CIAO DATE: 01/03

India Looks East

The South Asia Monitor
Number 23
July 6, 2000

The Center for Strategic and International Studies

 

In the two years since its nuclear tests, India has been quietly cultivating expanded relations with other countries in Asia. China, Japan, and the Southeast Asian countries top Indian priorities in the region. India-China relations are wary, dominated by their geo-strategic rivalry, but have stabilized since the tests. The content of the other growing relationships is chiefly economic, with trade expanding, investment hoped for, and broader regional cooperation still very limited. Stronger Asian ties will tend to reinforce India’s economic reform policies, and India probably hopes they will also help build support for a UN Security Council seat.

China, the strategic rival:China is India’s major natural geostrategic rival, the other major Asian land power, which claims a large chunk of its northeastern corner. India’s decision to characterize its 1998 nuclear tests as a response to the primary threat it faced from China caused great offense in Beijing, but is entirely consistent with the outlook of most Indian strategic thinkers.

The Sino-Indian relationship has always been ambivalent. On the one hand, India has sought good political relations, especially during the Cold War years when these were a standard way for nonaligned countries to show their distance from the West. The phrase “Hindi-Chini bhai-bhai”, or “Indians and Chinese are brothers”, illustrated this heavily symbolic approach. On the other hand, Indian leaders’ strategic viewpoint was always deeply influenced by geography, and they traditionally sought to keep other significant powers out of their immediate neighborhood. China was the only regional power of a size comparable to India. Their border war in 1962 confirmed India’s view that China was bent on keeping India down, and its longstanding security relationship with Pakistan was seen as proof of Chinese ultimate hostility.

When the end of the Cold War robbed India’s leadership of the Non-Aligned Movement of much of its international importance, Indian policymakers began more consciously to look for other ways of being acknowledged as a great power. China became the benchmark against which India’s own international status could be assessed. China’s membership on the United Nations Security Council and the deference accorded it (in Indian eyes) by major governments like the United States set the standard for how India would like to be treated.

For China, on the other hand, India is part of the “strategic periphery” which China has historically sought to weaken, control, or diplomatically manipulate. It is the largest of the “periphery” countries, but still clearly subordinate to the status China considers appropriate for itself. China’s relationship with Pakistan, with its military, nuclear and missile dimensions, is one of China’s means of keeping India from being completely confident of its security.

Sino-Indian relations had their ups and downs in the nearly forty years since the border war, but they had been on an upswing in the mid-1990s. While neither side was prepared to expend any capital to resolve the border issue – for both, giving up a claim was more painful than living with the status quo – talks aimed at improving relations in other respects had been moving forward. The nuclear tests were a major setback, especially given India’s references to the “Chinese threat.” China joined the consensus among the Permanent Members of the Security Council and the G-8 countries condemning the tests, and has been the most strident critic of India’s nuclear policy in the interim. China was not directly involved in post-test sanctions, however, since China has no aid relationships with India.

The trips to China by Indian Foreign Minister Jaswant Singh in June and by President K. R. Narayanan, a former Ambassador to China, are part of a serious Indian effort to rebuild relations – or at least to remove some of the bitterness. The Narayanan visit included a number of important political statements re-launching a cooperative dialogue on regional and bilateral security and economic relations. President Narayanan urged the two nations to overcome differences and make their border a peaceful and friendly one.

No concrete moves were made to settle the border issue, however. The present Line of Actual Control is reasonably favorable to India in the east, but to China in the west. As long as the line remains quiet, neither side will feel great pressure to settle it. Conceivably, however, its settlement could be brought into a future resolution of the India-Pakistan problem, thereby providing a contribution to regional security.

Harder to deal with, but vital to India’s sense of whether China is a hostile power or not, are China’s relations with Pakistan and, more recently, Burma. China’s evident distaste for Pakistan’s incursion into the Kargil area of Kashmir in 1999 was a reassuring development. On the other hand, Sino-Pakistani security ties remain strong, Pakistan continues to develop its missile program, and recent reports (officially denied in Beijing) cite continued Chinese involvement in it. India remains concerned about Chinese policy in Burma.

In contrast to India’s ties with the rest of Asia, the economic dimension is limited. Two-way trade came to $1 billion in 1998, with a modest $73.5 million surplus for India. The two countries will become more active rivals in export markets in the coming years, as textile quotas are phased out and as China’s information technology capabilities expand.

Japan: finance dominates: Japan has been slow and not very effective in developing its political ties in this part of Asia. Relations have been cordial, but Japan’s few efforts to take on a higher profile role have been inept. A classic example is the Japanese effort to host a Kashmir conference – predictably, embraced by Pakistan and shunned by India.

The nuclear tests caused serious damage to the relationship. Political dialogue became strained, and aid was frozen. Before the tests, India had been one of the five largest recipients of Japan’s official development assistance (ODA). Moreover, with the exception of 1990 Japan has been India’s largest donor of bilateral ODA since 1986. India-Japan trade has been nearly in balance, with India’s 1998 exports to Japan at $2,179 million (4.6 percent of total exports) in 1998 and imports of $2,409 million (4.1 percent of total imports), chiefly machinery and transport equipment. Traditionally, Japan has been the second largest destination of Indian exports. Major exports include gems, marine products, iron ore, and cotton yarn. Meanwhile, foreign direct investment from Japan was $117 million in 1995, growing to $498 million in 1997, making Japan the seventh largest direct investor in India.

Southeast Asia: a new prominence: Southeast Asia barely figured on India’s list of foreign policy priorities for many years, but has been gradually moving into a more prominent position as the area has become more prosperous. Years of neglect left India with a considerable residue of suspicion to overcome. Malaysia and Indonesia, among others, had expressed misgivings about India’s intention to expand its navy in the late 1980s and early 1990s.

Once again, the nuclear tests provided the impetus for a much needed refurbishing of India’s ties in this area. India’s first appearance at an ASEAN Regional Forum came two months after the tests. While the tests got a frosty reception from ASEAN, India’s presence provided an opportunity to explain its perspective and build up other elements in its ties. The somewhat austere and dignified Foreign Minister Jaswant Singh found himself performing the traditional after-dinner spoof in the company of his colleagues from ASEAN and the other Forum participants – a somewhat improbable setting for a fairly successful diplomatic repair job.

Indo-ASEAN trade and investment ties have grown rapidly in the 1990s. Trade and investment with ASEAN now exceed India’s trade with Japan, and there is immense scope for further enhancement. In 1997, two-way trade was valued at over $7 billion with India’s largest export being machinery and electrical appliances ($884 million) and mineral products ($1238 million), the largest imports.

Besides building on this economic base, India appears to be working on two tracks for its future ties with Southeast Asia. First, it is trying to break into the “East Asian Club” through eventual membership in the Asia Pacific Economic Cooperation (APEC) and by developing sub-regional mechanisms which include both it and some of the Southeast Asian countries. This is partly intended to compensate for the weakness of the South Asian Association for Regional cooperation (SAARC), aggravated by the poor relations between its two largest members, India and Pakistan. With time, economic growth and smooth diplomacy, this could well work.

More interesting is the development of new security ties. India plans joint naval exercises with Vietnam and Japan. While this is unlikely to develop into a major security relationship – Vietnam and Japan are too far away from India’s core security needs, and vice versa – it may have an impact on the dynamics of Sino-Indian relations. It may also help knit India more strongly into the fabric of pan-Asian relations.

What lies ahead: The region’s economic progress is likely to be the strongest determinant of India’s future relations with its eastern neighbors. If India and the Southeast Asian countries all continue to grow, closer association becomes easier, and will also benefit the participants. The more market-oriented approach to economic policy in East Asia will strengthen pro-market forces in India. The political side of the relationship too will expand. On the other hand, economic stagnation or a security crisis involving India or China is likely to push India back into its traditional preoccupation with the immediate South Asian neighborhood. Indian foreign policy is likely to be easier for its friends around the world to deal with under the first scenario than under the second.