GS Paper: India & Its Neighborhood – Relations

Sri Lanka’s economic crisis is aggravating rapidly, putting citizens through enormous hardship.

Reasons for the Crisis

The first wave of the pandemic in 2020 offered early and sure signs of distress.

• In-migration: Thousands of Sri Lankan labourers in West Asian countries were left stranded and returned jobless.
• Shut-down: Garment factories and tea estates could not function, as infections raged in clusters. Tourism sector to saw a big dip.
• Domestic job losses: Thousands of youth lost their jobs in cities as establishments abruptly sacked them or shut down.
• Forex decline: It meant that all key foreign exchange earning sectors, such as exports and remittances, along with tourism, were brutally hit.

Policy failures of Lankan govt

• No strategy: The lack of a comprehensive strategy to respond to the crisis then was coupled with certain policy decisions last year.
• Ill-advised policies: It included the government’s abrupt switch to organic farming —widely deemed “ill-advised”, further aggravated the problem.
• Food hoarding: The government declared emergency regulations for the distribution of essential food items. It put wide import restrictions to save dollars which in turn led to consequent market irregularities and reported hoarding.
• Continuous borrowing: Fears of a sovereign default rose by the end of 2021, with the country’s foreign reserves plummeting to $1.6 billion, and deadlines for repaying external loans looming.

What is happening on the ground?

• At the macro-economic level, all indicators are worrisome.
• The Sri Lankan rupee, which authorities floated this month, has fallen to nearly 265 against the U.S. dollar. Consumer Price inflation is at 16.8% and foreign reserves stood at $2.31 billion at the end of February.
• Sri Lanka must repay foreign debt totalling nearly $7 billion this year and continue importing essentials from its dwindling dollar account.
• Sri Lanka will incur an import bill of $22 billion this year, resulting in a trade deficit of $10 billion.

Implications on Public

• For citizens, this means long waits in queues for fuel, a shortage of cooking gas, contending with prolonged power cuts in many localities and struggles to find medicines for patients.
• In families of working people, the crisis is translating to cutting down on milk for children, eating fewer meals, or going to bed hungry.

How is India helping?

• Acting in the Neighbourhood’s first policy, India stands with Sri Lanka.
• $1 billion credit line signed for supply of essential commodities. Key element of the package of support extended by India.
• Beginning January 2022, India has extended assistance totalling $ 2.4 billion — including an $400 million RBI currency swap and a $500 million loan deferment.

Chinese lure of aid

• China is considering Sri Lanka’s recent request for further $2.5 billion assistance, in addition to the $2.8 billion Beijing has extended since the outbreak of the pandemic.

How is India’s assistance being viewed in Sri Lanka?

• Sacking key infra projects: The leadership has thanked India for the timely assistance, but there is growing scepticism in Sri Lankan media and some sections, over Indian assistance “being tied” to New Delhi inking key infrastructure projects.
• Deep incursion: They mainly include the strategic Trincomalee Oil Tank Farm project; the National Thermal Power Corporation’s recent agreement with Ceylon Electricity Board to set up a solar power plant in Sampur, with investment from India’s Adani Group.
• Diplomatic blackmail: SL media accuses New Delhi was resorting to “diplomatic blackmail”. The political opposition has accused the Adani Group of entering Sri Lanka through the “back door”, avoiding competitive bids and due process.

Options available for SL

• Sri Lanka is hoping for a Rapid Finance Instrument (RFI) facility as well as a larger Extended Fund Facility (EFF) from the IMF to deal with its foreign currency shortages.
• IMF had assured to help the country with an amount of $300 million to $600 million.

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Context

The accidental firing of an Indian missile into Pakistan highlights the sorry state of bilateral mechanisms for crisis management between the two nuclear adversaries where there is a missile flight time of barely a few minutes.

Balance response from both side

• The Pakistani response to the accidental firing of the missile was a balanced one.
• While New Delhi maintained a silence over the issue until it was brought up on March 11, the Indian response was also far from denial.
• In that sense then, the Indian and Pakistani responses to the missile (mis)firing were the best possible outcome under the circumstances given that there is little bilateral mechanism for crisis management.
• The two sides do not have high commissioners on the other side, there is no structured bilateral dialogue, and, most importantly, the two sides have not held ‘Expert Level Talks on Nuclear Confidence Building Measures’ or ‘Expert Level Talks on Conventional Confidence Building Measures’ for several years now.

Lack of strategic stability regime

Following are the reasons why the strategic stability regime in South Asia is hardly prepared for dealing with accidents such as the one that just happened, or enhancing effective crisis management and deterrence stability.

1] Pre-notification agreement does not include cruise missiles

• For one, although India and Pakistan signed a ‘Pre-Notification of Flight Testing of Ballistic Missiles’ agreement in October 2005, it does not include cruise missiles.
• Notably, the missile that was misfired by the Indian side earlier this month, suspected to be the BrahMos, was a cruise missile (even though it was a misfire, and not a flight test).
• Way forward: Given the many sophisticated cruise missiles that are now a part of each side’s arsenal, it is important to include them in the pre-notification regime.

2] No structured meetings on nuclear confidence-building measures (CBMs)

• The two sides have not held their structured meetings on nuclear confidence building measures (CBMs) and conventional CBMs for several years now.
• Given the nature of the India-Pakistan relationship — adversarial, nuclear-armed, crisis prone, and suffering from trust deficit — there is an urgent need, especially in the wake of the recent incident, to revive these two dialogue mechanisms.

3] China has so far refused to engage in strategic stability discussions with India

• The third state with nuclear weapons in the region, China, has so far refused to engage in strategic stability discussions with India even though China today is involved in the India-Pakistan conflict more than ever before, apart from being in a military standoff with India.

Way forward: Mechanisms for communicating sensitive information during crisis periods

• India and Pakistan should consider setting up mechanisms such as nuclear risk reduction centres (NRRCs), established between the U.S. and the Soviet Union during the Cold War.
• The primary objective of NRRCs, or similar structures that can be set up on either side, is risk reduction by providing a structured mechanism for timely communication of messages and proper implementation of already agreed-upon confidence-building measures.
• Such a body could routinely exchange messages, provide timely clarifications, and review compliance to agreements, among others.

Consider the question “The incident of the accidental firing of a missile by India highlights the issues with the strategic stability regime in South Asia. Discuss the issues and suggest the measures needed? 

Conclusion

New Delhi should provide assurances to Pakistan that efforts will be made to avoid such mistakes in the future. And both sides should use risk reduction mechanisms.

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The two-day visit to Moscow by Pakistan’s PM Imran Khan comes at a time when President Vladimir Putin is the bad boy of the world for his actions against Ukraine.

Pakistan–Russia Relations: A backgrounder

• The Soviet Union and Pakistan first established diplomatic and bilateral relations on 1 May 1948.
• For most of the Cold War, the Soviet Union’s relations with Pakistan have seen ups and downs during the different periods in the history of Pakistan.
• Pakistan is credited for playing a key role for allying and supporting the West during this time period of the Cold War.
• In recent years their ties have warmed as a countermeasure to warming ties between India and the United States.

Instances of Russia defying India

• The two countries carried out their first-ever joint military drills in 2016 despite Indian requests to postpone due to the Uri attack.
• Pakistan and Russia signed an agreement for the Pakistan Stream Gas pipeline from Karachi to Kasur, and reached a price accord by December 2016.
• Pakistan has also granted Russia access to a warm water port in the Arabian Sea (Gwadar Port).
• Their mutual partnership with China that has grown in recent years signals the undeniable development of a new axis in South Asia and Central Asia.
• The two countries take the lead in projecting the Taliban as the rightful claimants to power in Kabul.

A timeline of relations

• Cold war era: Pakistan’s relations with Russia have come a long way since the time it was a willing ally and treaty partner of the US bloc against the Soviet Union. It had helped the US repair its relations with China, which sent Beijing and Moscow further apart.
• Paving way for India: In response, India and USSR solidified their ties with a defense pact and increased economic and people-to-people exchanges.
• Afghan War: Pakistan saw itself as a frontline state against the spread of communism, and actively aided and assisted in the defeat of the Red Army in the first Afghan war, with the US and Saudi Arabia using the Pak Army.
• Fall of USSR: The collapse of the Soviet Union led to major shifts in international relations. From their vantage points, Pakistan and Russia watched the US and post-economic-reforms India draw closer.

Pakistan parted with the US

• Putin’s Russia began looking for new markets for its military hardware, as well as new international partners, began building ties with Pakistan.
• By then, serious rifts had emerged between the Obama Administration and Pakistan.
• The killing of Osama bin Laden in a stealth raid by US marines in Pakistan’s Abbottabad became the turning point.

Russia-Pakistan-China

(1) Helping the lonely Pakistan

• In 2011, to New Delhi’s shock, Russia lifted its four-decade-old arms embargo on Pakistan — and within four years, would sell Pakistan its first MiG attack helicopters.
• As a US defeat in Afghanistan began to look certain, both countries made common cause on Afghanistan, again to India’s dismay.
• In September 2016, after the Jaish-e-Mohammed attack in Uri, Russia went ahead with a joint military exercise with Pakistan, ignoring New Delhi’s appeal.
• In 2017, with Indo-Pak relations at their lowest, Russia sold more helicopters to Pakistan.

(2) Enters the old dragon

• After its 2014 annexation of Crimea, Russia found a friend in China, the long-time friend of Pakistan, triangulating the relationship.
• Both Pakistan and Russia are participants in China’s Belt and Road Initiative.
• After the Taliban takeover in Afghanistan, the world has seen the three take common positions and in tacit acknowledgment of each other’s interests in that country.

Impact on ties with India

• The Russia-India relationship is not what it used to be in the Soviet days, both sides recognise its continued mutual benefits. However-

1. Russia is hardly starry-eyed about its relations with Pakistan.
2. It has clear views against Pakistan’s patronage of terrorists.
3. While it is supportive of the Taliban regime, Russia is concerned about radical terrorism expansion from Afghanistan.

• Russia remains India’s biggest arms supplier, and India took the risk of being sanctioned by the US when it bought the Russian S 400 missile defence system.
• New Delhi has not yet allowed its close ties with the US to tilt its delicate balance on the Ukraine issue.

Significance of Pak Visit

• IK is visiting Russia on the Kremlin’s invitation sides to convey their own messages to the West about building partnerships in a changing world.
• He will become the first foreign leader to visit Russia after Putin recognized two breakaway regions of Ukraine as independent republics.
• He is also the first Pakistani PM to travel to that country since the landmark visit by Nawaz Sharif in 1999.

What does Pakistan seeks to have?

• Pakistan wants Russia to invest in, and construct a $2.5 billion gas pipeline from the seaport in Karachi to Kasur in the Punjab hinterland, even though this pipeline is unlikely to transport Russian gas.
• Moscow, however, appears to be more interested in the possibility of building the 1,800-km Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline.

 

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Russian President Vladimir Putin’s visit to China this month, as well as the Ukraine crisis, have turned the spotlight on Russia’s relations with China.

News: China-factor in Ukraine Crisis

• Many in the west have blamed the Russia-China axis for motivating Moscow’s recent moves and ensuring it will not be completely isolated in the face of western sanctions.
• At the same time, Beijing has found itself walking a tightrope in its response and has so far stopped short of endorsing Russia’s actions.

Russia-China Relations: A backgrounder

• Relations between China and the former Soviet Union were frosty, marked by mistrust and doctrinal differences for most of the Cold War decades.
• The change came in 1989, when Mikhail Gorbachev became the first Soviet leader to land in Beijing since Nikita Khrushchev in 1958.

1. Economic dependency: A decade after the Soviet Union broke up, disappointed and humiliated and deep in economic crisis, Russia under Putin’s first presidency turned to China under President Jiang Zemin.
2. Neighborhood: In 2001, the two countries signed the Treaty of Good-Neighbourliness and Friendly Cooperation, paving the way for expanding economic and trade ties.
3. Technological support: For the new People’s Republic of China, the Soviet Union was the most important source of financial and technological support.
4. Respect for sovereignty: Russia’s backing for China’s position on Taiwan is also a benchmark.

Current state of ties

• Last year, Russia’s Foreign Minister has described relations as the “best in their entire history”. Both premiers have met 38 times (in person and virtually) since 2013.
• The biggest factor behind their current closeness is:

1. Shared discomfort with the US and its allies
2. NATO and its ideological cold war approaches
3. Indo-Pacific strategy and QUAD
4. One-China Principle

Military closeness

• China in 2014 became the first foreign buyer of the S-400 missile defence system, which India has also purchased (although there have been reported delays in delivery for reasons unknown).
• Their joint exercises have also grown in scope.
• Last year, a third “joint strategic air patrol” was held over the East China Sea.

Trade and Commerce

• Russia is China’s largest source of energy imports and second largest source of crude oil.
• Energy set to account for 35% of trade in 2022.
• China has been Russia’s biggest trading partner for 12 consecutive years and accounts for close to 20% of Russia’s total foreign trade (Russia, on the other hand, accounts for 2% of China’s trade).
• But Russia is, for China, a key market for project contracts besides energy supplies.
• Chinese companies signed construction project deals worth $5 billion last year — for the third straight year.

Chinese response to the Ukraine Crisis

• Given these deep trade linkages, China does not want instability (or, for that matter, a spurt in energy prices).
• China has iterated that the sovereignty, independence and territorial integrity of all countries should be respected and safeguarded.
• China has preferred resolution to the current crisis through diplomacy and a return to the Minsk Agreement.

Minsk Agreement: They were a series of international agreements which sought to end the war in the Donbas region of Ukraine.

Implications for the world

• China has repeatedly underlined that it is sympathetic to Russia’s concerns on NATO, which mirror its own opposition to America’s allies in the Indo-Pacific.
• As strategic back-to-back fraternal partners, China is obliged to bolster Russia in time of need.
• With consistent support from China, the Russian economy has become increasingly resilient following years of sanctions imposed by the US and other Western developed countries.
• A strong economy will back up Moscow to deflect ruthless economic coercion from the US.

Implications for India

• Strategists in the west and in India have often questioned the robustness of the relationship as well as Russia’s possible unease at being the “junior partner” and increasingly beholden to Chinese interests.
• The Russian President’s invite to Pak PM Imran Khan is the recent unwelcomed moved for India.
• In this regard, New Delhi expects Sino-Russian closeness to continue, which poses its own challenges.
• This is not, however, an entirely new situation, as history reminds us, on how the Soviet Union responded to China’s attack on India in 1962.

Conclusion

• It is no doubt that India would restrict its foreign policy choices and undermine its own status as a rising power of global standing by taking sides in a conflict that has nothing to do with it.

 

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Peace with India and its immediate neighbors is set to be the central theme of Pakistan’s first-ever National Security Policy.

Why has this news made headlines?

• Pakistan’s (official) policy now leaves the door open for trade with India even without the settlement of the Kashmir issue – provided there is headway in bilateral talks.
• Earlier, Kashmir used to be at the centre-stage of all Pakistani outcry.

New Security Policy

• The country’s new policy would act as an umbrella document, to be used as a guideline for Pakistan`s foreign, international and defence related policies.
• The five-year-policy document, which will span 2022-26, is being touted by the Pakistan government as the country’s first-ever strategy paper of its kind.

Key highlights

• Focus on trade: The 100-page policy document has also put out elaborate plans to open trade and business ties with India.
• Silent on Kashmir: Kashmir issue with India has been identified as a ‘vital national policy’ issue for Pakistan.
• No public discussion: Only a part of the national security policy will be made public.
• Defying hostility with India: The document states that Pakistan is not seeking hostility with India for the next 100 years.
• Curbing militancy: The new policy also deals with the issue of militant and dissident groups and advocates dialogue with ‘reconcilable elements.’
• No re-conciliation with India: There are no prospects of rapprochement with India under the current government.
• Others: On the internal front, the new policy identifies five key areas of population/migration, health, climate and water, food security and gender mainstreaming.

Significance of such policy

• Pakistan and India have mostly been at loggerheads with each other throughout history.
• During the first term of Narendra Modi in 2014, the relations took a positive turn when he announced his intentions to have cordial relations with Pakistan.
• He had also visited Islamabad in 2015 unannounced to attend a marriage ceremony in Ex-PMs family.
• However, the relations deteriorated following the horrific 2016 Uri attacks.

Way ahead

• Pivotal equations between India and Pakistan will continue to be dominated by Kashmir, the ongoing proxy war and terrorism.
• It is unlikely that this prevailing equilibrium is likely to be reset by this classified policy document. That too overnight.
• The India-centric security obsession will remain the core of this policy.

 

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