China and South Asian States (Pakistan Observer)

Geopolitical notes from India

M D Nalapat

Friday, May 01, 2015 - Pakistan can serve as a viable land hub between India (and indeed, ASEAN) and the countries to the west, such as Afghanistan, the Central Asian republics and Iran. This would promote investment in Pakistan, including of service and manufacturing units catering to those trading between India and countries west of Pakistan. Now that a good personal rapport has been established between PM Narendra Modi and President Xi Jinping, the expectation is that access to markets will form an important part of their discussions. including access via the New Silk Road. 

Given the huge investment that will need to be made in order to make the road a reality, it would make commercial sense to ensure full participation by India in the venture. This could come about if China and Pakistan give full access to India over the highway. At present, such access is zero, which is the exact probability of the New Silk Road becoming financially viable if India is not included in its scope. Access would cool down tensions substantially, thereby reducing the heartburn caused by boundaries that are not mutually acceptable but which remain disputed, and which are unlikely to change. 

Should the education system in regions prone to extremist recruitment be modernised so that the skills learnt are relevant to the job market. and if there is a fall in tensions, at least between countries, job opportunities will rise as investment leaps in. Such increases in job creation are essential not only to create jobs for those entering the job market for the first time, but to prepare for a contingency where extremist violence afflicts the GCC powers and oil prices fall further, thereby weakening their economies and causing the repatriation of millions of South Asian workers depending on incomes from the GCC to survive. Should a significant portion of such a GCC-based South Asian population (which is easily in excess o 10 million) have to come back to the subcontinent and not fins alternative occupations, unrest in their home countries would be immediate. More ominously, several of the returnees may sign on to extremist causes. 

It makes economic sense therefore for the South Asian countries to ensure ease of transit within their boundaries for approved businesses located in any of the member-countries of SAARC. Security concerns could be addressed by the use of modern tracking and surveillance technologies, as is being done at the US-Mexico and US-Canada border, for example. Cargo such as sealed containers can be sent across from India to Afghanistan and Central Asian countries and in the reverse direction, using access through Pakistan. Such movement of goods and investment can even take place in terrain that is “disputed”, such as in northern parts of Kashmir. In the creation of such confidence building systems, China can play a key role, as it is the country funding the New Silk Road and therefore has a huge financial stake in its success. 

Unless India is networked into the road, financial viability will prove elusive and as a consequence, even the full development of the road will prove problematic. The concept of a New Silk Road is bold and brilliant, and is the vision of Xi Jinping, who will certainly be aware of the importance of India in the overall matrix, something which would be a factor in the discussions he will be holding in Beijing on May 15 and 16 with Prime Minister Modi. Both leaders understand the value of closer relations with each other. India looks to China for investment, while Beijing sees Delhi as a potential market for products which may otherwise remain unsold, in view of the slowdown in Europe. 

Thus far, there has not been clarity on exactly how India would benefit from the New Silk Road, the emphasis being on the Maritime Silk Road. However, both constructs have to be seen as an entirety, and it would not be appreciated were access for India on the New Silk Road to be restricted if not denied altogether, while passage is granted on the maritime version. In the ensuring of access, the role of Pakistan would be crucial. Ensuring connectivity sufficient for commerce between China, India, Pakistan and Afghanistan would benefit each of these countries. Kabul in particular will be looking at investment in the development of its natural resources, and in assistance on infrastructure projects. These would be facilitated were Afghanistan to serve as a crossroads between countries on its periphery. Such linkages would also smooth over differences on other issues, such as questions relating to the boundaries between nations. 

There are those who claim that boundary disputes must be solved first before closer trade and other ties can be forged. The reality is that the atmosphere for a full, final and fair settlement of boundary disputes can only take place after confidence and goodwill get built up as a result of joint action to promote prosperity. With its land borders abutting Iran, Afghanistan and India, there has opened up an immense opportunity for Islamabad to become a catalyst for growth through a quantum leap in trade between its neighbours through its transit points as well as between itself and its neighbours. President Xi Jinping has originated a very bold concept of twin tracks to promote peace through prosperity, the New Silk Road and the Maritime Silk Road. However, both need to be commercially viable for the economic objectives to get realised, and in such an outcome, adequate access is key. 

Although they differ on several issues, a conflict between China and the US would be close to inconceivable, in view of the multiplicity of economic linkages between the two biggest economies on the globe. Should there be a war between the two, there would be MADE - Mutually Assured Destruction of Economy. What is needed in South Asia is for the countries comprising this grouping - especially two largest, India and Pakistan, to expand business links with each other, so that each country emerges as a significant contributor to the prosperity of other. As this columnist wrote in Times of India nearly two decades ago, “Playing the Business Card”, a policy of encouraging commerce would work wonders in cooling down tempers and in avoiding conflict.

President Xi’s concepts need to be developed to their full potential, and for this to happen, the giving of access to trade routes is essential. What is needed is a SAARC summit on the economy, so that a collective effort can be made to remove the shame of South Asia having more than 400 million people in conditions of extreme hardship, and more than that number in conditions that are unsatisfactory by any reasonable standard. Both Modi and Xi Jinping know value of economic growth, and hopefully, they will succeed in convincing other leaders as well of its benefits, so that focus be on the removal of poverty through an expansion of trade and investment throughout the region by countries of the region.
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