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Mainstream, VOL LII, No 23, May 31, 2014

Some Thoughts on Foreign Policy of the New Government

Sunday 1 June 2014, by Muchkund Dubey


Relations with Neighbours

Strengthening relations with neighbours should continue to be accorded the highest priority in the foreign policy of the Narendra Modi Government. For, a country is judged by the world through the prism of its neighbours’ perceptions. Besides, relations with neighbours impinge directly on India’s security, both military and non-military. Moreover, due to cultural affinity, geographical proximity and several other commonalities, neighbours are the best and natural partners for economic cooperation. And finally, India’s ability to hold its pluralistic society together depends to a considerable extent on what happens to the similar societies in its neighbourhood. By inviting the Heads of Government of the SAARC countries to his swearing-in ceremony, Narendra Modi has clearly underlined, indeed dramatised, the priority he attaches to India’s relationship with its neighbours. This bold, imaginative initiative is indeed commendable.

(a) Pakistan: 

Among our neighbours, we have traditionally remained obsessed with our relationship with and developments in Pakistan. This is under-standable because of Pakistan’s relatively large size, its military might and its economic potentials. Both India and Pakistan are paying incalculable opportunity cost on account of their failure to normalise their relations. Normalisation even in one sphere, for example, trade, will be a win-win situation and bring immense benefits to the peoples of the two countries. For example, it has been calculated that if the two countries establish a non-discriminatory and restriction-free trade regime, trade transactions between them can reach a level of $ 20 to 25 billion within seven to eight years.

Obtaining MFN treatment is not the only objective we are pursuing through dialogue with Pakistan. There are many other issues the solution of which can be a positive-sum game for the two countries. Even if there is a small chance of solving any of these issues we should not allow the resultant benefit to go by the default of not engaging Pakistan. This is apart from the fact that remaining engaged with Pakistan on a constructive and continuing basis, always sends positive signals to outside countries which matter for us and to important sections of our own population.

The new government should not, therefore, indulge in any form of Pakistan-baiting or otherwise introducing unnecessary tension and bitterness in our relations with this country. There is no scope for narrow sectarian jingoism in dealing with the most important country among our immediate neighbours. The government should in fact, without wasting any time, resume the long suspended bilateral dialogue with Pakistan which, to be politically acceptable to them, has to be composite and comprehensive. Once the dialogue is resumed, it should be pursued seriously to achieve concrete results. The government should not allow any long hiatus or frequent interruptions in the dialogue.

The new government would be well advised not to underestimate the military might and economic resilience of Pakistan. Pakistan possesses one of the largest conventional armed forces in the world. It is now also a nuclear weapon power. For long spells, from time to time, its economy has grown at relatively fast rates, at times even faster than that of the Indian economy. Given favourable conditions, Pakistan’s economy can be put back on the trajectory of high growth. Therefore, the new government should not underestimate the benefits that India can derive from having closer relations with Pakistan and the danger that can be posed to its security by a belligerent Pakistan.

Unfortunately, the near-term prospects for normalising relations with Pakistan do not appear to be bright. It is mainly because of the progressive lurch of the Pakistani society during the recent years towards religious extremism. Extremist religious elements, among which the Pakistani Taliban are the best organised and most active, are embedded in all the organs of the government, including the legislature, judiciary and armed forces, as well as in political parties. Among the political parties, they have deeply infiltrated into the Pakistan Muslim League of Prime Minister Nawaz Sharif. Mr Nawaz Sharif is so heavily compromised to the Taliban that instead of trying to contain them, he is seeking a modus vivendi with them through negotiations. Any compromise package that is likely to be reached is bound to contain, in the internal sphere, provisions for governance on the basis of the Koran and Hadith, and a major say, if not a veto, of the Taliban on key elements of Pakistan’s foreign policy, particularly in relation to India, Afghanistan and the United States. Extremist religious elements are reported to have influenced the Nawaz Sharif Government’s refusal to adhere to the dateline fixed by the Zardari Government for the extension of the MFN treatment to India and his move to link MFN to the resumption of the composite dialogue and presumably progress in Pakistan’s favour.

In the resumed bilateral dialogue, the new government should not appear as a supplicant for getting MFN treatment. This is because MFN is India’s right under the international trade law. Besides, it is of equal, if not greater, importance to Pakistan. Though in the short run, access for Indian goods and services to Pakistan’s market on par with that of third countries, is likely to bring greater trade benefits to India on account of its more diversified and competitive industrial structure, in the medium and long term it is going to better serve Pakistan’s economic interest by giving it expanded access to the vast Indian market and raising the level of the competitiveness of its industry. For the past 50 years, Pakistan has paid a very heavy price by allowing political considerations to come in the way of having normal trade relations with India. It is essentially for it to decide how much longer it will go on pursuing this futile and counter-productive policy.

(b) Bangladesh:

The new government should attach the highest priority to improving relations with Bangladesh, as this offers the best prospect for obtaining tangible results in the country’s interest in the near future. Our foreign exchange earnings from trade in goods and services with Bangladesh are more than $ 10 billion annually and there are potentialities for doubling this earning in the near future. Moreover, the transit of Indian goods through the Bangladesh territory to the North-Eastern region of India can be a key factor in integrating this region with the national mainstream. Bangladesh is also an important link in our connectivity with the South-East and East Asian countries, which rank very high in our foreign policy calculations. Our trade with them has recorded the fastest growth during the last 15 years. In order to further accelerate this process and achieve economic integration with them, we have put in place the necessary institutional infras-tructure in the form of bilateral free trade agree-ments and comprehensive economic cooperation agreements with all the major countries of this region as well as with the ASEAN as a group.

There has been a dramatic improvement in our relations with Bangladesh after the Awami League Government came to power about five years ago. This government lost no time in taking care of our security concern emanating from the terrorists’ activities of militants operating against India from Bangladesh territory. The Bangladesh Government acted promptly and effectively to put a stop to such activities and also apprehended and handed over to India most of the leaders of the militants. During Sheikh Hasina’s visit to India in January 2010, Bangladesh agreed to a series of measures which, taken together, amounted to granting far-reaching transit facilities for the movement of Indian goods to other parts of India through the Bangladesh territory. These facilities, however, have not till now been operationalised because of the failure on the part of India to sign the agreement on the distribution of Teesta water between the two countries and that on land boundary which would have, among others, provided for the resolution of the long pending issue of the exchange of enclaves. One of the most important challenges of the Narendra Modi Government is to deliver on these two agreements. The next logical step would be to assist Bangladesh in a major way for the development of its transport infrastructure without which the transit facilities to the North-Eastern region of India cannot be a reality on the ground. A further important step for cementing relationship with Bangladesh would be to conclude a comprehensive economic partnership agreement designed to achieve an integration of the economies of the two countries.

The above vision of bringing the two countries together will be nipped in the bud if the Narendra Modi Government goes ahead with its publicly pronounced plan of identifying and pushing back Bangladeshi Muslims who have illegally migrated to India over the last few decades. This move will unnecessarily create a first class crisis in our relations with Bangladesh and will also vitiate the climate of cooperation in South Asia. The stand taken by Narendra Modi, in his capacity as the prime ministerial candidate for the BJP, that Hindus migrating illegally from Bangladesh are refugees and Muslims migrants, illegal entrants, is untenable under both in terms of our constitutional provision and international law. The Indian Constitution makes no provision for conferring or denying citizenship on the ground of religion. Therefore, it is very likely that our judiciary itself will declare ultra vires of the Constitution, any measures drawing the proposed dubious distinction between Hindu and Muslim migrants from Bangladesh. Secondly, the figure of tens of millions, cited by the BJP leaders and their protagonists, of the number of Bangla-deshis who have illegally migrated to India are highly exaggerated. Some of the research papers on this subject which I had seen in the early 1990s, showed that the number of Bangladeshis who illegally entered into India and did not return between 1971 and 1991 did not exceed one million. This magnitude of migration, between countries with asymmet-rical economic conditions and development, is not unknown in modern history. Thirdly, it will be impossible to make a distinction between Muslims in India who migrated illegally from Bangladesh and those who are Indian citizens. Practically all the persons suspected to belong to the former category would have proofs, like entry into the voters list and valid identity cards, including Aadhar and ration cards. On the basis of these proofs of identity, they can appeal to the courts and foil attempts to declare them illegal entrants. Moreover, any process of such identification has to be carried out with the cooperation of the State Government concerned. Most of the States, particularly West Bengal, are likely to refuse to extend such cooperation. Finally, even if it is possible to identify illegal Muslim entrants from Bangladesh, it will be impossible to push them back without the agreement of the Government of Bangladesh. Bangladesh will most certainly regard any attempt to push the illegal entrants by force as a violation of its territorial integrity. The Bangladesh Government has repeatedly announced—most recently through a statement by one of the seniormost Awami League leaders, Tofail Ahmed, known to be very friendly to India—that there has been no illegal migration from Bangladesh to India.

In the circumstances, the only face-saving device that the new government can adopt is to initiate negotiation with Bangladesh in order to arrive at a comprehensive agreement for preventing illegal crossing of the border from both sides. This is the best that the BJP-led government can do to redeem its electoral promise on the issue of illegal migration from Bangladesh.

Indo-US Relations

The United States remains the largest economic and military power in the world, the biggest market for India’s export and the most important source of technology and investment flow. Over the years, India has established an elaborate framework of conducting bilateral relations with the United States, covering a whole gamut of issues—bilateral, regional and global. The new government should definitely make a determined effort to revitalise this framework in order to inject new energy into our relationship with the United States. However, this should not be on terms dictated by the United States. It will be both demeaning and detrimental to national interest if the new government starts its term by placating the United States by means of revising the Nuclear Liability Act and the amended Patent Act. The former Prime Minister, Shri Atal Behari Vajpayee’s remark that the US is our “natural ally” may have served a useful rhetorical purpose at the time when it was made. However, historically the US has treated only those nations as allies which are either subservient to it or possess sufficient economic clout to be of interest to it.

There has been an unwarranted tilt towards the United States in the foreign policy of the UPA Government. This has been based on the naive belief in the US promise to help India become a world power and in the erroneous judgement of our economic policy-makers that the sustenance of high economic growth in India depends mainly upon big ticket investments coming from the United States.

The undeclared but unmistakable predilection in our foreign policy in favour of the United States has been responsible for our missing the opportunity of fully exploiting the potentialities of our relations with Iran and for the stagnation in our relationship with Russia because of our reluctance under US pressure to undertake major projects in collaboration with this country. Through our conduct in G-20, we have become a partner in the US design to maintain the existing world order dominated by them. In deference to US wishes, we have also allowed our voice to be muffled in international gatherings and abstained from taking major initiatives in these forums, intended to bring about changes in the world order.

Today our relations with the United States are not as buoyant and warm as they were a few years ago. This is mainly because the US has lost interest in India after the slowing down of the momentum of growth of its economy in the aftermath of the global economic and financial crisis of 2008. Indo-US relations have also deteriorated recently because of the high-handed and thoughtless manner in which the United States has handled some of the issues of great concern to India. The United States is questioning our Parliament’s sovereign right to make laws. It is casting aspersions on the judgement of our highest level judiciary. It is putting relentless pressure on us to adopt macro-economic policies in total disregard of their social and environ-mental implications and of the obligation of the state to abide by the social contract with the people of India undertaken in the Indian Constitution. The US wants us to revise our labour laws to the detriment of the rights and the bargaining strength of the workers. It wants us to privatise services in the social sector at great cost to the poorest and marginalised in society. America also wants us to award it defence contracts bypassing the normal procedure laid down for this purpose. In policies towards third countries, the US wants us to go along with its design to bring about regime changes in the so-called rogue states, by use of force and at the cost of immense human suffering.

We have, therefore, to be very firm in dealing with the United States. In this endeavour, we should not hesitate from taking the legal route, that is, to resort to the Dispute Settlement Mechanism of the WTO in order to hold them accountable for the arbitrary positions they have taken on issues of concern to us, like our right to give compulsory licences or not to grant patent rights for innovations which do not conform to the criteria of patentability laid down in our patent law. I also see no scope for evolving a common position with the US on how to deal with the situations in Ukraine, Syria and other countries of West Asia and North Africa. In the light of these considerations, the onus of improving Indo-US relations rests primarily on the United States. Consistent with its national interest and its global perspective, India is not in a position to revise its domestic or foreign policies on any of the issues of concern to the United States.

Relations with China

It is in our vital interest to maintain and expand our relations with China. This is in spite of the fact that we face several problems in dealing with this country, particularly its rigid and at times aggressive stand on the border issue and its continuing military assistance and other support to Pakistan, intended to keep India destabilised. China has emerged as one of the greatest powers in the world and every major country is busy adjusting its foreign policy in order to establish a new equation with China. India, a close neighbour and tied with China in myriad ways, cannot be an exception to this trend. During the short span of a decade-and-a-half our trade with China has reached the staggering level of over $ 70 billion. The two countries have also forged several other economic linkages. India has been working closely with China in important forums like BRICS, G-20, and in the negotiations in the Doha Round and on Climate Change. A convergence of the positions of India and China on such issues as the reform of the IMF, additional issues of SDRs and creating a new international reserve currency on its basis, regulations of the international financial market, strengthening of the United Nations etc., can serve the interest of both the countries, and of developing countries as a whole. This can also be a harbinger of change in the existing world economic order. The new government should, therefore, engage with China on all the above issues. In the short run, it should seek to persuade the Chinese to take the following steps:

(i) Change the lopsided nature of the current trade exchanges through the opening of the Chinese market for India’s exports. The Chinese should remove restrictions on the import of competitive goods and services from India, particularly in the areas of pharmaceuticals and information technology.

(ii) Invest more in major infrastructure projects in India.

Side by side, we should take action to bolster our military presence along the border and build and keep operational the infrastructure for military surveillance, and operation if it becomes necessary. We should also pro-actively nurture and strengthen our economic, political and defence ties with important countries in South-East and East Asia.

Recalibrating Relations with Russia and Iran

Next to the US and China there is an urgent need to recalibrate our relationship with Russia and Iran. Limitation of space does not permit me to advance specific suggestions for such recalibration. However, the first step the new government should take is not to allow the shadow of US influence to be cast on our relations with these countries.

Free Trade Areas and Comprehensive Economic Partnership Agreements— 


India has over the past decade-and-a-half, concluded Free Trade Agreements (FTAs) with most of the important countries of South-East and East Asia and Comprehensive Economic Partnership Agreements (CEPA) with some of them. India has also signed an India-ASEAN FTA in goods which became operational from January 1, 2010 and is in the process of negotiating an India-ASEAN FTA in services. India is also in the process of negotiating a Regional Comprehensive Economic Partnership (RCEP) agreement with the countries belonging to ASEAN+6.

The new government is likely to come under pressure by both big and small business, to review these agreements. There can be no objection to reviewing these agreements, and for that matter, any important aspect of India’s foreign economic policy But there is no question of India going back on FTAs and CEPAs already negotiated or under negotiation. There is hardly any important country in South-East and East Asia which does not have an FTA or CEPA with other major countries of the region. Besides, both India and China have concluded FTAs with ASEAN as a group. Countries in Europe, America, Latin America and Africa have also formed economic groupings in which trade takes place on a preferential basis. According to one calculation, some two-thirds of the world trade is today transacted among countries belonging to preferential groupings. In this context, it will be absurd for India to think of withdrawing from the FTAs and CEPAs it has concluded with other countries and not to continue partici-pating actively in the ongoing negotiations for establishing new economic partnerships. If we do so, we would be left high and dry and subject to discrimination in the world trading system.

The issue, therefore, is not to withdraw from FTAs and CEPAs already negotiated or go slow on the ongoing negotiations, but how to get the best terms in the negotiations, and more important than that, how to take advantage of these agreements to expand our trade with the partner countries. The UPA Government has followed the right policy in negotiating the FTAs and CEPAs and, on balance, it has got reasonably good terms in the negotiations on these agreements. Our partners would not have allowed us to make too many exemptions as demanded by our business, from the provisions of free trade because of the higher stage of liberalisation of their economies and also because too many exceptions have the effect of negating the very essence of a free trade agreement. The time has, therefore, come to have intensive discussion with our industry and business on the domestic measures to be taken for deriving maximum benefits from the FTAs and CEPAs.

There has been a lack of clarity in the policy of the UPA Government towards the two most important negotiations going on currently for forming comprehensive economic partnership agreements in Asia and the Pacific. These are the Trans-Pacific Partnership (TPP) initiative launched by the United States and the Regional Comprehensive Economic Partnership (RCEP) launched by ASEAN+6 of which India is a member. India has not been invited to participate in the negotiations on the TPP. At the same time, it has not taken an official view on it as it wants to keep its option open in case it is invited to participate. This ambiguity in our policy towards the TPP does not serve our interest. It is quite clear that the objectives pursued by the United States and its partners through the negotiations on the TPP, particularly in the areas of patent rights, investment measures and liberalisation in the field of industrial sectors, severely militate against our interest and go much beyond the commitments we have under-taken or are likely to accept in the near future, within the framework of the WTO. Moreover, agreements like the TPP and the Trans-Atlantic Trade and Investment Partnership (TTIP), which have similar objectives, will severely undermine the international trading system. Though it is not necessary for us to announce our official position on the TPP or TTIP, we should be very clear in our mind regarding the negative implications of these negotiation for us and for the international trading system. To have an ambiguous position on initiatives like these is positively against our national interest.

On the RCEP, though the UPA Government has decided to participate, it is doing so hesitatingly and not making any move of its own to impart momentum to it. This is in spite of the fact that 10 years ago, the UPA Government had taken the initiative for the creation of a trans-Asian economic community. At that time, mainly because of the objection of China we could not succeed in our endeavour and had to remain content with our participation in the East Asian Economic Summit which was launched in Kuala Lumpur in December 2005. It is queer that we have developed cold feet at a time when our position has been vindicated and China has withdrawn its objection and decided to participate. This has opened up a real prospect for moving towards Pan-Asian economic integration, a goal which we pioneered. India should, therefore, initiate a dialogue with China in order to impart momentum to the on-going negotiations on the RCEP so that they can be concluded by the stipulated dateline of December 2015. This move, if it succeeds, will not only be politically very significant but will also remove the possibility of our being discriminated in the markets of China, Japan and Korea which are in the process of forming free trade groupings among them. It will also be one of the highest points reached by our Look East Policy.

Our position on the above initiatives for forming regional groupings in Asia and the Pacific should be formulated and appropriately articulated as a matter of high priority by the new government.

Ultimate Determinants of Foreign Policy

In the final analysis, the effectiveness of our foreign policy, particularly towards the United States and China, but not excluding our neighbours, will hinge critically on our military strength and preparedness and restoring dynamism to our economy. On the former, the prevailing impression among the public and experts is that our conventional armed forces have been neglected by the government, and that they are ill equipped and not in a state of full preparedness. There is, therefore, a need to pay attention to this matter urgently. On the nuclear front, we do not expect the government to share with the public every detail of the progress being made in developing our second strike capability. But it will be good for the government for boosting public morale and garnering public support, to go public from time to time on major developments in this crucial area. As regards the economy, the country is waiting with a mixed feeling of expectation and apprehension, to see what policies the new government is going to unveil for putting the economy back on the path of high growth and at the same time ensuring that the growth is inclusive.

A former Foreign Secretary, Prof Muchkund Dubey is currently the President, Council for Social Development, New Delhi.

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