Subject: Bilateral Relations

Digital data revolution

• The Industrial Revolution restructured the global manufacturing order to Asia’s disadvantage.
• But in the ‘Digital Data Revolution’, algorithms requiring massive amounts of data determine innovation, the nature of productivity growth, and military power.
• Mobile digital payment interconnections impact society and the international system, having three strategic implications.

3 implications of mobile digital payment interconnections

1) Symbiotic nature of military and civilian system

• Because of the nature and pervasiveness of digital data, military and civilian systems are symbiotic.
• Cybersecurity is national security, and this requires both a new military doctrine and a diplomatic framework.

2) Productivity advantage of data to Asia

• The blurring of distinctions between domestic and foreign policy and the replacement of global rules with issue-based understanding converge with the growth of smartphone-based e-commerce, which ensures that massive amounts of data give a sustained productivity advantage to Asia.

3) India can negotiate new rules as an equal with US and China

• Data streams are now at the centre of global trade and countries’ economic and national power.
• India, thus, has the capacity to negotiate new rules as an equal with the U.S. and China.

How data shaped US-China relations

• Innovation based on data streams has contributed to China’s rise as the second-largest economy and the “near-peer” of the U.S.
• The national security strategy of the U.S. puts more emphasis on diplomacy than military power to resolve conflicts with China, acknowledging that its military allies have complex relationships with Beijing, as it seeks to work with them to close technology gaps.
• China’s technology weakness is the dependence on semiconductors and its powerlessness against U.S. sanctions on banks, 5G and cloud computing companies.
• But China’s digital technology-led capitalism is moving fast to utilise the economic potential of data, pushing the recently launched e-yuan and shaking the dollar-based settlement for global trade.

How global strategic balance will be shaped by data standard

• China has a $53-trillion mobile payments market and it is the global leader in the online transactions arena, controlling over 50% of the global market value.
• India’s Unified Payments Interface (UPI) volume is expected to cross $1 trillion by 2025.
• The U.S., in contrast, lags behind, with only around 30% of consumers using digital means and with the total volume of mobile payments less than $100 billion.
• The global strategic balance will depend on new data standards.
• The U.S., far behind in mobile payments, is falling back on data alliances and sanctions to maintain its global position.

India’s role in digital economy

• With Asia at the centre of the world, major powers see value in relationships with New Delhi.
• India fits into the U.S. frame to provide leverage.
• China wants India, also a digital power, to see it as a partner, not a rival.
• And China remains the largest trading partner of both the U.S. and India despite sanctions and border skirmishes.

Way forward for India

• India, like China, is uncomfortable with treating Western values as universal values and with the U.S. interpretation of Freedom of Navigation rules in others’ territorial waters.
• New Delhi’s Indo-Pacific vision is premised on “ASEAN centrality and the common pursuit of prosperity”.
• The European Union recently acknowledged that the path to its future is through an enhanced influence in the Indo-Pacific, while stressing that the strategy is not “anti-China”.
• The U.S. position in trade, that investment creates new markets, makes it similar to China’s Belt and Road Initiative.

Conclusion

India alone straddles both U.S. and China-led strategic groupings, providing an equity-based perspective to competing visions. It must be prepared to play a key role in moulding rules for the hyper-connected world, facing off both the U.S. and China to realise its potential of becoming the second-largest economy.

Avoiding military alliances and retaining its strategic autonomy could help India play an important role in geopolitics at the same time maintaining the diversity in its relationships.

Transformation in India-Russia relations

• The principal objective of the Russian Foreign Minister was to prepare the ground for the visit of President Vladimir Putin later this year.
• The Indian perspective on the Indo-Pacific was conveyed to the Foreign Minister of Russia.
•  India insists that its Indo-Pacific initiatives seek a cooperative order, that the Quad is not the nucleus of a politico-military alliance.
• A $1 billion Indian line of credit for projects in the Russian Far East and activation of a Chennai-Vladivostok maritime corridor were announced in 2019.
• The message was that India’s effort to restrain Chinese aggression is compatible with Russia’s vision of a Eurasian partnership.
• Russia remains unconvinced, either because it feels India’s words do not match its actions or because of its close ties with China.

China factor in India-Russia relations

• India is concerned about Russia’s China embrace, encompassing close political, economic and defence cooperation: Russia accounted for 77% of China’s arms imports in 2016-20.
• India’s apprehensions about their technology- and intelligence-sharing were heightened by Mr. Putin’s remark that he would not rule out a future Russia-China military alliance. 

Russia-Pakistan relations

• Foreign Minister visited Pakistan directly after India — the first time a Russian Minister has done so.
• .He confirmed that Russia would strengthen Pakistan’s “counter-terrorism capability” .
• Russia is now Pakistan’s second-largest defence supplier, accounting for 6.6% of its arms imports in 2016-20.
• Their cooperation includes joint “counter-terrorism” drills and sharing perspectives on military tactics and strategic doctrines.

Factors to consider about defence cooperation with Russia

• Despite being a major defence supplier of China and Pakistan, Russia remains a major supplier of cutting-edge military technologies to India.
• The Stockholm International Peace Research Institute (SIPRI) records that Russia supplied 49% of India’s arms imports in 2016-20.
• SIPRI estimates that recent orders for Russian arms could boost future import figures. T
• his is a reality check.
• Defence cooperation is not a transactional exchange. Sharing of technologies and strategies is underpinned by a mutual commitment to protection of confidentiality.
• Sustainable defence cooperation is based on a credible assurance that what is transferred to our adversaries will not blunt the effectiveness of our weapons systems.
• In this already complex mix, the American sanctions legislation, CAATSA (Countering America’s Adversaries Through Sanctions Act), adds an external layer of complexity.

Criticality of geography influence India’s relationship with Russia and China

• The Eurasian landmass to India’s north is dominated by Russia and China.
• Strategic and security interests in Central Asia, West Asia and Afghanistan dictate our engagement with the region and the connectivity projects linking it, like the International North-South Transport Corridor through Iran.
• India cannot vacate this space to a Russia-China condominium (with Pakistan in tow), without potentially grave security consequences.

The broader geopolitical context

• The principal element in this is the drive for the superpower status of a powerful, assertive China.
• The U.S., as the pre-eminent superpower, seeks to retard this process.
• In a deviation from classical geopolitical strategy, the U.S. is taking on both China and Russia.
• This move is driving Russia and China together and arguably accelerating the move to bipolarity.
• Even so, the differentials in military, economic and political power across countries may complicate the emergence of two clear poles of the Cold War variety.
• A decline in Western hostility to Russia could add to the complexity, if Russia takes the opportunity to loosen the Chinese embrace and position itself as a pole in the multipolar world.

Consider the question “The depth of India’s relationship with Russia will depend on the willingness and capacity of both countries to show mutual sensitivity to core security concerns. Comment.” 

Conclusion

India has to explore the space within these processes to maximise its global influence by steering clear of alliances and retaining the autonomy of policy.

Amid the second wave of covid pandemic, India’s decision to supply vaccine to foreign countries has been questioned from various quarters. The article deals with this issue.

Issue of vaccine supply to foreign countries

• While responding to a question  Minister of State in the Ministry of External Affairs noted that India was sending these vaccines abroad in the form of grant, commercial sales of manufacturers GAVI’s COVAX facility.
• The supply to GAVI’s COVAX facility is an obligation since India is a member of this multilateral body and also a recipient of vaccines from this body.
• By doing this, India wishes to signal that it is a responsible global power which does not self-obsessively think of itself alone.
• This desire to be a good global citizen can be traced to the Objective Resolution moved by Jawaharlal Nehru in the Constituent Assembly on December 13, 1946.
• The premise of the ideal ‘Vasudhaiva Kutumbakam’ is no different to that of the Objective Resolution.

Factors to consider

• The government made estimates of the vaccines that could be sent abroad on the interplay of three factors: domestic production, the demands of the national vaccine programme and requests for vaccines manufactured in India.
• What is not known is how these factors were collectively addressed in the decision-making process.
• It is also argued that it was obligatory to send vaccines contracted under GAVI’s COVAX facility.
• However, sovereign states can always invoke supreme national interest to over-ride obligations.
• Certainly, the vaccines sent as grants were voluntary and the commercial contracts of the company concerned could always be disregarded under existing laws.

Conclusion

The government needs to convince Indians that the vaccine exports have not been made at the cost of their health.

With the declining American supremacy in the global order, the world is set for new global order led by the developing countries. The article deals with this rise of alternate global order.

Factors that explains decentred and pluralistic global order

• The international order is under threat of the rising economic power of the BRICS nations, with China dominating in its economic and military capacity.
• It is apparent that the future of global politics requires a significant agenda in the hands of the rising powers that are aggressively building a parallel economic order envisaging new centres of hegemonic power.
•  It forebodes the final decline of American ascendancy.
• It was the Bandung Conference of 1955, a meeting of Asian and African states, most of which were newly independent, that set the schema for the rise of Asia, politically and economically.
• The confrontational stance was therefore the expected corollary in third world struggles to create a parallel order.
•  America will continue to play a prime role in international affairs though its image representing universal brotherhood has sharply declined under the Trump regime.
• The rising tide of far-right ultra-nationalism and ethnic purity experienced in the Brexit phenomena, in Trumpism and in the promotion of the right-wing agenda in India, has set in motion the wearing down of liberal democracy.
• Other threats such as terrorism, ethnic conflicts and the warning of annihilation owing to climate change necessarily demand joint international action where American “exceptionalism” becomes an incongruity and an aberration.
• This indeed has chipped away at the American global supremacy.
• The world is, as a result, witness to a more decentred and pluralistic global order.

New world order led by developing countries

• Though pandemic has ravaged economies such as Brazil, India, Turkey and South Africa into a downward spiral, in the post-pandemic period, these economies would rise to meet the American-led liberal hegemonic world order.
•  With China spearheading Asian regionalism, a serious challenge is possible.
• China must strengthen the opposition to the West through the promotion of regional multilateral institutions.
•  More than having individual partners or allies, China must embrace and give a push to multilateral affiliations in order to not further exacerbate regional tensions.
• Power rivalry in a multipolar world would remain a possibility with military conflict not ruled out.
• However, the capabilities of the rising economies cannot be underestimated.
• China and India clearly have the age-old potential to lead as, historically, they have been pioneers of some of the oldest civilisations in the world.
• China is indisputably a serious rival to the U.S. in the South China Sea, a world leader in renewable energy, and a formidable actor on the global stage of investment and trade, penetrating India, Israel, Ethiopia and Latin America.
• Thus, a kind of dualism persists in the world order with no clear hegemony that can be bestowed on one single nation.

Conclusion

It is feared that there could be a possibility of a multipolar world turning disordered and unstable, but it is up to the rising nations to attempt to overcome territorial aspirations and strike a forceful note of faith on cultural mediation, worldwide legitimacy, and the appeal of each society in terms of its democratic values.

India-Pakistan relations weigh down heavily on the SAARC. This affects the economic development of the region. The highlight opportunity for India and Pakistan to separate politics from economics.

Economic integration

• There is a growing, but unstated, realisation that neither India nor Pakistan can wrest parts of Kashmir that each controls from the other.
• A fair peace between India and Pakistan is not just good for the two states but for all the nations constituting the South Asian Association for Regional Cooperation (SAARC).
• While SAARC has facilitated limited collaborations among its members, it has remained a victim of India-Pakistan posturing.
• World Bank publication titled ‘A Glass Half Full’ conclude that there is explosive value to be derived from South Asian economic integration.
• An economically transformed and integrated South Asian region could advantageously link up with China’s Belt and Road Initiative and even join the RCEP.

Important role of India

• Collectively with a population of slightly over 1.9 billion, South Asia has a GDP (PPP) of $12 trillion.
• However, India’s enjoys an overwhelming ‘size imbalance’ in South Asia.
• The shares of India in the total land area, population, and real GDP of South Asia in 2016 are 62%, 75%, and 83%, respectively.
• The two other big countries in South Asia are Pakistan and Bangladesh with shares in regional GDP of only 7.6% and 5.6%, respectively.
• Given its size and heft, only India can take the lead in transforming a grossly under-performing region like South Asia.

Consider the question “How India-Pakistan relations affects the potential of SAARC? Examine the role both countries can play in the prosperity of the region through economic integration.”

Conclusion

This is the moment for India to think big and act big. But for that to happen, India needs to view peace with Pakistan not as a bilateral matter, but as essential and urgent, all the while viewing it as a chance of a lifetime, to dramatically transform South Asia for the better, no less.

Relations between Russia, China and the US have not always been the same. The changes in triangular dynamic offers lessons for India. The article deals with this issue.

India’s changing relations with great powers

• The recent visit of Russian foreign minister Sergei Lavrov to Delhi and Islamabad is among multiple signs of India’s changing relations with the great powers.
•  At the same time, Delhi’s growing strategic partnerships with the US and Europe have begun to end India’s prolonged alienation from the West.
• Also, New Delhi’s own relative weight in the international system continues to increase and give greater breadth and depth to India’s foreign policy.

Shifts in triangular relations between Russia, China and America

1) Russia-China relations

• The leaders of Russia and China — Joseph Stalin and Mao Zedong — signed a formal treaty of alliance in 1950.
•  Russia invested massively in the economic modernisation of China, and also gave it the technology to become a nuclear weapon power.
• However, by the 1960s, their relations soured and two were arguing about ideology and a lot else.
• The Sino-Soviet split had consequences way beyond their bilateral relations.
• None of them more important than the efforts by both Moscow and Beijing to woo Washington.
• The break-up between Russia and China also opened space for Delhi against Beijing after the 1962 war in the Himalayas.
• Under intense American pressure on Russia in the 1980s, Moscow sought to normalise ties with Beijing.
• Stepping back to the 1960s and 1970s, China strongly objected to Delhi’s partnership with Moscow.

2) Russia-US relations

• Russia, which today resents India’s growing strategic warmth with the US, has its own long history of collaboration with Washington.
• Moscow and Washington laid the foundations for nuclear arms control and sought to develop a new framework for shared global leadership.
• But Delhi was especially concerned about the Nuclear Nonproliferation Treaty system, with all its constraints on India’s atomic options, that Moscow and Washington constructed in the late 1960s.

3) US-China relations

• Despite fighting Korean War with the US in the early 1950s, China normalised relations with the U.S. in 1971 to counter the perceived threat from Russia.
• Deng Xiaoping, refused to extend the 1950 security treaty with Russia that expired in 1980.
• China turned instead, towards building a solid economic partnership with the US and the West that helped accelerate China’s rise as a great power.

Lessons for India

• The twists and turns in the triangular dynamic between America, Russia and China noted above should remind us that Moscow and Beijing are not going to be “best friends forever”.
• India has no reason to rule out important changes in the way the US, Russia and China relate to each other in the near and medium-term.
• In the last few years, India has finally overcome its historic hesitations in partnering with the US.
• India has also intensified its efforts to engage European powers, especially France.
• Prime Minister Boris Johnson’s visit to India later this month promises a fresh start in India’s difficult postcolonial ties with Britain.
• India is also expanding its ties with Asian middle powers like Japan, Korea and Australia.
• Despite the current differences over Afghanistan and the Indo-Pacific, India and Russia have no reason to throw away their mutually beneficial bilateral partnership.
• The current troubles with China seem to be an unfortunate exception to the upswing in India’s bilateral ties with global actors.

Consider the question “What are the lessons India can draw from the  twists and turns in the triangular dynamic between America, Russia and China.”

Conclusion

India has successfully managed the past flux in the great power politics; it is even better positioned today to deal with potential changes among the great powers.

The article highlights the key takeaways from Pakistan’s vacillations on resuming the trade ties even in the face of impending economic crisis.

U-turn on resuming trade

• On March 31, Pakistan announced the decision to import cotton, yarn, and sugar from India.
• However, it took a U-turn on that announcement about resuming trade ties.
• This highlights the internal differences and the emphasis on politics over economy and trade.
• It also signifies Pakistan cabinet’s grandstanding, linking the normalisation of ties with India to Jammu and Kashmir.

3 takeaways from the decision

1) Immediate economic needs

• Pakistan’s decision was to import only three items from India, namely cotton, yarn and sugar.
• It was based on Pakistan’s immediate economic needs and not designed as a political confidence-building measure to normalise relations with India.
• For the textile and sugar industries in Pakistan, importing from India is imperative, practical and is the most economic.
• This is because cotton and sugarcane production declined there by 6.9% and 0.4%, respectively.
•  By early 2019, the sugar prices started increasing, and in 2020, there was a crisis due to shortage and cost.
• Importing sugar from India would be cheaper for the consumer market in Pakistan.

2) Politics first

• The second takeaway is the supremacy of politics over trade and economy, even if the latter is beneficial to the importing country.
• The interests of its own business community and its export potential have become secondary.
• However, Pakistan need not be singled out; this is a curse in South Asia, where politics play supreme over trade and economy.
• The meagre percentage of intra-South Asian Association for Regional Cooperation (SAARC) trade and the failure of SAARC engaging in bilateral or regional trade would underline the above.

3) Emphasis on Jammu and Kashmir issue

• The third takeaway is the emphasis on Jammu and Kashmir by Pakistan to make any meaningful start in bilateral relations.
• This goes against what it has been telling the rest of the world that India should begin a dialogue with Pakistan.
• There were also reports that Pakistan agreeing to re-establish the ceasefire along the Line of Control (LoC) was a part of this new strategy.

Consider the question: “Trade is unlikely to triumph over politics in South Asia; especially in India-Pakistan relations. This is a curse in South Asia, where politics play supreme over trade and economy.” Critically Examine.

Conclusion

Pakistan has been saying that the onus is on India to normalise the process. Perhaps, it is India’s turn to tell Islamabad that it is willing, but without any preconditions, and start with trade.