It is the economy, stupid!



M Ziauddin

THE deepening and widening Indo-American honeymoon is being viewed world-wide and particularly in Pakistan with the cold-war lens. Conclusions reached, therefore, naturally see this growing alliance between the two great ‘democracies’ of the world as a grouping of ‘good guys’ being put together to contain the emergence of a vast regions under Chinese influence or what the Western media would like the world to believe the rise of a grouping of ‘bad guys’.
In this so-called new tussle between the ‘good guys’ and the ‘bad guys’ for carving out areas of influence many of those wearing the cold war lenses see the signs of a grand global conflict on the lines similar to seen during the cold war days between the so-called ‘free-world’ led by capitalist US on the one hand and the so-called ‘captive world’ led by the communist Soviet Union on the other.
However, as opposed to the cold war which was essentially an ideological tussle between two great powers influenced entirely by geopolitics, the competition that is emerging between the present ‘goodguys’ and ‘bad guys’ is not at all ideological and is entirely influenced by geo-economics and not geopolitics.
And when geo-economics is the dominant subject or the primary issue between states, the two bilaterally or group-wise tend not to harm or undermine the markets in the rival grouping but bend backwards to help sustain them because that ensures continued and escalating incomes from trading which in turn ensures inclusive prosperity .
In an essay written early in the first decade of the current century Sanjay Baru, one of India’s highly regarded economic commentators had this to say about the Strategic consequences of India’s economic performance:
“At a time when the world was still coming to grips with the implications of the end of the Cold War for the global balance of power, for the role and relevance of different nations in the emergent global system, and, before there was as yet any considered appreciation of the impact of the turnaround of the Indian economy on the global and Asian balance of power, one of Harvard’s most distinguished strategic thinkers made an interesting forecast about the nature of the post-Cold War international system that resonates to this day among strategic policy analysts in India. Prefacing his study of western diplomacy with a reflection on the ‘ New world Order’, Henry Kissinger ( Diplomacy, 1994), hypothesized that: The international system of the twenty-first century will be marked by a seeming contradiction—on the one hand, fragmentation; on the other, growing globalization. On the level of the relations among states, the new order will be more like the European State system of the 18th and 19th centuries than the rigid patterns of the cold war. It will contain at least six major powers—the United States, Europe, China, Japan, Russia and probably India—as well as a multiplicity of medium-sized and smaller countries.” (p.23).
“Neither the US nor China would like to hurt their business prospects in India. Indeed, China has in the past year delinked its growing business relationship with India from persisting differences on the political and diplomatic front. This partly explains China’s equivocal stance on an increasing number of India-Pakistan bilateral disputes like Kargil war and the campaign against terrorism.
“They (Indian policy-makers) believe that the best antidote to the persisting competitive, and even threatening, dimensions of Chinese power is the complete and permanent revitalization of the Indian economy. The pursuit of this objective implies that Indian security managers believe that the best insurance against assertive Chinese power lies not in participating in any evolving anti-China alliance but rather by emerging as a strong and independent power on China’s periphery——Within the sub-continental setting, India has focused entirely on economic renewal in order to secure the great power capabilities that eluded it during the cold war.”(P.43)
Polish economist, Michal Kalecki had likened India’s Cold War economics of a ‘mixed economy’ and the foreign policy of ‘non-alignment’ to a ‘clever calf sucking two cows’. And the chances are that India would most probably do the same with a little bit of variation to suit the current situation in its post-Cold War pursuit of great power ambitions. It will perhaps end up milking the US to fatten its economic links with China in the decades to follow.
India is already a very important member of Asian Infrastructure Investment Bank (AIIB) and the founding member of BRICS New Development Bank (According to the Agreement on the NDB, “theBank shall support public or private projects through loan, guarantees, equity participation and other financial instruments” Moreover, the NDB “shall cooperate with international organizations and other financial entities, and provide technical assistance for projects to be supported by the Bank.)both of which are the anathema for the US. In fact the US has been abandoned even by its closest European allies in regard to AIIB. More likely India would finally to end up having surplus bilateral trade with the US to more than match its negative bilateral trade with China thus ensuring that both the US and China would do their best to keep India on their respective economic right side.
China’s sustained economic growth of the past quarter century has increased its economic, political and strategic profile in Asia and in many other parts of the world. And there is a growing realization in India that if the Indian economy does not catch up with China, in terms of economic growth and human development indicators, its wider security and global profile may be seriously challenged. Therefore, it is in India’s own national security interest to avoid any non-economic tussle with China and instead improve its trade with such a vast market as well as with the global economy.
And here is a round-about pointer to those in Rawalpindi on how to go about putting our security house in order: “Schelling’s (Thomas C. Schelling—Nobel Prize in economics—2005) seminal work on strategy of conflict and the ‘nuclear game’ took economics beyond the more mundane pre-occupation with the economics of war and national security that grabbed the attention of many Western economists during and after the Second World War. John Maynard Keynes and Nicholas Kaldor, in Britain, and John Kenneth Galbraith and Charles P. Kindleberger, in the United States, were intensely engaged, as professional economists, in studying the financial aspects of war and its economic consequences. Galbraith and Kindleberger were in fact on the staff of the US Office of Strategic Services during the War. Professional economists continue to be hired both by the US Defence and State Departments and by the British and Commonwealth Office.
“Even in China, the collapse of the Soviet Union seemed to encourage greater respect among strategic policy makers for the views of professional economists in shaping strategic and foreign policy choices. It was at a defence establishment think tank that Chinese strategists developed the notion of Comprehensive National Power, which gave a higher weight to economic and social aspects of national security over the purely military.”