the lives of Indian citizens, political disturbances in the region will also have an impact on India’s economy.  Today, remittances account for about 4% of India’s GDP (considerable, but not as high as other countries in the subcontinent).  Remittances to India as a percentage of GDP have also (somewhat interestingly) increased over time, and with the liberalization of India’s economy (from 1.1% in 1985, 2.8% in 2000 to about 4% in 2008).  As of 2008, the Gulf was the largest source of remittances to India at about 40%:

(Source of data: Reserve Bank of India)

Two important points need to be made here: first, while we already know that India leads other nations in terms of total dollar remittances ($46 billion, 2008), it does not include remittances made via hawala transactions.  Since the September 11 attacks, the U.S. has worked with Gulf countries to strengthen their finance and banking regulations to ensure control over hawala transactions (which, by their very nature, have been helpful to terrorists to finance attacks against the U.S. and India).  However, according to some estimates, hawala remittances to India from the Gulf are still pegged at about 30-40% of legal remittances.  That would effectively put total remittances from the Gulf to India at at least $60 billion.

Second, when one considers remittances as a percentage of net state domestic product (NSDP), some states will likely be far more vulnerable to political uncertainties in the Gulf than others.  According to a study published by the Centre for Development Studies, remittances to Kerala as a percentage of the state’s economy was at 30%.  Further, per data published in the same report, it can be inferred that remittances from the Gulf alone can be pegged at about 28% of the Kerala’s economy.

While the most immediate impact of the repatriation of Indian citizens from a worsening situation in Bahrain could result in a momentary spike in remittances, as some suggest was the case during the first Gulf War, it will undoubtedly have a medium- to long-term impact on the economies of states in India that depend heavily on them.

Read full story · Comments { 1 }

Talkistan ka matlab kya?

The politics of talking to our neighbor.

Prime Minister Manmohan Singh has invited Pakistan’s prime minister Gilani and president Zardari to attend the cricket World Cup semi-final match between India and Pakistan in Mohali.  Mr. Gilani has accepted the invitation while we’re waiting to hear from Mr. Zardari.  In the past, cricket diplomacy has been afforded to the likes of Gen. Zia-ul-haq and Gen. Musharraf.  This time around, the extension of invitations will result in two tickets being granted gratis to  individuals who neither craft nor implement Pakistan’s foreign policy, instead of our own VVIPs, who are accustomed to not paying for anything anyway.

They say there is momentum towards a resumption of talks between India and Pakistan.  Mr. Singh and Mr. Gilani met on the sidelines of the NAM summits in Bhutan and (infamously) at Sharm el-Sheikh.  Talks between India and Pakistan have also taken place in Lahore and New Delhi in the recent past.  Times of India’s diplomatic editor, Indrani Bagchi informs in her column that New Delhi was also keen to open channels of communication with the Pakistan army and its ISI (recall that DG-ISI Lt. Gen. Pasha had a tete-a-tete with India’s envoy to Pakistan Sharat Sabharwal at an iftaar dinner in 2009).

Not talking to someone is more a momentary tactic and less a strategy. If the Government of India has decided to seriously engage not just the civilian administration in Pakistan, but also its military overlords in talks, then fine, but what is the end game?  In India, our leaders have repeatedly articulated that they are “not willing to give up on Pakistan.”  As if not giving up on Pakistan is a virtue!

Lest we forget, there is the more immediate matter of Pakistan prosecuting its citizens involved in the heinous terrorist attacks against India on 26/11.  It has been 2 ½ years since 200 innocent Indian citizens were killed in a state-sponsored project executed by the Lashkar-e-Taiba and members of Pakistan’s military-jihadi complex.  Not only has LeT’s leader gone unpunished, he is also being invited to give speeches at that venerable bastion of justice, the Lahore High Court!

To be sure, the pursuit of  peace between India and Pakistan (or indeed between any two nations) is always desirable.  However, in India we are victims of our own unattainable quest for morality in international relations above all else.  Our leadership has always taken pride in suggesting that if Pakistan takes minor, but tangible steps in addressing our concerns, that we would be “willing to go more than half the distance” in resolving our disputes with our neighbor.  But why?

In the anarchic world of international relations, abstract terms such as morality have no place.  States promote their national interests by exercising their relative power, both in times of war and peace. If it is in India’s interests to talk to Pakistan, then negotiations must be dictated from positions of relative power.  Magnanimity has no place in international relations.  As the greater power, India must expect settlements to be more favorable to its interests, not the other way around.  To quote India’s former intelligence chief and senior fellow at Takshashila, Vikram Sood, “magnanimity is a function of victory; otherwise it is appeasement.”

Prime Minister Singh is right in pursuing talks with Pakistan, but he would be wrong to believe that India’s growth and prosperity were contingent on making peace with that country. If India and Pakistan can, by some remote possibility, reconcile their differences and live in peace with one another, then fine.  If they can’t, that should also be okay for us as well.  Prime Minister Singh will always be favorably remembered in India’s history books for loosening the shackles of our License Raj.  He should remain invested in bringing 400 million of our citizens out of poverty.  India’s growth and development cannot be held hostage to anyone’s grand visions of orchestrating peace with countries that seek nothing but our dismemberment.

 

Read full story · Comments { 7 }

India at the UNSC on Libya

India’s 50-50.

There has been considerable uproar on India’s decision to abstain from voting on the imposition of a No Fly Zone (NFZ) in Libya at the UNSC.  Some have suggested that the decision to abstain doesn’t bode well for a nation seeking a place at the high altar in the congress of nations.  India’s non-vote however, has short- and long-term implications, which need further consideration and analysis.

UNSC’s resolution No. 1973 on Libya reads as follows:

[T]he Council authorized Member States, acting nationally or through regional organizations or arrangements, to take all necessary measures to protect civilians under threat of attack in the country, including Benghazi, while excluding a foreign occupation force of any form on any part of Libyan territory — requesting them to immediately inform the Secretary-General of such measures. [UN]

India, in its explanation for abstaining from the vote indicated that its reservations were based partly on “far reaching” measures adopted by the UNSC.  Indeed, there is now indication that the inclusion of the phrase “all necessary measures” went beyond what the Arab League initially envisaged when it first appealed to the UNSC for an NFZ in Libya.  The resolution, for instance, did not rule out airstrikes against Col. Qaddafi’s land forces advancing towards  Benghazi.  It also empowered a collection of states (e.g., Britain and France, the Arab League) to act unilaterally against the Libyan army as it saw fit.

There now appear to be considerable gaps in perception on approach and objectives among the primary actors, U.S., Britain and France, and the Arab League.  The question that India must answer is whether or not it is in India’s interests to see a change in regime in Libya.  To be sure, Muammar Qaddafi has been a thorn in India’s flesh for many years — on clandestine nuclear co-operation with Pakistan, on Kashmir — but how certain is India that the alternative to Col. Qaddafi couldn’t be as bad, if not worse?

For many reasons, India’s economic interests in Libya are minimal.  Bilateral trade has steadily declined over the past several years.  Libya just about figures among India’s top 50 import partners*, right below the People’s Republic of Congo (we also export less to Libya than we do to any other Arab country*). India’s energy interests in Libya are not substantial when compared to other countries in the region, and recent reports indicate that ONGC Videsh and OIL had, or were in the process of  relinquishing their stakes in at least four exploration blocks in Libya.

On security issues, Libya has had a history of cooperation with Pakistan on financing and acquiring nuclear technology.  However, under agreement with the U.S. and in an apparent bid to end its international isolation, Tripoli surrendered its nuclear weapons components —  including centrifuges, uranium and sensitive documentation —  in 2004. Though, to be fair, Col. Qaddafi’s calculations on the utility of nuclear weapons may change, should he survive the uprising.  As for Col. Qaddafi’s periodic rants about Kashmir at international forums, they are about as likely to have an impact on the status of J&K as OIC’s time-honored traditions have had of routinely issuing statements of concern at the behest of Pakistan about J&K all these years.

Taking these arguments as a whole, India’s decision to abstain from the vote may not have been imprudent.  However, the issue of whether and to what extent the ruling coalition’s stance was influenced by what it considers “domestic political compulsions” requires discussion.  In the long-term, it raises troubling questions on what sort of a role India will likely play in shaping the world’s security.

If the ruling government abstained from the Libyan vote because of domestic sensitivities, then what is to stop it from doing likewise on any future UNSC votes against nations that may happen to be Arab?  To be candid, it is not Saudi Arabia that is going to favorably influence the UNSC to grant India permanent membership, even if a UNSC expansion were remotely likely.  Secondly, if India is going to abstain from every vote on contentious issues, they why even ask for a permanent seat at the high altar?  Contentious issues will always be put to vote at the UNSC, by the very nature of the Council.  The UNSC is hardly going to sit around debating whether India should be playing an extra bowler vs. Australia in the quarter finals of the World Cup.

It is no use saying India deserves a permanent seat at the UNSC because it represents 1/6th of humanity, if that 1/6th of humanity seldom expresses an opinion.  UNSC membership is not granted based on entitlement — if it were, there would be no place in it for either Britain or France.  While it would be impractical to expect domestic political compulsions not to play a role in how India conducts itself in international affairs, it must also recognize that its aspirations to be regarded as a global actor are untenable if it is not willing to pursue those hard choices that promote its national interests, but impact international or domestic political considerations.

* Department of Commerce, April 2010 — September 2010 figures

Read full story · Comments { 7 }

India debates the nuclear bomb (1991)

A discussion with K Subrahmanyam, Gen. Sundarji, Jaswant Singh, Praful Bidwai, and others.

Rummaging through Indian Express’ archives has unearthed an interesting discussion in India in January 1991, on the merits and demerits of going nuclear and costs associated with such a decision.  Interestingly, the discourse in India at the time was motivated by accounts of Pakistan already possessing a nuclear stockpile;  not the other way around, as some commentators would like the world to believe.  Clearly, AQ Khan’s admission to Kuldip Nayar in at the height of the Brasstacks crisis played a critical role in shaping Indian perceptions of the regional security environment, post 1987.

The seminar, entitled “Nuclear Pakistan and Indian Response,” was sponsored by IDSA and included commentary from K Subrahmanyam, Gen. Sundarji, Jaswant Singh, Gen. Vohra and Praful Bidwai.  Excerpts from Manvendra Singh’s op-ed follow:

Mr. Praful Bidwai expressed doubts as to whether Pakistan was in fact capable of producing nuclear weapons.  He called it a bogey used by many in Delhi, for the sole purpose of justifying India going nuclear.  David Albright’s article in the June (1987) issue of “Bulletin of the Atomic Scientists” was heavily quoted by him for the technical aspects of his arguments.

Albright’s article was full of uncertainties, as Mr. RR Subramaniam pointed out in his vociferous rebuttals of Mr. Bidwai, whose claim that Pakistan’s nuclear policy was a response to the 1974 Pokhran test was historically incorrect.  And in fact none of the other participants pointed out to him that ZA Bhutto’s famous (we will eat grass but make a bomb) speech was made in January, 1972 in Multan.

Gen. Sundarji, with his quick-draw tongue, was at his articulately hawkish best.  A specialist in “Deterrence theories,” Gen. Sundarji made a very pertinent point when he stated that simple deterrence, without political engagement leads to overkill, as it did for the Soviet Union.  This was in response to the argument that desire for nuclear weapons in the belief of acting as deterrents can never be satiated, as stockpiles go on rising.  While unequivocally calling for India to go nuclear, he was of the view that diplomatic dialogue has to be encouraged if an overkill situation is to be avoided.

Mr. K Subrahmanyam, the doyen amongst defense specialists, was characteristically blunt and sharp in his analysis. Debunking the argument put forward that an active nuclear policy is grossly expensive, Mr. Subrahmanyam convincingly backed his  thesis that in terms of the value of returns for investments, a nuclear weapons programme is the most effective.  The total amount, he clarified, spent on our nuclear weapons programme is minuscule compared to the overall defence outlay.  Lamenting on the absence of direction and purpose in our nuclear policy, he grimly reminded the participants about the period post-1962, when India went, prostrate before Britain and the United States, desperate for a nuclear umbrella vis-a-vis China, backing Gen. Sundarji’s statement that “weakness is not a virtue.”

Mr. Jaswant Singh, the only active participant from the ranks of politicians (Mr. IK Gujral was largely an observer), created a bit of a ripple amongst the participants when he declared that India had lost the strategic initiative to Pakistan.  He declined to elaborate, saying that it was vital for all to ponder over it.  In all probability, his thesis revolved around the fact that primarily out of our inaction, the internal and external range of India’s maneuverability has shrunk to levels incompatible to India’s status and role in the world.  This is the sum total loss arising out of an absence of clear long-term policy formulation and implementation.

And taking this setback into account, he said, makes it all the more necessary to have permanent bodies like the National Security Council Secretariat.  Active during the period of the National Front government in the formation of the NSC, Mr. Singh stated convincingly that it was imperative for India to have such a specialized decision-making body, given the circumstances that it finds itself in. The shortage of active politicians participating in seminars of such importance is a phenomenon for all Indians to seriously think about.

The decision to go nuclear, or not, rests entirely on the political leadership of India, and which is to a large extent, totally unacquainted with this and related subjects.  In Pakistan,however, it is the military brass that is in control of defence policy-making.  A military in power, directly or indirectly, will always enlarge its arsenal to keep the internal balance of power, psychologically or otherwise, in its favour.  It is therefore natural, no matter how much static exists between Washington and Islamabad, that Gen. [Aslam] Baig will go ahead with increasing and improving Pakistan’s nuclear capability.

In the unlikely event of Pakistani civil leadership initiating moves towards a nuclear treaty with India, Gen. Baig could very easily torpedo the whole process with some populist gimmickry.  A nuclear capability will be an enormous psychological boost for Pakistan’s aims in Afghanistan, Punjab and Kashmir. [Indian Express]

 

Read full story · Comments { 3 }