Pakistan and China define their friendship as “higher than the heights of the Himalayas and deeper than the depths of the Arabian Sea.” To make it even stronger, President Xi Jinping of China visited Pakistan in April 2015, with a multibillion-dollar investment plan — the China-Pakistan Economic Corridor (CPEC), the main plank of Xi’s Belt and Road Initiative (BRI).
China has always defined the BRI as a win-win situation, implying that both China and host countries would enjoy the resultant economic prosperity. The truth, however, is completely different.
Basically, “win-win” probably meant that China would “win twice.” Unfortunately, the CPEC has burdened Pakistan’s economy with a lot of debt and trade deficits, and pushed the country on to the brink of bankruptcy. As well, China did not provide Pakistan with industrial technology to help it boost exports, nor did it create many jobs in the country — because the project has mostly hired Chinese laborers.
Basically, ‘win-win’ probably meant that China would ‘win twice’
It was the burden of Chinese debt that forced Sri Lanka to hand over its Hambantota Port to China and a massive piece of land in Colombo to Chinese multinational corporations, in return for debt relief. The fear of a debt trap pushed Malaysian Prime Minister Mahathir Mohamad (pictured below) to halt the contract for China Communications Construction Company to build the East Coast Rail Link, thought to have cost the government around US$20 billion, along with a $2.5 billion agreement for an arm of a Chinese energy giant to construct gas pipelines. He had earlier suspended the projects, leading some analysts to believe that he wanted to renegotiate the terms during his China trip.
Story of a so-called friend
Honestly, you can’t call a country your friend when it forces you to buy its equipment and material to be used in its projects — a port, coal-fired power plants, roads and railways (the CPEC). And when this exercise severely shreds your dollar reserves and piles up government expenses, this so-called friend offers a helping hand in the form of billion-dollar debts — so that you can keep importing from it.
Ultimately, you find yourself in the middle of nowhere. Your people suffer; you arrange a funeral ceremony of your economy with just enough foreign reserves that you can barely afford imports of two months. Then the so-called friend offers you some more debt, so that you can buy necessary goods (or otherwise, your citizens will starve).
You say thanks to your so-called friend and move on in your life. Suddenly, you see your economy standing on the brink of an ultimate collapse. You knock your so-called friend’s door for help, but this time, you face a blatant “no.” Why? Because your so-called friend wants to improve its image in the eyes of the world powers — as they think that your so-called friend is using you like a tissue paper.
Hopelessly, you approach an international lender (the International Monetary Fund), which offers you some help on condition that you will have to make the economic deals with your so-called friend public. When that so-called friend becomes aware of the bank’s (IMF) conditions, it warns you, saying that the loan from the bank (IMF) should not affect our “so-called friendship.”
The curse of Xi Jinping’s ‘debt-trap diplomacy’
China has been accused by the West of leveraging huge loans it holds over less developed economies across the world in order to snatch their key assets and increase its military intervention.
From Pakistan to Montenegro, from Laos to Kyrgyzstan, many nations owe huge debts to China. Let us take the example of Sri Lanka. It owed more than $1 billion to China and unfortunately wasn’t able to service the debt; China reportedly forced it to hand over Hambantota Port on lease for 99 years.
In April this year, China approached Vanuatu to set up a military base, which owed Beijing about $250 million. Tonga also carries some big debts and is facing difficulties in servicing them. The prime minister of Tonga, Akilisi Pohiva, in August showed his concerns over China’s debt-trap diplomacy, saying Beijing was preparing to seize assets from his country.
China forces Pakistan to buy Chinese equipment for use in Chinese projects, shredding its reserves; then it extends Pakistan loans to cover the purchases, which increases the burden of debt on Pakistan’s economy
For Pakistan, the situation seems alarming. China forces it to buy Chinese equipment for use in Chinese projects, shredding its reserves; then it extends Pakistan loans to cover the purchases, which increases the burden of debt on Pakistan’s economy. Machinery imports alone from China in the first two years of the CPEC raised Pakistan’s current-account deficit by 50%.
Now Pakistan is facing a severe foreign-currency shortfall, especially the US dollar holdings of its central bank, which have dropped to $8.4 billion, barely enough to pay for two months of imports. The trade deficit is skyrocketing; in the fiscal year ending last June, exports were $23.22 billion while imports exceeded $60 billion. Indeed, its public-sector debt stands at $75.3 billion — 27% of Pakistan’s gross domestic product.
Islamabad needed an urgent cash injection for its suffering economy, for imports and clearing debts. It is not that Pakistan didn’t ask China or Saudi Arabia to bail it out. Even Saudi Arabia agreed to invest in the CPEC in the form of an oil refinery in Gwadar, but China had concerns, as Saudi Arabia is a major non-NATO ally of the United States and any involvement of the Saudis in CPEC would indirectly mean allowing US intervention. Economic deals between Beijing and Islamabad related to the multibillion-dollar “debt trap” that is CPEC have been kept behind an opaque sheet of “we trust each other” from Day 1.
The United States, on every occasion, has accused China of predatory lending practices and ruining small economies. In my opinion, China had to portray itself as “sincere and unselfish” and therefore, it was a blatant “no” from Xi for another bailout for Pakistan. Or, it may also be that Pakistani Prime Minister Imran Khan’s government is aware of the dark realities of China’s Belt and Road Initiative.
Coming out of a fool’s paradise
As The News reported on October 1, Pakistani Railway Minister Sheikh Rashid Ahmad (pictured above) said the estimated cost of expansion and reconstruction of ML-1 (Main Line-1 that runs from Peshawar to Karachi) under the CPEC had been brought down to $6.2 billion from $8.2 billion. “Pakistan is a poor country that cannot afford [the] huge burden of the loans,” Rashid told a news conference in Lahore. “Therefore, we have reduced the loan from China under CPEC for rail projects from $8.2 billion to $6.2 billion.”
Remember that Financial Times report?
“The previous government did a bad job negotiating with China on CPEC — they didn’t do their homework correctly and didn’t negotiate correctly, so they gave away a lot,” Abdul Razak Dawood, the Pakistani cabinet member responsible for commerce, textiles, industry and investment, told the FT.
“I think we should put everything on hold for a year so we can get our act together,” he added. “Chinese companies received tax breaks, many breaks, and have an undue advantage in Pakistan; this is one of the things we’re looking at because it’s not fair that Pakistani companies should be disadvantaged.”
What Dawood said clearly shows that Imran Khan’s government is skeptical about China’s intentions behind pouring billions of dollars into Pakistan.
Between China’s warning and IMF’s conditions
Imran Khan is known for the slogans he raised during his election campaign, that if Pakistanis would give him a chance to form the government, he would break the country’s addiction to begging the West for dollars whenever it finds itself in a financial crisis. On October 8, Khan forgot his lofty claims and allowed Finance Minister Asad Umar to announce that Pakistan would seek a hefty loan from the IMF. It will be the country’s 13th bailout from the IMF since the 1980s.
And for sure, it will face strict conditions imposed by the Fund. It may force the Khan-led government to privatize steel mills and Pakistan International Airlines. And this would result in tens of thousands of jobs being lost, which will come with countrywide protests against Khan’s party, Pakistan Tehreek-e-Insaf. Before the announcement, the dollar in Pakistan was trading at 125 rupees to $1 — after that, the rupee has been devalued to 135 per US dollar.
The rupee’s depreciation has increased Pakistan’s debt by $6.75 billion, thus contributing to some more economic woes for the nation. Just after Asad Umar announced the government’s decision to seek a bailout package from the IMF on the night of October 8 came a substantial single-day stock-market loss by more than 1,300 points — losing almost 270 billion rupees ($2 billion) of its capitalization.
The government has failed to restore investor confidence, and thus the selling spree has continued.
As a result, the index dropped below 37,000 points. The IMF’s projection that the inflation rate might hit 14% by June 2019 further intensified the situation.
And there is yet another huge burden on the shoulders of Imran Khan and his cabinet — to disclose the nature, size and terms of the debt that Pakistan is bearing. Christine Lagarde, managing director of the IMF (pictured below), clearly said the Fund would expect “absolute transparency about the nature, size, and terms of the debt that is bearing on a particular country,” and although she did not explicitly mention China in her remarks, they were given directly in response to a question about Pakistan’s stockpile of Chinese debt.
The transparency must extend to “the extent and composition of that debt,” she added, regarding whether it was government-owned or by state-owned enterprises “or the like of it,” which presumably means it also includes private-sector debt.
If Pakistan gives access to all the hidden information related to CPEC deals to the IMF, it will end up hurting its fair-weather friend China. The State Bank of Pakistan is not aware of the details of the CPEC deals and therefore, it compiles its own debt-sustainability forecasts on the basis of the incomplete information available.
No one knows what China and Pakistan have possibly agreed on.
If Pakistan gives access to all the hidden information related to CPEC deals to the IMF, it will end up hurting its fair-weather friend China
What Chinese Foreign Ministry spokesman Lu Kang said at his press briefing in Beijing was shocking. On one hand, he endorsed Pakistan’s request to the IMF for financial assistance, but cautioned that the facility should not affect economic cooperation between Islamabad and Beijing, as Dawn reported.
Like a good friend of Pakistan, Lu could have endorsed the help that the IMF is offering to Pakistan — but the so-called “friend” cautioned Islamabad that the facility should not affect economic cooperation between the two countries. Already Pakistan’s stock exchange is suffering, and this statement will contribute to investor confidence being lost, as it would make investors more skeptical about the possible consequences of Pakistan disclosing the hidden deals of CPEC.
Friends don’t threaten each other, and China needs to understand that.
China should at least offer a helping hand to Pakistan in its truest sense. Rather than enmeshing it in a debt trap, it should invest in Pakistan’s magnificent renewable-energy potential, such as financing solar-power plants in Balochistan and Sindh provinces, so that the country can cut down expensive crude-oil import for electricity generation. And it should help the country boost its exports by providing it with advanced industrial machinery and technology, so that the country can obtain comparative advantage in the production of some high-valued items.
There is nothing wrong in taking help from a “friendly” nation for the sake of energy and transport sector development, but as the world works on the theory of realism and capitalism, there is nothing like a free lunch.
China is securing its interests in the multibillion-dollar CPEC — and currently even enjoying Pakistan’s piece of the cake.
Only after Pakistan begins to export more will it be able to acquire sufficient dollar reserves to fulfill its demands of energy and infrastructure on its own. Substantial macroeconomic changes have to be made so that it can produce, consume, save, expand and export efficiently.
Investment on research and development is needed. Barriers to enter and exit markets must be reduced. It will have to ask other countries (and not just friends) to make investments in its market. If the country properly explores its renewable-energy potential, it won’t need coal, gas or petroleum to fuel its power plants.
Author’s note: This article first appeared at DailyO (India Today)
CoVID-19 Control: Can Pakistan Learn From China?
It has been over a year since the first case of CoVID-19 was confirmed in Pakistan. The tally has reached 721,018 confirmed cases, 15,443 have died and 4,143 critical cases by 11thApril2021. Across many countries, since January 2020, a massive surge of research into CoVID-19 had enabled the scientific and medical community to better understand how to manage and eliminate the virus through public health interventions. Today, we have learned, CoVID-19 causes acute symptoms and death. We have learned, immunity lasts at least eight months and we also have five licensed vaccines. We have learned, the long-term effects of CoVID-19 and the morbidity attached to having this virus. We have learned, virus transmission occurs through droplets and aerosols spread through coughing, sneezing, breathing and speaking. We also have learned, stopping the spread of CoVID-19 requires people to avoid mixing though restrictions on social life. We have learned, the virus can mutate into various strains that can be more transmissible – and we also have understand cat-and-mouse game between vaccine and variants.
To alleviate the destructive effects of CoVID-19 on the economy, Pakistan has sought debt relief of slightly around $2 billion from its G20 creditors. In addition to the G20 countries, China was the largest bilateral creditor with $9 billion, followed by Japan with $5 billion. By early April 2020, when there were just about 2,000 CoVID-19 positive cases in Pakistan, the World Bank approved $200 million package to help Pakistan. Likewise, the International Monetary Fund (IMF) had approved the payout of $1.386 billion as financial support to Pakistan to meet its urgent balance of payment needs halting from the CoVID-19 outbreak. Further, to support Pakistan’s public health response to the CoVID-19 and allow to meet the basic needs of the vulnerable and poor segment of society, the Asian Development Bank (ADB) approved $500 million emergency assistance loan to Pakistan. Similarly, The Islamic Development Bank (IDB) also provided a $650 million financial package to support Pakistan in its efforts against the CoVID-19. All these grants were provided to Government of Pakistan to assist in effective and timely action in response to the spread of the CoVID-19. The objective was to strengthen Pakistan’s public health infrastructure and to alleviate socioeconomic disruptions due to the pandemic. Despite huge grants and substantial endowments, Pakistan’s response to the CoVID-19 has been unsatisfactory. Lack of basic healthcare infrastructure, disease surveillance and management system, and inconsistent implementation of policies and SOPs resulted in the rapid and incessant spread of third-wave of CoVID-19 throughout the county.
China’s extraordinary organized and preventive risk management approach, established on coalition between government officials, virologists, epidemiologists and public health experts, has demonstrated to be successful in containing and controlling CoVID-19.The experience in China emphasized the significance of listening to science and public health experts during pandemic event. Firstly, China’s response demonstrates the value of national research and public health capability. Huge investment in research and development rendered China much better prepared for CoVID-19. China’s experience indicates the value of investing in national health and research scheme to boost laboratory capacity along with workforce. They are essential to a rapid and effective national response to health emergencies and to national health security. Secondly, a strong foundation of research and development cannot ensure effective control without powerful top-level political dedication to use science to confront the outbreak. Government and leaders must respect science, understand its significance, and act on science-based advice in a way that is best for society. Thirdly, attaining speedy and successful implementation of control measures for CoVID-19 requires extensive community engagement. Public solidarity during the CoVID-19 outbreak in China had been unprecedented. Control measures that could sacrifice personal freedom were accepted readily by the nation.
To be brief, cricket is to South Asia and football is to Europe. In fighting CoVID-19, everyone is equal. Everyone has the identical liability and shares the equal threat. The effective implementation of prevention and control measures in China is a model for Pakistan other parts of world to follow. From the beginning, a science-based, risk-informed and phased approach was taken, with a clear appreciation and enthusiasm. Today, China has restarted its economy, reopened and almost returned to normality. The key of success story is to make everybody responsible, get every single division involved and held executives accountable. These are the most prominent lessons Pakistan could learn from China at national and local levels. After the failure of “Smart-Lockdown” strategy, Pakistan needs to choose a strict strategy, should follow the example of China and continue the lockdown until the number of CoVID-19 infections is brought close to zero; the strategy should then be to maintain infection rates at very low level until vaccination is done. China’s epidemic management provides an important experience from which countries such as Pakistan can learn. This applies in particular to Pakistan, which would risk to lose many of its achievements in case of a severe third wave of the epidemic. Government of Pakistan should involve not only public health experts, virologists and epidemiologists, but also scientist and respect science advice when making any decision that is required to keep the epidemic under control. The rest of the world can also learn from China’s success in bringing outbreak under control.
United States snubs India for its excessive maritime claim
On April7, 2021, a 9,000-ton guided-missile destroyer, USS John Paul Jones (US 7th Fleet), waded (not strayed as it was deliberate) into the vicinity of India’s Lakshadweep Islands. The ship was 131 nautical miles away from India’s coast (12 nautical miles territory) but well within its exclusive economic zone (200 nautical miles, 370.4 kilometre).
The trespass by the US destroyer triggered indignation through all walks of life. It conjured up memories of the arrival of the 7th fleet during the Indo-Pak war of 1971. The fleet gave a message, loud and clear, to India that it should not dare finish West Pakistan, its long cherished desire. Even Nehru, an ostensibly liberal leader, regarded the creation of Pakistan a blunder. His rancour against Pakistan reaches a crescendo in his remarks: “I shall not have that carbuncle on my back.” (D. H. Bhutani, The Future of Pakistan, page 14). During 1971, Pakistan was a US ally. Now India is in the anti-China US-backed basket.
Yet, the `destroyer’ conjured up memory in India’s mind of `bitter’ American intervention. Congress leaders voiced surprise at the U.S. move. In a tweet, Manish Tewari said, “This never happened in the 10 years of UPA [Congress-led rule] or perhaps even before that as far as I can recall. The last time I remember it being so rather in your face was 1971 – Task Force 74 – 7th Fleet. What then happened is History. Hope the NDA/BJP shows some Oomph?” Echoing the surprise, former Union Minister Jairam Ramesh, said, “And this happened when the former U.S. Secretary of State and Climate Envoy, John Kerry, was meeting Ministers in New Delhi.”
The euphoria created by US gung-ho support for Quad, and Pakistan’s exclusion from the climate conference petered out.
India’s foreign office tried to play down the event by stating that it was not a “military manoeuvre”. So, the USA was not bound to inform India about it. But, to India’s chagrin, the U.S. The Navy announced that its ship the USS John Paul Jones had carried out Freedom of Navigation Operation (FONOP) in the Indian EEZ, adding that its operations had “challenged” what the U.S. called India’s “excessive maritime claims.” The U.S. defends its actions saying they were in compliance with international laws. Even Pentagon spokesperson John Kirby justified what India calls “intransigence’ by announcing the US Navy’s move was in compliance with international law. He told reporters, “I can tell you that the USS John Paul Jones, a Navy destroyer, asserted navigational rights and freedoms in the vicinity of the Republic of the Maldives by conducting innocent passage through its territorial sea in normal operations within its exclusive economic zone without requesting prior permission. We conduct routine and regular FONOPs, as we have done in the past and will continue to in the future. FONOPs are not about one country, nor are they about making political statements’.
India compelled to protest
As a face-saving gesture, India was forced to protest the U.S. decision to conduct a patrol in the Indian Exclusive Economic Zone (EEZ) in the western Indian Ocean, rejecting the U.S.’s claim that its domestic maritime law was in violation of international law. India’s external-affairs ministry retorted, ‘The Government of India’s stated position on the United Nations Convention on the Law of the Sea (UNCLOS) is that the Convention does not authorise other States to carry out in the EEZ and on the continental shelf, military exercises or man oeuvres, in particular those involving the use of weapons or explosives, without the consent of the coastal state.’ The ministry insisted that the USS John Paul Jones was “continuously monitored” transiting from the Persian Gulf towards the Malacca Straits.
The incident is a rare falling out between the two partners in the Quadrilateral Grouping that had recently committed to upholding freedom of navigation in the Indo-Pacific together.
Bone of contention
The USA shrugged off India’s ennui. According to the annual FONOP reports released by the U.S. Department of Defence for each fiscal year, the U.S. had been regularly conducting FONOPs in Indian EEZ. The FONOPs were carried out in several c continental shelves of several countries including its allies and partners. The USA regarded Indian maritime claim as “excessive” and in violation of International Law. From 2007 onwards till 2017, the U.S. carried out multiple FONOPs every year challenging “excessive” Indian maritime claims. No FONOP was carried out in 2018 and 2020 and one FONOP in 2019.
Difference of opinion is due to the fact that the USA has not ratified the UN Convention on the Law of Seas. India and China have ratified it with some reservations. But, the USA does not care a fig about provisos attached by China and India.
Ashamed of USA’s crass rebuttal, India is coining excuses to mitigate its embarrassment. To relieve pressure on Indian government, former Navy Chief Admiral Arun Prakash interpreted the US “trespass” as if it were a message to China that the USA has unfettered “freedom of navigation”. Prakash Tweeted
“While India ratified UNCLOS in 1995, the U.S. has failed to do it so far. For the 7th Fleet to carry out FoNOPs missions in Indian EEZ in violation of our domestic law is bad enough. But publicising it? USN please switch on IFF (Identification, friend or foe)! Prakash added FONOPs by U.S. Navy ships, “ineffective as they may be,” in South China Sea, are meant to “convey a message to China that the putative EEZ” around the artificial SCS islands is an “excessive maritime claim.” “But what is the 7th Fleet message for India?” he asked.
Might is Right
Obviously, the USA is acting upon might-is-right policy. India itself acted upon this policy to devour princely states, and annex Nepalese territory. Junagadh and Kashmir disputes are still unresolved on UN agenda. Indian Union is an artificial sally.
In its entire history India had never been a single nation, or one country, until united at gun point by the British. The artificial nature of modern India created by the British colonialists and adopted by post-colonial India generated insurgencies and separatist movements.
At the time of partition, India was in grip of virulent insurgencies and separatist movements (Dravidian South, Khalistan, Seven Sisters in the North East, so on). Wikipedia lists 68 major organizations as terrorist groups. Of them, nine are in the northeast (seven sisters states), four in the center and the east (Maoist/Naxalites), seventeen in the west (Sikh separatist groups), and thirty eight in the northwest (Kashmir). India kept afloat as a union only at the barrel of gun. The Indian army chief paid a five-day visit to Bangladesh as a prelude to conducting a massive operation against the Naxalbari militants.
UK and USA’s Diego Garcia headache
International Court of Justice advisory opinion on Chagos Islands has catapulted Indian Ocean into limelight. The ICJ `advisory’ is a blow to UK’s forcible occupation of Chagos Islands, including the strategic US airbase of Diego Garcia atoll (leased out to the USA by the UK).
The ICJ President Abdulqawi Ahmed Yusuf observed, `The UK has an obligation to bring to an end its administration of Chagos archipelago as rapidly as possible’. The court ruled that separation of Chagos Islands from Mauritius during decolonisation in the 1960s constituted an “unlawful detachment” and was a “wrongful act”.
In 1966, the U.S. signed a secret agreement with Great Britain allowing the Pentagon to use the Indian Ocean territory as an airbase in exchange for a big discount on Polaris nuclear missiles. Three years later, hundreds of Navy Seabees arrived by ship and began pouring out two 12,000-foot runway that would become a bulwark of American Cold War strategy in the region, and a key launching pad for the first and second Gulf wars, the 1998 bombing of Iraq and invasion and carpet-bombing of Afghanistan.
The base can house more than 2,000 troops and 30 warships at a time. It has two bomber runways, a satellite spy station and facilities enabling the use of nuclear-armed submarines. It served as a CIA black site (like Guantanamo Bay) to interrogate and torture terror suspects including those from Afghanistan, Pakistan and Indonesia.
The base holds key to America’s Afghan exit plan, by year 2024, to avoid a rout at the hands of Taliban.
To India’s chagrin, the USA wants to exert its authority on Indian Ocean also. Forty seven countries have the Indian Ocean on their shores. The Indian Ocean is the third largest body of water in the world. It occupies 20 percent of the world’s ocean surface – it is nearly 10,000 kilometers wide at the southern tips of Africa and Australia and its area is 68.556 million square kilometers, about 5.5 times the size of the United States. India’s motto is ‘whoever controls the Indian Ocean dominates Asia’. Admiral Alfred T. Mahan (1840-1914) of the United States Navy highlighted the strategic importance of the Indian Ocean in these words: “whoever attains maritime supremacy in the Indian Ocean would be a prominent player on the international scene. The Indian peninsula (i.e. the Deccan and below) juts 1,240 miles into the Indian Ocean. 50 per cent of the Indian Ocean basin lies within a 1,000 mile radius of India, a reality that has strategic implications. Under the law of the sea, it has an exclusive economic zone of 772,000 square miles. Chennai is a mere 3,400 miles away from Perth in Australia, slightly more than the distance between New York and Los Angeles.
To dominate Straits of Malacca (bordering Indonesia and Malaysia), India established its Far Eastern Marine Command at Port Blair in the Andamans. It has developed Port Blair as a strategic international trade center and built an oil terminal and trans-shipment port in Campal Bay in the Nicobar Islands.
In diplomacy, there are no permanent friends or foes, only permanent interests. Afghan exit plan requires the USA continues to retain Diego Garcia.
US-China Developing Confrontation: India and QUAD
At the request of the editors of International Affairs magazine, the renowned Kanwal Sibal, India’s Foreign Secretary and Ambassador to Turkey, Egypt, France and Russia, comments on new US initiatives in Southeast Asia.
Judging by its Interim National Strategic Security Guidance (INSSG) document (March 2021) the Biden Administration intends to be tough towards China on many fronts. Human rights issues in Xinjiang and Tibet, threats to Taiwan, limiting Hong Kong’s autonomy, encroachments and territorial pressures in the East and South China Seas, freedom of navigation and overflight issues, preserving a free and open Indo-Pacific, unfair trade practices, technology theft, resilience of critical supply chains, emerging technologies, standard setting for 5G, a new competitive US industrial strategy, and so on.
Whereas Trump had alienated allies and weakened America’s hand in dealing with China’s challenge, the Biden administration seeks to speak to China from a position of strength. For this it seeks to restore ties of confidence with Japan, South Korea and Australia in priority. In doing this the US is indirectly recognizing its reduced strength and its inability to meet the China challenge alone. In this perspective, It had reached out to Europe for policy coordination towards China even before it took office, but Europe went ahead to sign a Comprehensive Investment Agreement (CAI) to protect its own independent and competitive interests in China. After the fractious US-China Alaska meeting, the US has continued its coordinating efforts with Europe but faces resistance from Germany and France in particular who want to retain their strategic autonomy in dealing with China, believing that US policy under Biden will remain self-centred and that too much water had flown under the bridge for US-Europe ties to simply revert to the pre-Trump era.
The timing of virtual Quad summit before the Alaska meeting was also intended to signal to China that like-minded countries were coming together to deter what they view as China’s increasingly aggressive policies. From a telephonic meeting at the Foreign Ministers level in February 2021 the summit was a major step forward in consolidating the Quad politically. India, earlier reticent in moving too far too quickly with the Quad in the light of the need to manage the stresses of its China ties, decided to join. After the stand-off in eastern Ladakh India has realized that deferring to Chinese sensitivities is not reciprocated by China. The visit of the US Defense Secretary Lloyd Austin to India coincided with the US-China meeting in Alaska.
In the INSSG, India is not treated strategically in the same category as US allies like Japan, Republic of Korea and Australia. The China challenge is felt primarily in the western Pacific where the US has bases, deployed military forces and a powerful naval presence. China’s challenge in the Indian Ocean is not considered of the same order for the time being, but partnership with India, with its significant naval assets and geographic position, overlooking the critical sea lanes of communication in the region, is important for the future. India is seen as a net security provider, fitting into the template of burden sharing. For this the US has shown its readiness to build India’s maritime surveillance capacities by supplying defense platforms, intelligence sharing, increasingly complex military exercises with the inclusion of Japan and Australia, and utilizing the India-US defense-related foundational agreements that provide for inter-operability and sharing of geo-spatial data.
Although the joint statement issued by the Quad summit did not mention China by name, China was of course discussed, with each leader sharing his thinking. According to US NSA Jake Sullivan, China, about whom none of the leaders had any illusions he said, was discussed at the meeting but was not its focus. Coercion of Australia, harassment around the Senkakus, border aggression against India figured in the discussions. According to him, the Quad is now a critical part of the architecture of the Indo-Pacific. Cybersecurity incidents impacting Quad members too figured, including attacks against India’s power sector. He dismissed the talk about Quad being a military alliance, though he stated that it has to worked out at the leaders level and that of the working groups how the Quad can move from freedom of navigation to broader regional security questions. Apparently, at Alaska, the Chinese reacted negatively to US mentioning its dialogue with India.
The summit rightly felt that the Quad should have a broader agenda than simply China, a point of view that India has studiously supported. India is conscious of the fact that the US, as well as Japan and Australia, have deep economic ties with China, which can be rolled back selectively to lessen dependence by decoupling in critical areas, restricting Chinese access to advanced critical technologies in which China has external dependence such as semi-conductors, preventing Chinese investments in sensitive areas etc but cannot be dramatically reduced, given China’s huge weight in the global economy. The US policy seems to be “extreme competition”, cooperation and confrontation, as required. India’s investment in the Quad, beyond the maritime security aspect, would be to benefit from a shift away from China of critical supply chains, use India’s democratic environment to attract more US investment and technology transfers that would accelerate India’s growth for the welfare of its people, besides enabling it to close the developing gaps with China.
It is in this perspective that the decision on building India’s capacity for vaccines should be seen. The three expert groups set up by the Quad summit, on vaccines, critical technologies (5G, AI, Quantum Computing, human biology) and climate change broaden the Quad’s agenda, opening up bilateral opportunities with the US for India, besides creating the beginnings of a structure. In line with Indian thinking and emphasis on a broader agenda, the Quad leaders pledged “to respond to the economic and health impacts of COVID-19, combat climate change, and address shared challenges, including in cyber space, critical technologies, counterterrorism, quality infrastructure investment, and humanitarian-assistance and disaster-relief as well as maritime domains”. The decision to manufacture US vaccine in India with Biological E Ltd to provide one billion doses to the Indo-Pacific region was taken, with Japanese finance and Australia’s delivery support. The third group will deal with critical – and emerging-technologies to facilitate cooperation on international standards and innovative technologies of the future.
China’s concerns about the Quad summit and the strengthening of India’s strategic ties with the US have no basis. China has benefited enormously from US capital and technology and that of its allies for China’s rise. The economic power it acquired, and with that military power, has been used by it to expand territorially in the western Pacific and globally through the BRI, not to mention in the Indian Ocean. Now that defenses are being put up against China’s policies and ambitions, China, after the stand-off in Ladakh, has no ground to warn India not to become close to the US. Even now the US is China’s biggest economic partner and China is reaching out to the US to ease pressures on it. Its critique of “selective multilateralism” would apply equally to the Russia-India-China group, BRICS as well as the SCO. It has established a Quad in our region- the China-Pakistan-Afghanistan-Nepal group, in which Nepal does not fit at all.
The bristling encounter at Alaska demonstrates that China’s expectations that a change of administration in the US could lessen tensions and some accommodation could be worked out have been belied for the time being. China touted the Alaska meeting as a strategic dialogue, which was strongly denied the US. In response to Secretary of State Blinken’s severe strictures on China’s infringements of a rules based international order on various issues, Politburo member Yang Jiechi hit back brutally, decrying US democracy, castigating America’s racism, calling it the champion of cyberattacks, rejecting the notion that western nations represent global public opinion, and, most significantly, stating that the US lacked the qualifications to speak to China from a position of strength, now or even 20 or 30 years earlier. Yang Jiechi may have intended to say all this in private but felt compelled to do so in public to show to the domestic and international audience that China will not be bullied and will deal with the US as an equal. If he had reacted meekly, it would have been a blow to China’s prestige and its self-image. It appears that after the public spat the two sides got down to business calmly on the agenda items , with serious differences over Taiwan emerging and raising US concerns that this could become a flash point if Xi Jinping was determined to achieve reunification, by force, if necessary. There was no commitment by the US side to meet again despite persistent probing by Yang Jiechi to elicit a response.
With China and Russia in the cross-hairs of the Biden government, it is not surprising that both countries have closed ranks against the US. Lavrov and Wang Yi rejected US calls for “a rules-based order” and proposed a summit of the UN Security Council’s five permanent members to be held “to establish direct dialogue …in the interests of maintaining global stability”. With the sharper US divisions with China and Russia it is unclear what the P5 summit could achieve concretely, especially as the representative nature of the UN Security Council as currently constituted is questioned in large parts of the world.
Regrettably, a new version of the Cold War might now be taking shape. In the developing scenario, it is very important that the India-Russia dialogue is strengthened so that the implications of the new developments and the compulsions of the two countries are better understood bilaterally.
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