Looking East: India’s Eden or Land of Nod?

Initially conceived of as India’s way out of post Cold War economic stagnation, New Delhi’s “Look East “ policy is the world’s largest democracy shot at finding its place in a globalized world—which was initially dominated by the US but later rebalanced by the dramatic rise of China and concomitant need for India to enhance its economic and diplomatic links with the growing Asian economies to its east.

The end of the Cold War was the nail in the coffin for India’s non-aligned movement aspirations—for a third way between the super powers. Without the two superpowers to play off against, the non-aligned movement faded into the past.

Still, with a stagnant economy fueling widespread and often raw poverty, India was a sickly “tiger,” unlike the dynamic big cats in East and Southeast Asia. Looking “East” offered not only new markets and trading partners, but models of economic growth and development for India.

Prof. Sandy Gordon, who teaches at Australian National University and is a founding editor of the “South Asia Masala”, told The Irrawaddy: “The Asian Tigers to India’s East were seen not only as role models for economic liberalization, but also as markets and a new geopolitical sphere—one with which India was more comfortable at that time that it was with a policy of reaching out in unambiguous terms to the West.”

India’s economic growth continues to be impressive, with the International Monetary Fund now projecting 9.4 percent growth for India in 2010, plotted to drop a bit to 8.4 percent in 2011.

Like elsewhere in Asia, India has rebounded quickly—compared to the West—from the global 2008 economic downturn. India’s super rich have emerged to take their place alongside the financial elites elsewhere, and as the country’s middle class expands, vast numbers of people are being lifted out of poverty, and the country is producing world class multinational companies such as Wipro, Infosys, Tata and others.

However the country’s vast and often raw poverty remains, according to a new

Poverty has always seen South Asian societies being militarised, to keep social contradictions surfacing with a new challenge to the existing status quo, under check. Poverty is not accounted for in GDP and Per Capita Income growth, their evidence of economic growth

“multidimensional poverty index” developed at Oxford, and soon to be harnessed by the UN’s Human Development Report. This index numbers 410 million Indians in poverty, meaning there are more poor people in eight Indian states than in all 26 countries of sub-Saharan Africa.

To help these vast hundreds of millions escape from poverty, India will likely remain focused on boosting economic links with the Asia-Pacific region, as current forecasts and projections indicate that this part of the world will remain the most vibrant region in the global economy in the medium term.

Asean and Burma are an important aspect of this strategy. India is now part of the Asean Regional Forum, the East Asian Summit and the Asia-Europe Meeting. The free trade agreement it signed with Asean in 2009 has been described as the crowning glory of the “Look East” policy. Amitendu Palit, a visiting research fellow at the Institute of South Asian Studies (ISAS) at the National University of Singapore. said that the main success of Look East “is clearly economic.”

However the Free Trade Agreement is much more limited than the deal Asean signed with China, and India-Asean trade is growing from a low base, in any case. While the FTA is a milestone, it needs work, said Amitendu Palit. He told The Irrawaddy that “India needs to work with its Eastern neighbors for improving trade facilitation and enabling greater export of services.”

Going beyond economics, India has extensive defense dealings with Singapore, Australia and Japan and defense relationships with Malaysia, Indonesia and Vietnam. In terms of India’s dealings with Burma, the rise of China, strategic and defense planning and India’s need to develop investment and trade links all coalesce.

As China rises, the US is engaging more in the region, aligning behind Asean and allies such as South Korea where it can on issues like control of the South China Sea and on various military training exercises. India’s nuclear and strategic relationship with the US fits into this, with Washington perhaps hoping to build up India as a hedge against China’s rise, in an act of old-school balance-of-power politics. This has its limits, however, with the US also giving billions of dollars in aid to Pakistan, which India believes to be funding “Jihadists” in Kashmir and behind terror attacks on the Indian parliament in 2001 and more recently in Indian cities.

Given that China and Pakistan are long-standing allies, India naturally enough will seek its own arrangements elsewhere in Asia, and on its own terms, even if this means an amicable relationship with a Burmese regime that is allegedly-working with the same North Korea that helped Pakistan go nuclear over a decade ago.

The big picture is, that, despite India’s growth and dynamism, Chinese military spending is bigger, and has been for some time, meaning that India is falling farther behind year by year, with China set to launch its first aircraft carrier in coming years, significantly boosting its ability to project power into the Indian Ocean and beyond.

India therefore sees itself as needing to engage with Burma to counter China, economically and strategically, even if it appears that New Delhi is lagging, according to K. Yhome, an associate fellow at the Observer Research Foundation, a think-tank based in New Delhi.

China’s new port and pipeline facility on Burma’s west coast will not only allow it to pipe gas

In August 2000, Daewoo International signed a production sharing contract with the Myanmar Oil and Gas Enterprise (MOGE), a wholly owned subsidiary of the Burmese military government. In early 2004, Daewoo announced they had struck a "world class commercial scale gas deposit" in the A-1 block in Sittwe sea port area. A month later, Daewoo acquired the neighbouring A-3 block. A US firm, determined the available reserves at 5.4 - 9.1 trillion cubic feet (tfc). The sale of 9.1 tfc would be worth US$ 40.1 billion. Out of this amount, Burma's military regime would stand to gain US$ 24 billion over the 20-year contract, or US$ 1.2 billion per year.

from the Shwe field into China, but also involves Beijing’s building of a terminal to allow it to pipe oil and gas shipments from the Middle East and Africa into China, avoiding the need to send tankers through heavy traffic through the Straits of Malacca and the South China Sea, where US naval power is likely to be dominant for a long time to come.

Indian energy companies are investing in the Shwe field nonetheless, which is expected to bring almost US 1billion a year in additional revenues for the Burmese regime, once it comes on stream. Burma is a lynchpin for the Look East policy as it is the land bridge between India and Asean, with the two countries sharing a porous 1,640 km border across which rebel groups have crossed at will. Burma’s junta previously supported ethnic and leftist rebel militias in retaliation for India’s pro-democracy, pro- Aung San Suu Kyi stance up to 1993. This was ironic given that the Burmese junta had spent years fighting Communist militias inside Burma.

In New Delhi on Wednesday, Burmese junta chief Snr-Gen Than Shwe held talks with India’s Prime Minister Manmohan Singh, before they later signed agreements to combat the smuggling of arms, drugs and ammunition across their common frontier and co-operate in the fields of information, science and technology—where India and its formidable IT sector promises a significant advancement for IT infrastructure and capabilities in Burma.

At least five major militant groups from India’s Northeast, where numerous tribal and ethnic groups are fighting for greater autonomy or independence, have at one time or another had training camps in the dense jungles of Sagaing in Northern Burma, while ethnic militias in Burma have in turn used India’s remote North-East as a retreat and staging post into Burma.

As well as Indian support for his plan to coerce Burmese ethnic militias into joining the border guard force, Than Shwe will also, presumably, acquire much-craved international legitimization for the 2010 election, signing agreements with the world’s largest democracy almost simultaneous to US President Obama renewing American sanctions on the Burmese regime. Than Shwe’s four-day visit to India notably takes place just a few weeks after he hosted Chinese Premier Wen Jiabao, thereby reassuring New Delhi that it remains central to his thinking.

It is doubtful if India’s leaders were rattled by pro-democracy protests marking Than Shwe’s visit, or by the US’s attempt at exhorting New Delhi to put more pressure on Than Shwe to ensure a free and fair election or work toward national reconciliation in Burma.

Growing mutual links—in the context of India’s growing regional clout, needed to improve regional trade links and counter China—mean that, as K. Yhome told The Irrawaddy, “It is unlikely both countries would want to rock their hard-earned relationship in the near future.”

By Simon Roughneen

Thursday, July 29, 2010

Bangkok

For original post – http://www.irrawaddy.org/article.php?art_id=19084&page=1

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