Subject: Bilateral Relations

Context

Delhi’s Indo-Pacific strategy has acquired political and institutional traction, thanks to intensive Indian diplomacy in recent years. It must now devote similar energy to the development of a “Eurasian” policy.

Need for Eurasian strategy and challenges

• This week’s consultations in Delhi on the crisis in Afghanistan among the region’s top security policymakers is part of developing a Eurasian strategy.
• National Security Advisor Ajit Doval has invited his counterparts from Pakistan, Iran, Central Asia, Russia, and China to join this discussion on Wednesday.
• Pakistan has declined to join.
• Pakistan’s reluctance to engage with India on Afghanistan reveals Delhi’s persisting problem with Islamabad in shaping a new Eurasian strategy.
• But it also reinforces the urgency of an Indian strategy to deal with Eurasia.

Factors shaping India’s Eurasian policy

• The most important development in Eurasia today is the dramatic rise of China and its growing strategic assertiveness, expanding economic power and rising political influence.
• Beijing’s muscular approach to the long and disputed border with Bhutan and India, its quest for a security presence in Tajikistan, the active search for a larger role in Afghanistan, and a greater say in the affairs of the broader sub-Himalayan region are only one part of the story.
• Physical proximity multiplies China’s economic impact on the inner Asian regions.
•  These leverages, in turn, were reinforced by a deepening alliance with Russia that straddles the Eurasian heartland. Russia’s intractable disputes with Europe and America have increased Moscow’s reliance on Beijing.
• Amidst mounting challenges from China in the Indo-Pacific maritime domain, Washington has begun to rethink its strategic commitments to Eurasia. 
• Whether defined as “burden-sharing” in Washington or “strategic autonomy” in Brussels, Europe must necessarily take on a larger regional Eurasian security role.
• More broadly, regional powers are going to reshape Eurasia.

What should be India’s approach to Eurasia

• Like the Indo-Pacific, Eurasia is new to India’s strategic discourse.
• To be sure, there are references to India’s ancient civilisational links with Eurasia.
• While there are many elements to an Indian strategy towards Eurasia, three of them stand out.
• Put Europe back into India’s continental calculus: As India now steps up its engagement with Europe, the time has come for it to begin a strategic conversation with Brussels on Eurasian security.
• This will be a natural complement to the fledgling engagement between India and Europe on the Indo-Pacific.
• India’s Eurasian policy must necessarily involve greater engagement with both the European Union and the North Atlantic Treaty Organisation.
• Intensify the dialogue on Eurasian security with Russia: While Indo-Russian differences on the Indo-Pacific, the Quad, China, and the Taliban are real, Delhi and Moscow have good reasons to narrow their differences on Afghanistan and widen cooperation on continental Eurasian security.
• Indian collaboration with both Persia and Arabia: If Persia’s location makes it critical for the future of Afghanistan and Central Asia, the religious influence of Arabia and the weight of the Gulf capital are quite consequential in the region.
• India’s partnerships with Persia and Arabia are also critical in overcoming Turkey’s alliance with Pakistan that is hostile to Delhi.

Challenges

• Contradictions: India will surely encounter many contradictions in each of the three areas — between and among America, Europe, Russia, China, Iran, and the Arab Gulf.
• As in the Indo-Pacific, so in Eurasia, Delhi should not let these contradictions hold India back.

Consider the question ” Eurasia involves the recalibration of India’s continental strategy. India has certainly dealt with Eurasia’s constituent spaces separately over the decades. What Delhi now needs is an integrated approach to Eurasia. In the context of this, examine the challenges in India’s engagement with Eurasia and suggest the elements that should form part of India’s strategy towards Eurasia.”

Conclusion

The current flux in Eurasian geopolitics will lessen some of the current contradictions and generate some new antinomies in the days ahead. The key for India lies in greater strategic activism that opens opportunities in all directions in Eurasia.

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Context

The Gati Shakti National Master Plan will have an important economic multiplier effect at home, it must also be leveraged to have an external impact by aligning it with India’s regional and global connectivity efforts.

Main components of the Gati Shakti National Master Plan

• The Gati Shakti plan has three main components, all focused on domestic coordination.
• Increase information sharing: The plan seeks to increase information sharing with a new technology platform between various ministries at the Union and state levels.
• Reduce logistics’ costs: It focuses on giving impetus to multi-modal transportation to reduce logistics’ costs and strengthen last-mile connectivity in India’s hinterland or border regions.
• Analytical tool: The third component includes an analytical decision-making tool to disseminate project-related information and prioritise key infrastructure projects.
• This aims to ensure transparency and time-bound commitments to investors.

How Gati Shakti Plan can strengthen India’s economic ties with its neighbours

• The plan will automatically generate positive effects to deepen India’s economic ties with Nepal, Bhutan, Bangladesh, Myanmar and Sri Lanka, as well as with Southeast Asia and the Indian Ocean region.
• India’s investment in roads, ports, inland waterways or new customs procedures generate positive externalities for these neighbours, who are keen to access the growing Indian consumer market.
• Any reduction in India’s domestic logistics costs brings immediate benefits to the northern neighbour, given that 98 per cent of Nepal’s total trade transits through India and about 65 per cent of Nepal’s trade is with India.
• In 2019, trade between Bhutan and Bangladesh was eased through a new multimodal road and waterway link via Assam.
• The new cargo ferry service with the Maldives, launched last year, has lowered the costs of trade for the island state.
• And under the South Asia Subregional Economic Cooperation Programme, India’s investments in multimodal connectivity on the eastern coast is reconnecting India with the Bay of Bengal and Southeast Asia through integrated rail, port and shipping systems.
• Whether it is the alignment of a cross-border railway, the location of a border check post, or the digital system chosen for customs and immigration processes, India’s connectivity investments at home will have limited effects unless they are coordinated with those of its neighbours and other regional partners.
• While India recently joined the Transports Internationaux Routiers (TIR) convention, which facilitates cross-border customs procedures, none of its neighbouring countries in the east has signed on to it.

Suggestions for Gati Shakti Plan to have maximum external effect

• First, India will have to deepen bilateral consultations with its neighbours to gauge their connectivity strategies and priorities.
• Given political and security sensitivities, India will require diplomatic skills to reassure its neighbours and adapt to their pace and political economy context.
• A second way is for India to work through regional institutions and platforms. SAARC’s ambitious regional integration plans of the 2000s are now defunct, so Delhi has shifted its geo-economic orientation eastwards.
• The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) has got new momentum, but there is also progress on the Bangladesh, Bhutan, India, Nepal (BBIN) Initiative.
• Finally, India can also boost the Gati Shakti plan’s external impact by cooperating more closely with global players who are keen to support its strategic imperative to give the Indo-Pacific an economic connectivity dimension.
• This includes the Asian Development Bank and the World Bank, but also Japan, the US, Australia, EU and ASEAN.

Conclusion

Gati Shakti plan must also leveraged to have an external impact by aligning it with India’s regional and global connectivity efforts.

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Context

The trilateral security agreement between Australia, the United Kingdom and the United States (AUKUS) continues to be in the news.

Implications for ASEAN

• There is also the matter of Association of Southeast Asian Nations (ASEAN) disunity over the emergence of AUKUS.
•  While AUKUS is clearly an attempt by the U.S. to bolster regional security, including securing Australia’s seaborne trade, any sudden accretion in Australia’s naval capabilities is bound to cause unease in the region.
• Even though Australia has denied that AUKUS is a defence alliance, this hardly prevents China from exploiting ASEAN’s concerns at having to face a Hobson’s choice amidst worsening U.S.-China regional rivalry.
•  AUKUS is based on a shared commitment of its three members to deepening diplomatic, security and defence cooperation in the Indo-Pacific to meet the challenges of the 21st century.
• Even though this has not been stated explicitly, the rise of China, particularly its rapid militarisation and aggressive behaviour, is undoubtedly the trigger.

Relations of AUKUS members with China

• The AUKUS joint statement clearly acknowledges that trilateral defence ties are decades old, and that AUKUS aims to further joint capabilities and interoperability.
• For three nations, their relations with China have recently been marked by contretemps.
• Australia, especially, had for years subordinated its strategic assessment of China to transactional commercial interests.
• Much to China’s chagrin, its policy of deliberately targeting Australian exports has not yielded the desired results.
• Instead of kow-towing, the plucky Australian character has led Canberra to favour a fundamental overhaul of its China policy.
• The transfer of sensitive submarine technology by the U.S. to the U.K. is a sui generis arrangement based on their long-standing Mutual Defence Agreement of 1958.
• Elements in the broader agenda provide opportunities to the U.S., the U.K. and Australia to engage the regional countries.

AUKUS engagement with regional countries

• All three nations will also play a major role in U.S.-led programmes such as Build Back Better World, Blue Dot Network and Clean Network, to meet the challenge of China’s Belt and Road Initiative.
• The Quad and AUKUS are distinct, yet complementary. Neither diminishes the other.
• Whereas the Quad initiatives straddle the Indian and the Pacific Oceans, a Pacific-centric orientation for AUKUS has advantages.
• Such a strategy could potentially strengthen Japan’s security as well as that of Taiwan in the face of China’s mounting bellicosity.
• Shifting AUKUS’s fulcrum to the Pacific Ocean could reassure ASEAN nations.
• It could also inure AUKUS to any insidious insinuation that accretion in the number of nuclear submarines plying the Indo-Pacific might upset the balance of power in the Indian Ocean.

Conclusion

There are limited options in the economic arena with China already having emerged as a global economic powerhouse. AUKUS, though, provides an opportunity to the U.S. to place proxy submarine forces to limit China’s forays, especially in the Pacific Ocean.

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Context

The fate of the grand strategic ambitions of the Indo-US relationship may depend substantially on how well they collaborate in two areas to which their joint attention is only belatedly turning — climate and trade.

Importance of climate change and trade to India-US partnership

• Strategic partnerships capable of re-shaping the international global order cannot be based simply on a negative agenda.
• Shared concerns about China provide the U.S.-India partnership a much-needed impetus to overcome the awkward efforts for deeper collaboration that have characterised the past few decades.
• What risks being lost is a reckoning with how interrelated climate and trade are to securing U.S.-India leadership globally, and how their strategic efforts can flounder without sincere commitment to a robust bilateral agenda on both fronts.

India-US collaboration on climate change and challenges

• India and the U.S. are collaborating under the Climate and Clean Energy Agenda Partnership.
• In parallel, there are hopeful signs that they are now prioritising the bilateral trade relationship by rechartering the Trade Policy Forum. 
• At COP26 in Glasgow India announced a net zero goal for 2070, it has called for western countries to commit to negative emissions targets.
• Challenges: India’s rhetoric of climate justice is likely to be received poorly by U.S. negotiators, particularly if it aligns with China’s messaging and obstructs efforts to reach concrete results.

Collaboration on trade

• The failure of the U.S. and India to articulate a shared vision for a comprehensive trade relationship raises doubts about how serious they are when each spends more time and effort negotiating with other trading partners.
• Protectionist tendencies infect the politics of both countries these days, and, with a contentious U.S. mid-term election a year away, the political window for achieving problem-solving outcomes and setting a vision on trade for the future is closing fast.

Climate-trade inter-relationship

• Climate and trade are interrelated in many ways.
• If governments, such as India and the U.S., coordinate policies to incentivise sharing of climate-related technologies and align approaches for reducing emissions associated with trade, the climate-trade inter-relationship can be a net positive one.
• India and the U.S. could find opportunities to align their climate and trade approaches better, starting with a resolution of their disputes in the World Trade Organization (WTO) on solar panels.
• The two countries could also chart a path that allows trade to flow for transitional energy sources, such as fuel ethanol.
• Shared strategic interests will be undermined if India and the U.S. cannot jointly map coordinated policies on climate and trade.
• The most immediate threat could be the possibility of new climate and trade tensions were India to insist that technology is transferred in ways that undermine incentives for innovation in both countries or if the U.S. decides that imports from India be subject to increased tariffs in the form of carbon border adjustment mechanisms or “CBAMs”.

Conclusion

Concerted action on both the climate and trade fronts is mutually beneficial and will lend additional strength to the foundation of a true partnership for the coming century.

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Context

With its abundant energy sources and appetite for trade diversification, Russia could be an ultimate long-term partner of India as it tries to diversify its trade relations.

Energy partnership

• Indian Prime Minister in a virtual address at 6th Eastern Economic Forum (EEF) in Russia’s Vladivostok said that “India-Russia energy partnership can help bring stability to the global energy market.”
• Indian and Russian Energy Ministers announced that the countries’ companies have been pushing for greater cooperation in the oil and gas sector beyond the U.S.$32 billion already invested in joint projects.
• India’s Minister for Petroleum and Natural Gas Hardeep Singh Puri referred to Russia as the largest investor in India’s energy sector.
• One of the examples of cooperation between the two countries in energy transformation is the joint venture between India’s Reliance Industries Ltd. and Russia’s Sibur, the country’s largest petrochemicals producer.
• Apart from accounting for most of the Indian butyl rubber market, Reliance Sibur Elastomers exports its products to Asia, Europe, the United States, Brazil and other countries.
• A few years ago, Rosneft invested U.S.$12.9 billion in India’s second-largest private oil refiner, Essar Oil, renamed Nayara Energy, marking it one of the most significant foreign investments in years.
• Partnership in renewable: In efforts to transition to green energy, India has recently achieved a significant milestone of completing the countrywide installation of 100 gigawatts of total installed renewable energy capacity, excluding large hydro.
• A recent Deloitte report has forecasted that India could gain U.S.$11 trillion in economic value over the next 50 years by limiting rising global temperatures and realising its potential to ‘export decarbonization’.
• Unknowns of climate change and threats of a new pandemic suggest that the country should accelerate its energy transition. Russia, one of the key global players across the energy market, could emerge as an indispensable partner for such a transition.
• Partnership in nuclear energy: Russian companies have been involved in the construction of six nuclear reactors in the Kudankulam nuclear power project at Tamil Nadu.
• India and Russia secure the potential of designing a nuclear reactor specifically for developing countries, which is a promising area of cooperation.
• India’s nuclear power generation capacity of 6,780 MW may increase to 22,480 MW by 2031, contributing to the country’s efforts to turn to green energy.

Way forward

• In September, almost all of Russia’s major energy companies were interested in projects in India, Russia’s Energy Minister said at the Vladivostok forum in September, adding that he sees prospects for energy cooperation in all areas.
• However, the current bilateral exchange rate needs to accelerate for India to grasp its potential from energy transformation.

Conclusion

To meet its growing energy demand and succeed in green transformation, India needs approximately U.S.$500 billion of investments in wind and solar infrastructure, grid expansion, and storage to reach the 450 GW capacity target by 2030. Therefore, more efforts are needed to expand cooperation with such partners as Russia.

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