Saturday 25 May 2019

Will another Syndicate rise in the Congress?

By M D Nalapat

The Nehru family’s complete control over the former ruling party began in 1969.

Fifty years have elapsed since Indira Gandhi converted the Congress Party into an entity fully owned by the Nehru family. Not that such a situation was or remains unique to that party. The Yadav family “owns” the Samajwadi Party and Mamata Banerjee the TMC. As many as four members of the Deve Gowda clan fought the 2019 Lok Sabha polls as candidates of the Janata Dal (Secular). In Tamil Nadu, heir-by-birth Stalin has acted swiftly to take control of the DMK, which since the demise of C.N. Annadurai a half-century ago, came into the control of Muthuvel Karunanidhi and his relatives. Since 1953, Jawaharlal Nehru dominated the Congress party almost in the manner that the Mahatma had for decades, resulting in the departure of those who disagreed with his mix of Fabian-Soviet policies, but even he could not achieve the level of control over the party machine that was achieved by his daughter Indira Gandhi. She had been selected by Congress president Kamakshi Kamaraj in 1966 as the successor to Lal Bahadur Shastri, because she was regarded by the party’s senior leadership as being malleable to their dictates, certainly much more than the mirthless Morarji Desai, the senior claimant to the Prime Ministership. So complete was the acceptance of the fact that the Congress Party was in effect family property that President Zail Singh hesitated not at all in swearing in Indira Gandhi’s son Rajiv Gandhi as Prime Minister after she was killed in 1984. While this act by the Head of State may have been looked askance by political purists, the fact remains that Rajiv would have been the choice of practically all Congress party MPs had the President asked for a vote by the Congress Parliamentary Party, just as in 2004 (20 years later), every Congress Member of Parliament elected in the Lok Sabha poll of that year would have supported Sonia Gandhi for the job that had been held by her husband for five years. Indeed, her handing over the baton to Manmohan Singh led to near bouts of hysterics by newly elected MPs in full view of television cameras.
The Nehru family’s complete control over the former ruling party began in 1969, the year the Congress Working Committee (CWC) passed a unanimous decision to nominate Neelam Sanjiva Reddy as its candidate to replace President Zakir Husain, who had passed away in office. Soon afterwards, Prime Minister Indira Priyadarshini Gandhi correctly discerned that Reddy would not obey 100% of her orders but perhaps only 90%. She therefore stunned her party by openly rejecting the CWC’s candidate, preferring instead to back Vice-President Venkata Varaha Giri for the nation’s top job. Seeing an opportunity to weaken the Congress behemoth by splitting it, Communist and other parties backed V.V. Giri, who narrowly walked in as the President of India because the majority of Congress MPs backed Indira Gandhi over the “Syndicate”, as the senior leaders of the Congress Party were called. Unfortunately for the anti-Congress parties who had supported her candidate against the official Congress nominee, Indira Gandhi proved to be a much more astute judge of voter preferences than the Syndicate, and this skill ensured that the Congress party under her sole proprietorship did much better in the 1971 Lok Sabha polls than would have been the case, had she been made to share authority within the party. Not accidently, the policies Prime Minister Indira Gandhi adopted after her 1969 victory over the Syndicate were the polar opposite of those that that group of Congress elders favoured. They were also the opposite of what the country needed, but this detail was of no concern to the victorious heir to Nehru, focused as she was on political rivals and not national needs.
Post-2014, when both reasons of health as well as the realisation that the electorate was tiring of her came together to persuade Sonia Gandhi to step down as AICC president, the only choice for a replacement was son Rahul. Had Sonia stepped down in 2014 rather than towards the close of 2017, more time would have been given to the new Congress president to alter perceptions of his mettle. Rahul needed from the start to show that his assumption of office was indeed a fresh start, and not a repainted Sonia Congress. Such a transformation has yet to occur, with the result that former ministers (such as P. Chidambaram) who are facing serious charges of corruption are still the prominent faces of a party that has sought to make corruption in the BJP a key issue. Priyanka Gandhi ought to have stepped into an organisational role at the same time as Rahul, so that the two could effect a coordinated working style rather than seem disconnected from each other. Worst of all from the Congress Party’s viewpoint were Rahul and Priyanka suddenly reversing course by mid-2018 from their earlier acceptance of the fact that Hindus are indeed the majority community, and should be shown the respect and attention this merits. The two returned to “Nehruvian secularism”, which was carried to extreme levels by Sonia Gandhi, for example in her seeking to get passed a bill that explicitly posited that only Hindus should be held accountable for communal riots, even when they were the victims. Or Sonia’s (and later Rahul’s) backing for the Shinde-Chidambaram concoction labelled “Hindu terror”. Or such anti-secular laws as the Right to Education Act, that separated Hindus from the rest in a new version of the two-nation theory.
Will the 2019 disaster lead once again to senior (non-Nehru) leaders of the Congress Party finding the courage to speak out in the manner that Sardar Patel used to on matters where he disagreed with Nehru? Fifty years after Indira Gandhi crushed Nijalingappa, Sanjiva Reddy and other senior leaders, will Congress party seniors bestir themselves again in order to try and see that the Congress revives as a national party by escaping from the shadow of aspects of its past? Rahul and Priyanka continue to talk ceaselessly of the past in a country where more than half the population is less than 30 years of age. They seem oblivious to the fact that their very survival in politics hinges on sloughing off their dynastic moorings and moving into a 21st century attitudinal and policy matrix. In this age of feisty television anchors and disrespectful social media posts, past glory is irrelevant. What voters look for is a leader’s vision for the future, a fact that Prime Minister Narendra Modi eloquently accented in his thanksgiving speech at the BJP headquarters on the day of his greatest electoral triumph.

Narendra Modi’s global strategy set to boost India’s growth (Sunday Guardian)

By M D Nalapat

The Modi strategy has been to work closely with Beijing and Washington, so as to bring India’s growth trajectory to a stable double digit period. Much progress has been made, but much of this has not come to public attention.

New Delhi: In his first term as Prime Minister of the Republic of India, Narendra Modi gave visible attention to the Ministry of External Affairs. The resultant impact of Prime Minister Modi across the world has become clear from the widespread global interest in the 2019 elections. From the anxious: “Will Modi win?” to the more hopeful: “How big will Modi win?”, queries are asked in every major capital of the globe to visitors from India. This is the first time since the days of Jawaharlal Nehru in the 1950s that there has been such interest in the elections in India, and this is the direct consequence of the interest and attention generated by Modi in his several visits abroad. In particular, the leaders of both superpowers—the US and China—have established a close personal relationship with the Prime Minister of India, as has most recently been demonstrated in their public reactions to the victory of the BJP under Modi in the 23 May 2019 Lok Sabha polls. The Modi strategy has from the start been not to avoid but to work more closely with Beijing and Washington, so as to bring India’s growth trajectory to a stable double digit period. Much progress has been made, but much of this has not come to public attention. An example is the trade deficit with China, which crossed $60 billion in fiscal 2018, the year that Modi and Xi established a new paradigm for Sino-Indian relations at the East Lake Guest House in Wuhan. Subsequently, under the direction of the Prime Minister, Commerce Minister Suresh Prabhu entered into discussions with his Chinese counterpart Zhong Shan, who had been similarly tasked by President Xi to ensure that trade between two countries that together comprise a fifth of global GDP and 35% of the total population of the world gets into a healthier balance. This fiscal year, the trade deficit between Delhi and Beijing has fallen to $53 billion. This is the first time in three decades that India’s annual trade deficit with China has fallen. Suresh Prabhu stressed in his talks with the Commerce Minister of China on the need to enhance market access for India in exports of IT, pharmaceuticals and agricultural goods, and under the umbrella of the strong personal relationship between Xi and Modi, this is taking place. While there has been adverse comment within India about the large volume of mobile telephone imports from China, what goes unmentioned is the fact that low cost Chinese smartphone models have resulted in around 160 million citizens of the world’s most populous democracy gaining access to the internet and to its benefits. Refusing to be stampeded into reactive stances by elements in his administration influenced by third countries eager to torpedo relations with China, Prime Minister Modi has held to the view that while the security challenges from China (mainly caused by the continuing love affair between the PLA and GHQ Rawalpindi) need to be robustly faced, the many opportunities opened up for India by a rising China need to be given equal attention, rather than be ignored as they were by past regimes. Over $110 billion of investment is awaiting entry into India from China, mainly in the form of component manufacturing and other plants that are eager to take advantage of India’s ample (and relatively low cost) trained manpower resources. This is separate from the $90 billion that would get invested, should there be a China India Economic Corridor (CIEC), which—unlike the troubled and loss-making China Pakistan Economic Corridor (CPEC)—would be immensely profitable for both sides, besides converting the Red Corridor into a Road Corridor.
While in absolute terms, the trade deficit with China may grow, Modi’s calibrated policies (that are being implemented by the Union Commerce Minister) will ensure that there will be a steady percentage fall in the imbalance. The potential for India-China trade is huge, around $300 billion, with exports from India having the potential of crossing $100 billion out of the total volume. The benefits that this will bring to the working population of both India as well as China are among the results of the 2018 Wuhan Accord arrived at between the leaders of India and China. For Beijing, the chemistry between Modi and Xi has become of great importance in view of what may be termed the fullscope Geostrategic War launched by President Donald J. Trump of the United States on China a year ago. This conflict is likely to last a generation or more. The US side hopes that it will end in the implosion of Chinese Communist Party (CCP) rule in the People’s Republic of China (PRC), while Beijing expects that it will establish a commanding lead over the US in terms of economic attainment and technological prowess well within a generation, that too without ceding any of the authority exercised by the CCP over the PRC.
During much of his first term, Modi was fortunate in that the price of hydrocarbons remained at a low level. This has risen during the past two years, but not because of market fundamentals. They have risen as a result of President Trump following the example of President George W. Bush and artificially boosting the price of oil through geopolitical shock therapy, mainly by creating an atmosphere of imminent war between the US and Iran, an event that would lead to an immediate doubling of oil prices and a global economic recession, including in the US. Given the trust that has been established between Trump and Modi, should Delhi persuade Washington to step aside while purchases of oil from Iran continue, the impact on oil prices would be immediate and beneficial to the global economy. Stopping India’s oil purchases from Iran, as demanded by John Bolton and Mike Pompeo, will almost certainly lead to China stepping into India’s shoes as the operator of Chabahar port, a switch that would adversely impact not merely Indian but US security interests. Continuing oil purchases from Iran by India is therefore a necessity for both Washington and Delhi, and a path needs to be found towards such an objective. This could include a much higher level of coordination between the US and Indian militaries, including replacing strategic defence systems such as Russia’s S-400 with the US THAAD and Patriot, both of which are on offer to India. Overall trade with Russia, for example in hydrocarbons and nuclear energy, could grow even while the present dependence on Russia for advanced defence equipment gets reduced. It needs to be borne in mind that Russia is now no longer a rival, but an ally of China, which itself is the only major military ally of Pakistan, the only country obsessed with doing harm to India. Again in the case of China, while a firm line has to be drawn concerning moves that impact the security of India, trade, tourism and investment from the PRC need to be encouraged. In the case of the US, while there needs to be very much closer cooperation on matters of security and defence, there needs to be a firm rejection of US efforts to alter in a negative manner  the volume and composition of India’s trade and commerce through US measures that flout market imperatives, such as the use by Trump of national security as an excuse to meet US commercial objectives that go against the interests of its trading partners.
While he has been pilloried by political opponents in India as being “Hindu-centric”, the fact is that Prime Minister Modi has established closer ties with the Gulf Cooperation Council than any of his predecessors. Nehru had close ties with a few Arab leaders, but was not on cordial terms with many. Prime Minister Modi has won the friendship of practically all the key ruling families within the GCC. Given that India favours the status quo in the region and frowns on efforts at regime change, this is hardly a surprise. The synergy between the GCC and India created by the diplomacy of Prime Minister Modi can get leveraged into massive – easily $ 90 billion – and mutually profitable investments in India by the GCC states, thereby assisting in the securing of double digit growth that would liberate hundreds of millions from poverty. A suggestion could be to follow the example of London, New York and Frankfurt and open the door to Interest Free Banking, a system that has created controversy in India through its being labelled “Islamic Banking” by some. The advent of Interest Free Banking will create opportunities for the conversion of currency into bank deposits on the part of sections of the population that till now have kept away from the interest-driven banking system. It would assist in multiplying inflows into India from NRIs and others across the world. It would also assist in proving the falsehood behind allegations that Prime Minister Modi does not subscribe to the concept of “Sabka Saath Sabka Vikas” popularised by him but favours only particular faiths and not others. Societally, Prime Minister Modi could ensure that he do what Prime Minister Nehru shied away from, which is to ensure through example and legislation that medieval practices (especially those that discriminate against women and the modern, moderate majority in certain faiths) get removed. In such a task, the geopolitical bonds established by Modi across West Asia (including Iran) could play an important factor.
During his second term, it is expected that Prime Minister Modi will pay as close attention to the ministries of Home, HRD and Finance as is the case with the MEA. Paradigm shifts in policy are likely to result from such a “Modified” mix of policies for national renewal. Rather than being a diversion or an unnecessary expense, the numerous foreign visits of Prime Minister Modi have created conditions whereby the global synergy of India can be deployed in order to ensure double digit growth. The nation will be looking for such an outcome to the ministerial team Modi will unveil in Rashtrapati Bhavan on 30 May, and subsequently his chosen ranks of officials who will work in South and North Blocks, besides locations such as Krishi Bhavan, Udyog Bhavan and Shastri Bhavan. The Prime Minister pledged to the 1.3 billion people of India on 23 May that he would take India firmly into the 21st century, and this is a pledge that Narendra Damodardas Modi is capable of keeping, not just by 2024 but by 2022 itself.

Saturday 18 May 2019

US-China conflict opens door to Sino-Indian border settlement (Sunday Guardian)

By M D Nalapat

Unlike his predecessors Jiang Zemin and Hu Jintao, who believed that the boundary dispute was best left to be settled at a much later date, key policymakers say that Xi Jinping is looking to strengthen his historical legacy by coming to a boundary settlement with India during his term.

East Lake Guest House, Wuhan: Far from anticipating a speedy end to the trade war formally launched last year by US President Donald Trump against China, the leadership of the Chinese Communist Party (CCP) is preparing for a prolonged struggle. The CCP considers the hostile measures serially introduced by Trump as an effort by the United States to slow down and if possible snuff out economic growth in China in order to create chaos that would generate Arab Spring or Colour Revolution conditions. In the CCP core’s view, several of the conditions insisted upon by US trade negotiators “at the point of a gun” have little to do with commerce but relate to demands designed to significantly dilute the influence and authority of the Communist Party over the country, a control over policy that is regarded as having been a necessary pre-condition for the rapid growth of China since the mid-1980s. Those around President Xi Jinping look to the experience of Japan, which during 1985-87 accepted (as a consequence of Washington’s pressure) several one-sided conditions related to the economy, such as excessive levels of investment in US-based assets, and artificially boosting the value of the Japanese currency. That surrender to US dictates by Tokyo created the conditions for the relative stagnation of the Japanese economy since the 1990s as compared to the previous period. The policy group around the core leadership of the CCP has equally intensively gone through the numerous concessions made by the Communist Party of the Soviet Union (CPSU) to US demands since the death of Stalin, including Khruschev’s climbdown in Cuba in 1962 and Brezhnev agreeing to the 1975 Helsinki accords, which opened the way for large-scale US interference through the non-formal sector in sensitive internal matters concerning the CPSU. They point out that none of the concessions made by Moscow yielded any of the economic and financial returns that they were expected to generate. CCP policymakers have also studied the aftershocks of numerous other Soviet concessions “given on the basis of post-dated cheques by western powers that were never honoured”, not to mention the unprecedented concessions made by Mikhail Gorbachev in the latter half of the 1980s, which in their view resulted in the meltdown of the USSR. Instead of heading down the “Soviet Road”, the CCP is instead fashioning a raft of measures designed to ensure eventual success in what is expected to be a long struggle with the US over the economy and polity of China “without the illusions that the CPSU had that an honourable accommodation could be reached with a power intent on its destruction”. Such a situation has created an opportunity for India, a country whose importance in the geopolitical calculus of China has risen substantially in view of what are anticipated to be long-term, multiple and significant tensions between Beijing and Washington.
In discussions concerning strategy, a favoured retreat for officials looking for a quiet locale conducive to intensive deliberations is the East Lake Guest House on the outskirts of Wuhan, the capital of Hubei province. This was the venue for the Wuhan Summit that took place last year between Xi Jinping and Narendra Modi, two individuals who together manage the destinies of 2.6 billion of the earth’s human inhabitants. Apart from the comfortable 7-star quarters and the leafy grounds of the estate, some of their discussions took place on the lake itself, inside a large craft outfitted with two rows of white single-seater sofas. On Modi’s part, the sofas on his side were occupied by the IAS, IFS and IPS officers that the Prime Minister relies on to formulate policy and implement decisions. The large seacraft where the two leaders met has now become something of a tourist attraction, although visitors are not permitted inside. Indicating the importance the Chinese side attaches to the Xi-Modi meeting, there are numerous locations around the lake with plaques commemorating the 2018 Wuhan Summit. Not coincidentally, the East Lake Guest House is a short walk away from what was from 1955 to 1974 the favourite residence of Mao Zedong, who on October 1, 1949 declared that “the Chinese people have stood up”. Given what has taken place since then, it can now be asserted that the Chinese people are now not just standing up but standing tall. The Peoples Republic of China has become an economic and geopolitical powerhouse next only to the US. From the start of his term in 2012 as the General Secretary of the Chinese Communist Party, the most consequential of his titles (others include the President of the Peoples Republic of China (PRC) and Chairman of the Central Military Commission) Xi Jinping has made no secret of his determination to place China once again where the country had been for at least two millennia, at the very top. During the earlier period of its glory, China was followed closely by the Indian subcontinent, which at the time was the world’s second largest economy. Both were brought to their knees by European colonial powers and denuded of their wealth. However, by 2011, it was clear to US policymakers that the PRC was well on the way towards achieving the goal of being the world’s biggest economy within at most a couple of decades. This led, in the view from Beijing, to the implementation of plans for the US to try and indefinitely delay the day when Washington’s post-1945 primacy over global geopolitics ended would end. This included slowing down and limiting the reach of the Chinese economic juggernaut, a policy initiative made by Barack Obama during his term, although in a far quieter manner than his successor, Donald J Trump, who tweets almost hourly nuggets of information on US policy objectives. Trump has filled the topmost layers of his administration with those who not only wish to ensure that the 21st century remains the American Century, just as the 20th has been, but are willing to take enormous risks in order to ensure such a result. Such a casual attitude towards risk is much the way Trump acted during the days he ran his business interests. As a consequence, Xi Jinping has collected around him a group of individuals chosen for their skills in identifying the problems facing the PRC and finding out solutions for them. Meeting not just in Beijing but in other places having historical significance for the CCP, his policy advisors are aware that the Trade War begun by President Trump in the opening weeks of 2018 is not so much about commerce as it is about Washington seeking to retain its global primacy in the face of the challenge from China. President Xi knows that the battle will be hard and long, which is perhaps why a slim text, “On Protracted War”, a collection of lectures given by Mao from 16 May to 1 June 1938 at the Yenan Association for the Study of Resistance is being read and re-read these troubled days by several within the most consequential echelons of the CCP.
In the book, which details Mao’s strategy for winning what the CCP Chairman warned would be a long and cruel war with Japan, Mao correctly identified then British Prime Minister Neville Chamberlain as being blind to the threat posed by Germany to Great Britain, and forecast that Hitler (with help from Japan) would soon launch a war against the US and Britain. Among Mao’s forecasts in the book was that this global war would inevitably end in the destruction of the feudal governance system of Japan. This did happen in 1945, but not because of the Japanese people revolting against the leaders who had taken them into a disastrous conflict. It took place because of the victory of the US and consequent reforms imposed on Japan by General Douglas MacArthur. Key officials say that Beijing’s refusal to accept the “one-sided and harmful” conditions that the US side had demanded of China were the reason for Trump’s additional tariffs in May 2019 on a further $ 200 billion of imports from China. It was claimed that negotiators from Washington unilaterally included the contentious conditions and one-sided commitments in its own draft, despite the Chinese side not having agreed to them. The US side insisted that the Chinese side should accept the US draft rather than seek a mutually acceptable compromise. Policymakers spoken to said that several of these conditions were quasi-political rather than wholly economic in their effects, and if conceded, could have affected the governance system in China in branches that have little to do with trade. It was therefore not a surprise (except to the US side) that the fresh tariffs imposed by Trump saw an almost immediate retaliation from Beijing, which imposed tariffs on a further $ 60 billon of imports from the US. During the initial weeks of the US Trade War with China, public opinion in the latter country was largely in favour of an accommodative stance, the perception being that all that the US President was looking for was to get some more money for his country’s companies out of doing business with China. However, subsequently opinion within the populace hardened as a consequence of the harsher and harsher rhetoric, as well as additional punitive measures from the US side. The perception is spreading within the general public that the conflict between Beijing and Washington is much bigger than merely the size of the trade surplus. There has begun a conscious effort to eliminate from public acceptance two toxic theories pointed out by Mao in his lectures, which was to “either believe that China was doomed to lose the battle, or that victory over the adversary will be quick”. Through his very public and not very polite efforts at getting China to make concessions, President Trump has ensured that more and more of the Chinese population are moving in the direction of favouring a hard line rather than Beijing making concessions that would satisfy the US side, even if this means pain for what could be an extended period of time. Memories are reviving of an earlier period when China accumulated huge specie surpluses with western powers (then led by Britain), but which were clawed back by western powers through gunboat diplomacy and “unequal treaties” imposed by force. The 120 years from 1820 onwards saw the decline of China from being for millennia the world’s largest economy to a nation in free fall, and this period of shame and weakness has been burnt into the minds of the Chinese people. Today, once again, the view of many is that because China has become the world’s biggest economy ( in Purchasing Power Parity terms) and has accumulated large surpluses with the US, the latter is seeking to get back, once again through “unequal treaties”, the moneys earned by China. The revival of such memories has ensured that public opinion remains behind the firm line being adopted by President Xi Jinping.
There may be an underlying rationale for the numerous geopolitical fires that have been lit in different regions by National Security Advisor John Bolton and Secretary of State Mike Pompeo on behalf of the 45th President of the United States. However, to minds less evolved than theirs, the crises that have been created by Trump across continents since 2017 seem a textbook example of overreach. Some carry the risk of outright war, such as in the actions concerning Iran and Venezuela. In several of these militarised and tension-filled situations, the Sino-Russian alliance is the beneficiary. For example, the US has put China in the driver’s seat so far as two large oil producing states are concerned, Venezuela and Iran, through forcing countries such as Japan and India to snap oil trade with Teheran. The Modi government seems to have decided to prioritize the goodwill of Bolton and Pompeo over the possibility that the consequence would be that Iran transfer India’s rights and access in Chabahar to China as a consequence of oil imports by India from Iran being brought to zero since the beginning of May 2019. The reason given by Delhi is that a decision on continuing or stopping imports from Iran needs to await the results of the current Lok Sabha polls, a reason that seems somewhat at variance with the stance expected of a country that showcases itself as a global heavyweight with a mind of its own. Should China decide to boost oil imports from Venezuela and Iran, it is likely to do so at prices far below those India will need to pay to access alternative supplies. Across the world, pressure both public and otherwise that is being brought to bear on different countries by the Trump administration, often on behalf of individual US companies, is leading policymakers in these capitals to look towards Beijing for a closer association, given that the Chinese are entirely tolerant of what they term the “internal affairs” of the countries they are dealing with. Even within the European Union, the divide has deepened between Germany, France and the UK, who consider themselves the First Tier of the EU, relegating others to a less exalted status. Countries such as Italy and Greece, which have been pushed and pulled by the EU Big Three to alter their policies for the benefit of Frankfurt, London and Paris, are now openly moving closer to the Sino-Russian alliance. They are likely to be followed by several more EU member-states interested in the potential for investment from China, especially on projects within the Belt and Road Initiative (BRI) framework. The ongoing effort by Beijing to persuade countries in Asia, Africa and South America to move away from their longstanding tilt towards the US to a posture of neutrality will get intensified as a consequence of the US-China trade war masterminded by President Trump.
Technology is a key battleground. Alarmed that Huawei has developed what is at present globally the most cost-effective 5G system, the Trump administration is seeking to use administrative methods, including emergency powers, to limit its market access. However, policymakers in Beijing are confident that more and more countries will prefer the 5G and other advanced products of the company, in view of time and cost advantages over the competition. Trump’s move to block select Chinese products from accessing the US market is having an impact on the minds of citizens in the PRC. In times past, US franchise operations such as McDonalds or KFC used to be crowded, but more and more, locals are giving them a miss in favour of other outlets. Whether it be food, aircraft, automobiles or mobile telephones, US brands are likely to face a backlash from Chinese consumers made hostile by trade tensions. Apart from Chinese consumers increasingly looking askance at US-made items, Chinese companies that are being denied access to the US market are gearing up to compete more fiercely with US brands across the world, seeking to make up the loss of the world’s biggest market by denying market share in third countries to companies from the US, “not though administrative fiat but through price and quality standards”.
A fallout of the trade war has been a change in the approach of the CCP leadership core towards private industry in China. Across Southeast Asia, ethnic Chinese are the most successful in business, creating commercial empires that reach across the globe. However, in the PRC, private industry has long been treated in a stepmotherly fashion, with funds and policy advantages instead getting lavished on the state sector, whose top ranks are filled with the CCP elite. Recent statements by Xi Jinping indicate that the leadership core of the CCP has accepted that the private sector in China needs to be trusted and given freedom to develop rather than remain held back by bureaucratic excess. This shift in policy is likely to boost the economy in coming years, and give China more legroom to overcome the blockages created by the US on Chinese exports.
US-China tensions have opened the door for India, and not only in business deals. Each turn of the screw by Washington on China demonstrates to the CCP core the importance of a stable and cordial relationship with India. The barrier standing in the way of this is the border dispute. Senior policymakers for the first time admit in private conversation that it is time to seek a resolution of the boundary dispute rather than push the issue away towards a future leadership. Ideally, the matter should get resolved on the lines suggested by Zhou Enlai in 1960. Unlike his predecessors Jiang Zemin and Hu Jintao, who believed that the boundary dispute was best left to be settled at a much later date, key policymakers say that Xi Jinping is looking to strengthen his historical legacy by coming to a boundary settlement with India during his term. This would remove a major shadow on relations between Delhi and Beijing. The illusion has ended in Beijing that the US and China could reach what Clinton staffers termed a cosy G2 relationship with each other. This has created a window for diplomacy for India to ensure an equitable outcome. During the Modi years the Special Representative dealing with the boundary question is the former IPS officer Ajit Doval, whose expertise is legendary in spy craft. Prime Minister Modi has immense confidence in the IPS, just as he has in the IAS and the IFS. However, despite heavy-duty official involvement through officers trusted 100% by Prime Minister Modi, Sino-Indian boundary talks have hardly made any progress since 2014, despite the personal chemistry between Narendra Modi and Xi Jinping. The bureaucracy in India, on which Prime Minister Modi relies, is known for its propensity to “lose no opportunity to lose an opportunity”, as has been said by the Israelis about the Palestinians in the past. Prime Minister Narendra Modi decided two years ago to set up two industrial parks for Chinese companies, in Maharashtra and Gujarat, but actual implementation of these projects have yet to take begin. This despite the fact that numerous Chinese companies are looking to invest in India, especially after Prime Minister Modi personally intervened to ensure that the Bank of China was allowed to set up a branch in India for the first time since the 1962 war. Modi’s gesture of refusing to target Chinese companies even during the 73-day Doklam standoff in 2017 has ensured appreciation for the Prime Minister within the leadership core in China, which is looking to whether he will return to office or get replaced as a consequence of the 2019 Lok Sabha election results. Telecom giant Huawei is looking to India to set up 5G facilities, and till now, the Government of India has resisted efforts from abroad to get India to ban the company. A compromise solution could be to give access to Huawei 5G systems in all except those fields that are core to security-related operations. A speedy rollout of 5G would be immensely beneficial to India, in much the same way as the proliferation of low-cost smartphones has empowered tens of millions of users across small towns and villages in India. Following on from the Green Revolution begun under Lal Bahadur Shastri, India needs a Digital Revolution that could alleviate some of the problems faced by the low quality of infrastructure across most of India, and an early spread of 5G usage (the way it is taking place in South Korea and China) would help such a result. Enhancement of rail and road infra through Chinese collaboration would also be game changers, and these would form part of the mix of an overall resolution of Sino-Indian tensions, including a time-bound path towards a settlement of the boundary dispute. Such moves need not be at the cost of building close security and defence ties with the US. If China could, in the 1960s and beyond, live comfortably with its relationship with a Pakistan that was a formal member of CENTO and SEATO, it can do so with India even after this country establishes a close working relationship with the US on matters such as jointly ensuring primacy in the Indo-Pacific and battling extremist terror to reverse the instability created by such forces in South, Central and West Asia.
It may be a good idea for the East Lake Guest House in Wuhan to be the permanent location for the annual India-China summit, just as a backwaters resort in Kerala may provide a restful setting for summit talks in India. Ideally, there should be two summits each year, one in China and the other in India. President Xi Jinping is firming up plans to visit India for a return summit with the Prime Minister of India, possibly by October 2019. Hopefully, both sides will be more ambitious in their aims than has been the case so far, so that substantial outcomes that benefit both sides get agreed upon. In particular, a border settlement within a clear time frame is vital to the establishment of comprehensive trust between both sides. Given innovative handling, international circumstances have made the border dispute between India and China a matter that could get settled during the term in office of President Xi Jinping and his interlocutor, the Prime Minister of India.

Garibi Hatao through Minimum Government (Sunday Guardian)

By M D Nalapat
PM should ensure policy changes for empowerment of the individual in India.

Prime Minister Rajiv Gandhi won more Lok Sabha seats in 1984 than any party had, or has after that election. Narendra Modi won more seats in 2014 than the BJP ever had, securing a single party majority for the first time since Rajiv’s first election as Prime Minister. Will Prime Minister Modi repeat that feat this month, the way Prime Minister Jawaharlal Nehru used to, although of course there was no further national electoral test of his popularity after the 1962 debacle on the Himalayan frontier? This was a military defeat that was partly made up by Prime Minister Lal Bahadur Shastri’s decision in 1965 to cross the International Border and attack Pakistan, rather than stand by and watch the detaching of all of Kashmir from the Union of India. We do not know what course Nehru himself would have adopted, had he, and not Shastri, been in charge in 1965. It cannot be forgotten that he belonged to a Congress Party leadership that in 1947 accepted Partition without protest despite having ceaselessly opposed such vivisection for decades. Prime Minister Manmohan Singh did little to retaliate after GHQ Rawalpindi made Mumbai endure three days of terror in 2008, yet won the 2009 Lok Sabha election for his party as he was regarded by voters as a better choice than the BJP alternative, L.K. Advani. What would have been the fate of the BJP had someone other than Modi been the standard bearer in 2014? Most likely, the party would have got around two hundred Lok Sabha seats, and the Congress Party about a hundred, thereby ensuring the formation of a United Front government with perhaps a non-Congress leader as its titular head. This would have been the 2014 scenario had Modi not been leading the way, but in 2019, once again it is Modi fronting the BJP campaign. After five years leading the government, will Modi manage a repeat performance by again securing a parliamentary majority, or will the BJP’s tally descend to 200 Lok Sabha seats, thereby giving the opportunity for other parties to form an alternative government that was denied to them by Modi’s 2014 wave? Amit Shah has not hidden his preference for ensuring the same level of control over the Centre and the states as the Congress Party under Nehru had during his 17 years in office. Fortunately for Shah, lingering memories of past glory have ensured that the Congress Party continues to push for AICC president Rahul Gandhi to become the next Prime Minister of India, when a declaration that the Congress Party would not insist on the Prime Ministership but would be open to handing it over to a regional party leader, could have pushed the Congress 2019 tally up by thirty more Lok Sabha seats. Several who would have voted for the party have changed their minds in the booth, owing to worry that their votes may lead to an administratively untested Rahul getting sworn in as Prime Minister.
Although those around Prime Minister Modi seem to believe that every action taken by his government is a work of genius, including such self-goals as demonetisation, the fact is that only the inability of the opposition parties to excite the mood of the electorate has kept BJP hopes alive for a Lok Sabha tally of 220-240, the tally needed to ensure a second term for Narendra Modi. The Prime Minister shrewdly leapt over 2019 and designated 2022 as the year when he will fulfil the promises made by him in 2014. For this to happen, he implies, voters need to give him a second term. As a first, Modi was swift in publicly condemning a party candidate for praising Nathuram Godse, whose action did great harm to the Hindu community. Godse’s murder of the Mahatma gave the perfect excuse for those in sympathy with British-era attitudes to continue since Independence with colonial policies that discriminated against Hindus, such as state control of their principal places of worship. Within the governing elite, there has even been an inability to understand the injustice involved in the three holiest Hindu places of worship remaining out of bounds to believers in the majority faith in a country explicitly divided on the basis of religion. Aatish Taseer, who writes with a fluency matching that of his mother, has correctly compared Varanasi to Jerusalem, Rome and Mecca. However, he omitted to mention that Gyan Vapi, the spiritual core of that ancient city, has for centuries been wholly out of bounds to the Hindu community, as is the Krishna janmasthan, not to mention the unending manner in which resolution of the future of Lord Ram’s birthplace is dragging on. And on. And on. Just as England accepted a Christopher Hitchens, India should not balk at an Aatish Taseer. But he errs in his dystopian view of today’s India. There may be a scatter of individuals who attack those who consume a particular form of meat, just as there are individuals in parts of Bengal, Kerala and Tamil Nadu who erupt in anger at the sight of a Hindu festival procession. But overall, India is a country that is being changed in its chemistry, especially by the smartphone and the internet. If only our politicians would step aside and allow the spread of entrepreneurship, individual freedom, the English language and technologies such as 5G, this country will enter a high growth path rather than the Middle Income Trap economist Rathin Roy warns about. Modi as Chief Minister of Gujarat, with his party and a legislative majority backing him, had about 30% of the total stock of authority in the state. As Prime Minister of India, he does not have more than 15% of the total stock of overall national authority. He has to share authority with the states, with other countries, with rival parties and with the private sector, besides civil society overall. The Prime Minister should ensure the government accepts and not resists the policy changes needed to ensure the steady empowerment of the individual in India. He should seek to accelerate this process, rather than try and recover 1950s and 1960s era control by the bureaucracy that was lost through reforms during the 1990s. Igniting a higher growth rate in India is easy. As Narasimha Rao showed in industrial policy during 1992-93, what is needed is not more of the same policy or adding new policy, but ensuring less—much less—of existing policies. The still insufficient changes made under Modi’s direction to the woefully dystopian GST designed by North Block are an example of what needs to get done across the regulatory and policy spectrum. The PM should cut away at tax rates and regulations, and walk away from the notion peddled by the civil servants that cluster around him that government has all the solutions, and so should retain as much of the income of the citizen and control over the population as the British had. Should the Prime Minister act in such a manner, by 2024 India will no longer be limping painfully at 6% but speeding forward at double that rate of growth, a performance that needs to be maintained for an entire generation if the 1971 promise of “Garibi Hatao” is to be fulfilled.

Sunday 12 May 2019

KMT disarray gives Tsai a poll advantage (Sunday Guardian)

By M D Nalapat

Tsai is quietly fashioning a security alliance with US. Should KMT return to power in 2021, such moves may be halted, as KMT is in favour of engagement with China.

TAIPEI: Where Taiwan is concerned, it was P.V. Narasimha Rao who took courage in his hands and opened a Representative Office for India in Taipei, also permitting Taiwan to do the same in Delhi. Since then, relations have moved forward, although not to the extent that the potential for synergy makes possible. Fear of a negative reaction from Beijing keeps high-level visits from mutually taking place, for example. This columnist invited the present President of the Republic of China (otherwise known as Taiwan) to India years ago. The gentle, erudite Tsai Ing-wen enjoyed her visit to the world’s most populous democracy, insisting on a non-VIP itinerary. She opted to travel by train rather than by air, and to walk to meetings in Mumbai from her hotel rather than go by car. In place of the five-star luxury of the Taj or the Oberoi, Tsai gladly stayed at the Ambassador Hotel in Churchgate, hardly the last word in luxury. On assuming office, one of President Tsai’s first steps was to initiate a Southbound Policy, that sought to shift the focus of local businesses from China to South and Southeast Asia. Since the policy came into force nearly three years ago, investment in India from Taiwan has grown substantially, although of course investment from the People’s Republic of China would be much larger, were the policy and other obstacles to investment from China to be removed.
Visitors from across the Taiwan straits watch such television shows and the abuse served in them in shock. They see that in Taiwan, even politicians in high office are not immune from verbal attack, a very different situation from that prevailing in the People’s Republic of China (PRC), where the entire nation marches to the beat of the leadership core of the Chinese Communist Party led by Xi Jinping. The new leader of the PRC is fashioned in the mould of Mao Zedong, who thought little of sending his relatively under-equipped army into battle with forces led by the United States, a nuclear power at a time when China was far from having reached that standard of lethality. Xi has repeated on three occasions that his patience is not infinite, and has hinted that he would like to see the incorporation of Taiwan into the PRC within his period in office. As term limits on the General Secretary of the CCP have been removed, it is not clear how long Xi’s term will last. However, some in Taipei who follow developments across the straits closely say that a serious effort to incorporate Taiwan into the PRC could be made around 4-6 years from now. Perhaps as a consequence, Tsai Ing-wen is quietly fashioning a security alliance with the US that is becoming more visible by the day. Of course, should the rival KMT party return to power in the 2021 Presidential elections, such moves may be halted, as the KMT is in favour of vigorous engagement with China. During the eight years that KMT leader Ma Ying-jeou was President of Taiwan, links with China multiplied exponentially. Today, there are hundreds of flights each week between the two sides of the strait, and two million Taiwanese work on the other side.
Although the KMT has regained much of the electoral ground it had lost during the last contest a little under three years ago, the problem facing the party is that there are too many wishing to be its standard bearer in the forthcoming Presidential polls. The former Mayor of New Taipei City, Eric Chu, was first off the block, followed by former Speaker Wang Jing-pin. Once a hitherto unknown KMT politician administered a shock defeat to the DPP in Taichung’s mayoral poll, the city’s newly elected Mayor Han too seems eager to test his luck at high office, this time at the national level. Just when things had become messy came Terry Guo, the Chairman of Foxconn, among the largest companies in the world. Guo believes that he has the skills needed to navigate between the competing attentions of Washington and Beijing, and ensure a high growth rate in addition. There is even an independent candidate, Taipei Mayor Ko, impatient to become President. Although there is a challenge to President Tsai for the party nomination from former Prime Minister William Lai (whose government proved so unpopular that the DPP lost heavily in the mayoral polls some months ago), it is all but certain that she will once again be the standard bearer of her party. Should she be re-elected, relations between Washington and Taipei (and therefore between Taipei and Beijing) are likely to undergo a tectonic shift. Over the past months, the US has visibly boosted its involvement with Taiwan, aware that the incorporation of the island into its Indo-Pacific plans could be a game changer, given Taiwan’s location, information technology advantages and manufacturing capacity. The American Institute of Taiwan, which in effect is the US embassy on the island, is a massive structure with personnel to match. Indeed, it is much bigger than most of the other US missions within the region. The world is witnessing a silent competition between China and the US, as the former seeks to replace US-led supply chains in services and in industry, an objective that the determined leadership of Xi Jinping is rapidly making a reality. The Chinese currency, the RMB, has joined the dollar and the euro as part of the world’s leading currencies. Across the world, Chinese companies are entering markets once the preserve of the US. Clearly the present trade war has been initiated by President Trump in an effort to get Beijing to slow down its advance, especially in technologies that will play a key role in future. It is unlikely that China will concede by reversing its drive towards global leadership in advanced technologies, hence tensions between the two giants across the Pacific Ocean (now part of the Indo-Pacific) are likely to continue. Taiwan was and remains an important theatre for this conflict, and it is no longer impossible that someday, this may swerve to military solutions. As yet, however, most people in Taiwan do not seem to be aware that storm clouds are gathering over their beautiful island.

Saturday 4 May 2019

S-400 deal may shatter India’s Indo-Pacific advantage (Sunday Guardian)

By M D Nalapat

Several other purchases, such as the planned acquisition of another Akula-class nuclear submarine, may also attract US sanctions. But would the Trump administration be willing to give India access to nuclear submarines, air defence systems, etc? According to senior officials spoken to, the reply is in the affirmative.

Washington: In the 1950s, Secretary of State John Foster Dulles looked at the world in two tones: dark and light. Those formally allied with the United States were in the well-lit space, while the others belonged to dark corners or should be sent there. During 1939-45, Muslim League supremo M.A. Jinnah skilfully cultivated Allied policymakers by placing himself at their service during wartime, in contrast to Mahatma Gandhi, who asked the British first to leave the country before their cause (of defeating Japan and Germany) could be considered by the Congress Party leadership. Jinnah’s support for the Allied cause proved crucial in enabling him to implement the measure which has done the greatest harm to Muslims across the subcontinent, which was the partition of India on the grounds of religion. After freedom was secured on 14-15 August 1947, Governor-General Jinnah of Pakistan placed his country firmly in the western camp, in contrast to Jawaharlal Nehru, who took a position of such nuance that his preferences became opaque. The Eisenhower administration responded by flooding Pakistan with US weaponry and assistance. The hesitant, often elliptical, Indian requests for similar assistance were ignored on the grounds that Pakistan was now a “treaty ally”, which India declined to be. Then as now, backing even the truncated post-1947 India would have generated greater geopolitical dividends for the US than sacrificing Delhi’s goodwill through pandering to Rawalpindi, but it took decades—until the second term of President George W. Bush more than a half-century later—that this truth began to significantly seep into the policy processes of the US government. Although the dominance of the Clinton cohort in Barack Obama’s first term dampened moves towards a close relationship between the US and India, by the close of his second term, guided by Defence Secretary Ashton Carter, substantial progress had been made towards making India a favoured recipient of US weaponry and technology, a policy that has been continued by Donald J. Trump, who has engineered a paradigm shift in US strategic thought through an embrace of the Indo-Pacific as the primary security-related theatre of interest for his administration. In such a strategy, India plays a role next only to that of the US itself.
That Trump seeks to eliminate competition to the US and its perceived interests by means fair or otherwise has not been secret. Just as a forced decline in petroproduct exports from Iran would boost sales of US allies such as Saudi Arabia and Qatar (not to mention the US itself), reducing Russia’s sales of advanced weaponry would remove a formidable competitor to US rivals such as Lockheed Martin or General Dynamics. It was India whose orders rescued much of Russia’s defence-industrial complex from extinction in the 1990s, and the country remains the top buyer of Russian defence systems. On its part, Moscow has opened the store to India, and has given access even to nuclear submarines, besides offering the S-400 air defence system. This is at present superior to any technology on offer by the US or by any other country. The problem is that its installation would entail the permanent stationing of Russian personnel to take care of maintenance as well as segments of operation of the air defence system. Practically every movement across Indian airspace would be registered by the system, and the overall performance parameters of the aircraft flying overhead would become known to the Russian side, including any advanced military aircraft (such as the F-35) that the US may supply to India. According to a senior US Air Force technical expert, the purchase of the S-400 system would entail “long-term reliance on Russian technological and logistical support to an intractable level”. He added that “when the S-400 surface-to-air missile system is installed, Russia will know the intimate details of everything happening over India’s skies”. This would not have been a problem until the close of the Cold War.  Till the collapse of the Soviet Union in 1992, GHQ Rawalpindi’s “iron” ally China and the Soviet Union were foes. Now, Moscow has become the most important military and civilian ally of Beijing, which remains tethered to Islamabad in its South Asia orientation. This being the case, allowing Moscow to access every byte of significant defence-related data has a different connotation than during the Cold War period. Apart from India, another country in talks with Moscow about the purchase of the S-400 system is Turkey. Should such a sale go through, it would mark the beginning of a process that would end with Ankara’s exit from NATO. In the case of India, going ahead with the S-400 purchase would foreclose any high-octane defence cooperation between India and the US in an era when Washington is on the cusp of unveiling its Indo-Pacific strategy at the forthcoming Shangri-la dialogue, a strategy where India has the pride of place as the key partner of the United States.
In the 1950s, it was the US side that pushed India towards the USSR as the primary (and for a considerable period, the only) defence partner. In 2019, it will be India (through the purchase of the S-400 system) that would select Moscow over Washington as the anchor ally in matters of national defence, bypassing the reality of the Moscow-Beijing military alliance that is gaining traction by the day as a force countering the US in theatres across the globe, including most recently in Venezuela. Lockheed Martin is at present willing to transfer its entire F-16 assembly line to India, and such a move would soon be followed by the transfer of the F-35 to India, an aircraft that is competitive in price and performance with those on offer by France, the European consortium and Russia. Given India’s manpower and technical skills, the country could emerge as a global manufacturing hub of military aircraft, followed by civilian assembly, within the term of a government. This is the vista presented by the Lockheed offer, and which has been placed at risk by the impending purchase of the S-400 air defence system from Russia, a country that has become toxic in the US Capitol, a location that has substantial goodwill at present for India. Indeed, there is a strong undercurrent of support for a robust security and defence relationship between India and the US, and should such a moment be seized, among the early harvests would be the formal designation of India by the US Congress as a US ally on the same footing as NATO. How would the use of the S-400 system by India impact such a move? According to a senior official close to President Trump, “concerns over the S-400 stem from intelligence collection. Any US jet could be tracked by the system, thereby helping the Russians better understand US manoeuvres, flight patterns and operations”. This is not merely an academic issue in the context of the rising possibility of the US getting engaged in combat with the Sino-Russian alliance in theatres such as the Korean peninsula or the Taiwan straits, besides locations such as the Baltics, Iran and Venezuela. Over the decades, India has developed an overpowering degree of reliance on Russian military hardware at the same time that Beijing and Moscow have seen their military-to-military ties develop, such that Moscow is now engaged with Islamabad in a manner closer than at any period since Tashkent in 1966, when Moscow forced India to make concessions such as the return of the Haji Pir pass to Pakistan in the belief that doing so would secure Rawalpindi’s support for the USSR’s friends in Afghanistan.
Getting an exemption from CAATSA (Countering America’s Adversaries Through Sanctions Act) in the S-400 would be a difficult ask for Delhi from a Washington where lawmakers are discussing Russia in hostile tones every session. Several other purchases, such as the planned acquisition of another Akula-class nuclear submarine, may also attract sanctions under CAATSA. But would the Trump administration be willing to give India access to nuclear submarines, air defence systems, aircraft carriers and other high-end defence equipment? According to senior officials spoken to, the reply is in the affirmative. They claim that as yet, the Indian side has not made a formal request for such transfers. “A senior Indian official may informally ask (the US side) about availability, but thereafter fail to follow up by giving a formal request. Unless such a request gets made, the inter-agency process required to clear such transfers cannot get activated”, a top official claimed, adding that “the mood on both Capitol Hill as well as in the White House is in favour of ensuring that India be given the means to defend democracy in Asia”. Another high official suggested a direct conversation about such specifics between the US President and the Prime Minister of India “to get the process onto the fast track”, warning that “informal soundings are not taken seriously in DC unless followed up through paperwork”.
At the forthcoming Shangri-la dialogue, the US is expected to unveil its Indo-Pacific strategy. India would be the keystone in that particular arch of defence and security, but this would depend on the choices made (or avoided) by policymakers in the Lutyens Zone, whose propensity for formulating policies that fritter away advantages for India have by now become the stuff of global conversation.

Modi, Xi rapport ensures China’s Azhar move (Sunday Guardian)

By M D Nalapat

To give credit to US for China’s Azhar turnaround is to belittle decisive effect of India’s own diplomacy, led by PM Modi and carried forward by FS Vijay Gokhale.

It must be said that the United States is a great country to visit. The people are friendly, and a surprisingly large number of them appear to have a working knowledge of English, a language that India’s leaders from Mahatma Gandhi to Amit Shah have worked hard to eliminate from the country. However, to give credit to the US administration for China’s Masood Azhar turnaround makes little sense, for such a view is to belittle the decisive effect of India’s own diplomacy, led by Prime Minister Narendra Modi and carried forward by Foreign Secretary Vijay Gokhale. Their discussions with Chinese policymakers from Xi Jinping on down have—at long last—resulted in Beijing joining the global coalition against terror by removing the GHQ Rawalpindi-inspired block that it had first imposed ten years ago on UN Security Council efforts at designating Masood Azhar as a global terrorist. Surprisingly, once news about the impending unblocking of the Azhar hold started to disseminate, a senior official in the Modi government briefed favoured scribes that the credit for such a change of heart was due to “pressure from the US, UK and France” on Beijing. This columnist was in Beijing in March, when an earlier international effort at getting Azhar designated a terrorist was taking place. It became clear that the Chinese leadership had by then already reached the conclusion that abiding by the wishes of GHQ Rawalpindi and shielding their terror asset would be against the interests of the Chinese people, who would benefit greatly from warmer ties with India, especially in matters relating to the economy. What prevented China from doing the right thing in March was a flurry of statements from London, Paris and Washington that demanded Beijing follow their example and place Azhar on the global terror list. From the time of the “Unequal Treaties” signed by China in the 19th and 20th centuries (and which caused the fall of the Qing dynasty), the Chinese have been sensitive to being seen as bowing to outside pressure, just as another country ravaged by colonial oppression, India, has been. Beijing’s pro-GHQ lobby (especially within the PLA) argued that unblocking the hold on Azhar’s UNSC designation as a terrorist would be construed as China bowing to pressure from the US, the UK and France, and hence should be avoided. Thanks to the very public intervention of these capitals, inadvertently assisted by a senior Indian official who asked his Chinese interlocutors to “follow the US and France” in the matter of Azhar, the hold was reaffirmed rather than abandoned. This caused immense damage to China’s goodwill in India, as it was seen as protecting the perpetrators of the Pulwama outrage. After that disappointing decision, those who had for several months informally and outside government worked to convince the Chinese to move away from reflexive support to GHQ Rawalpindi’s machinations were promised that the March 2019 retention of the hold would be the last time that China would act in such a manner. What worked in favour of GHQ was that—apart from Washington, London and Paris—a senior Indian official had warned the Chinese side that they must unblock the hold as “the US, UK and France are pressing for it and China should follow their example”. The GHQ lobby within Beijing argued that if the block was lifted during the March deliberations of the UNSC Al Qaeda-ISIS sanctions committee, it would be seen as having been done under western pressure. Their ploy worked, and the block continued till a few days ago, when Xi Jinping finally took heed to the need for better relations with India and ordered that it be lifted.
A murderer may have killed dozens of people—as A.B. Vajpayee’s freed prisoner Masood Azhar has—and yet be hanged for only a few of them. That matters little, for a hanging is a hanging. What is important is not whether Kashmir was mentioned but that Azhar has now been certified by the UNSC as a global terrorist, so that the continuation of cosy relations between him and GHQ Rawalpindi could constitute a ground for placing Pakistan on Black List of the Financial Action Task Force (FATF) against terror funding. A FATF meeting takes place towards the close of next month, and there is substantial justification for placing Pakistan on the FATF Black List. This ought to be a priority for the government that will be elected by voters to power in India on 23 May 2019, whether it be led by the BJP or by any other party. This will be the last FATF meeting before China takes over the chairmanship, and deft diplomacy will be needed between Delhi and Beijing to ensure a blacklisting. This would be more effective in blocking terror funding masterminded from within Pakistan than what the world has witnessed so far.
There are several reasons why Xi Jinping could once more intervene in the FATF on the side of those fighting terror, rather than permit Chinese policy to remain subservient to GHQ Rawalpindi’s demands. Most of these are economic. Huawei, for example, would find India probably its biggest 5G market once the company ensures credible security assurances and charges rates that are far more attractive than its nearest competitor. Once differences relating to the CPEC are resolved bilaterally, a China India Economic Corridor (CIEC) could be constructed that could end in Sri Lanka, a road that would be vastly profitable rather than drain money from the Chinese exchequer as projects in Pakistan are doing. The greater the commercial engagement between India and China, the sooner can the boundary dispute get resolved according to the Mao-Zhou formula that had unfortunately been rejected by Jawaharlal Nehru in 1960 and not fully examined by Rajiv Gandhi in 1988 because of the impending 1989 Lok Sabha polls. After the traverse through a long, dark tunnel in Sino-Indian relations, the Modi-Xi breakthrough over Azhar indicates that light, howsoever faint, has finally become visible in relations between two countries that together have over 2.5 billion people.