Dhruv C. Katoch:
We are living in highly volatile times. South Asia is not immune to the effects of global power politics, and for various reasons, the region is troubled by internal discord—political, economic, and security-related. In this podcast, we will discuss some issues concerning India’s neighbours. We are honoured to have Ambassador Shyam Saran to explore these topics. The Ambassador is one of the most respected voices on global and regional affairs. He has served as India’s Foreign Secretary and is also the recipient of the Padma Bhushan. Welcome, Ambassador. Let me begin with Bangladesh, with whom we have maintained very friendly relations, but those ties are now starting to fray. What are the main factors shaping Bangladesh’s current political and socio-economic situation, and how might these changes affect its internal stability as well as India’s security, trade, and the broader regional dynamics in South Asia?
Shyam Saran:
Thank you very much for inviting me to speak with you on topics that are very important for India’s foreign policy. So, concerning Bangladesh, as you said, we had an excellent run in a sense with Sheikh Hasina being in power. People sometimes complain that we put all our eggs in one basket, and we should have reached out to other political forces in Bangladesh. I think they neglect the fact that some very major positive developments took place during the past 15 years or so. We resolved the border issue, which had been pending for a very long time. We managed to get agreement, not 100%, but substantially, on the sharing of river waters. We established very strong cross-border connections with Bangladesh, including the revival of river transportation, which was once the lifeline for the northeast of the subcontinent. We became a major power source for Bangladesh’s industry. Without the supply of electric power from India to Bangladesh, the textile industry in Bangladesh would not have progressed as much as it did. We became a significant market for Bangladesh’s products, including textiles, which are their major export. In the security sphere, the sanctuaries that many of the insurgent groups used to have in Bangladesh came to an end. So, for anybody to say that we did not play this game right, I disagree with that. When an opportunity arose, we made full use of it. And even if the political pendulum swings to one side and we have to cope with the consequences of that, the pendulum can also swing to the other side, and we should be ready for that change. So, we should not get too panicky about the situation that has emerged. We should try to deal with it as best as we can.
One thing to consider is that, when examining the situation in Bangladesh, you must not forget its history. Remember that even when Bangladesh became an independent country, there was no complete political consensus, even within Bangladesh, regarding this separation from Pakistan. Nearly one-third of the population did not support Bangladesh’s separation from Pakistan. For example, the Jamaat, an influential force, although it doesn’t win elections, has never reconciled itself to the separation of Bangladesh. Several other people may be more inclined, as far as the attachment to Islam is concerned, to believe that being an Islamic country is more important than being a Bengali country. So, we have to be mindful of the fact that various forces are at work inside Bangladesh.
Regarding the domestic situation, we can do very little to influence those dynamics. So, what is the best course of action? The position that the Government of India initially took was communicated during the visit of our Foreign Secretary to Bangladesh. What message did he convey to the chief advisor? He stated that, despite any political relationship difficulties we may be facing, India will continue with the broad spectrum of cooperation we have always maintained with Bangladesh. This includes the supply of power to Bangladesh, cooperation on river waters, and providing access to our markets, including transit arrangements, which are very important for Bangladesh. We do not intend to interrupt these efforts, and we hope that, despite any political issues, Bangladesh will also recognise the value in maintaining this cooperation.
This is where political issues in Bangladesh have begun impacting some of our cross-border connections. How should we respond? I believe we should remain calm and continue to be prepared to cooperate whenever the other side is willing. However, when it comes to defending our interests, particularly our security concerns, we must be cautious. We need to be aware of where our interests are being affected, and nobody should doubt that if our interests are harmed in any way, we will take appropriate remedial action. Beyond that, we remain open to resuming cooperation with Bangladesh when the situation improves. We hold goodwill for the people of Bangladesh, as we have no issues with them. That should be our approach during this challenging time.
Dhruv C. Katoch:
Just a quick follow-up question: the elections are scheduled for February. First, do you think they will happen? Is it likely that they will (or should they) result in a democratic establishment? I mean, will they genuinely follow the democratic process, or will it simply be the Jamaat taking over?
Shyam Saran:
Well, the fact that they have said the Awami League cannot participate in these elections suggests that it may not be as democratic as one would hope, because the truth is that the Awami League is, in a sense, being marginalised within the political system. The fact that there is a concerted effort to try to delegitimise the Awami League shouldn’t be overlooked. Even today, 30% of the population still supports them. So, if you’re claiming that the preferences of at least 30% of your population cannot be considered, then how can it be truly democratic? We must take that into account. Incidentally, the BNP, which has been the main opposition party, also believes that a competitive political environment is necessary. They are not opposed to the Awami League participating in the election, or at least that’s the impression I have received. As for Jamaat, I am uncertain whether they will achieve significant gains in the polls, given that, as I mentioned, despite their influence, they have never secured a substantial number of seats in the Bangladesh Parliament.
We have observed that, whether or not they succeed in elections, they still become an influential constituency. Now, for the Jamaat, India is a warning sign because they blame us for the separation of Bangladesh from Pakistan. They also blame us for what they see as secularisation of the polity in Bangladesh. Therefore, as we see today, the Jamaat has gained a significant level of influence. If this situation continues and becomes, in a sense, institutionalised, then that is not very good news for India. However, we should also not underestimate the importance of the economic connection between India and Bangladesh. I am hopeful that many of the interdependencies established over the last 15 years or so will remain strong enough to help us through this period of some turmoil.
Dhruv C. Katoch:
Now I will move on to another country, our neighbour Nepal. Our relations with Nepal have traditionally been very close, especially considering the nature of family ties we have shared; there is a commonality of religion, culture, history, civilisation, and complete compatibility. However, we have tensions with them. There is a historical reason for this. Currently, internal problems within Nepal tend to influence the situation. These issues often impact the India-Nepal relationship. How do you see this playing out in the present climate in Nepal, where they face their own political and economic challenges, and China is also emerging as a significant player?
Shyam Saran:
I have been an ambassador to Nepal, and I believe I have some familiarity with the country, though perhaps not a great deal, but enough to know that the most important asset we possess regarding Nepal, which also applies to several neighbouring countries, is the people-to-people relations. Very strong people-to-people relations. You mentioned that we have these cultural links and familial ties, and by the way, the familial links are not only with the Madhesis and the states of Bihar and UP. There are also very strong familial connections with the so-called Pahadi population living in the hills. People tend to think it is only the Madhesis, but it is not. These are also very strong connections. Therefore, the challenge for India has always been how to leverage this very strong people-to-people and cultural affinity between the two countries to influence the state-to-state relationship positively. Because if there is a problem, it exists only there. It is not with the people; it is the political path.
One point I must emphasise is based on my own experience: you have to recognise that you are a very large country surrounded by smaller neighbours. It should come as no surprise that these neighbours may feel somewhat anxious about the possibility of being overshadowed by the larger power, which is natural. We often feel similarly when faced with a superpower, and we try to balance that influence. Therefore, we should not be overly sensitive about it. We need to understand what that implies, which is how we can develop a diplomacy of reassurance with our neighbours. This is especially important for a country like Nepal. The key is to show them that we genuinely wish them well and are willing to be partners in their economic and social development because that truly matters to them.
Now, two points regarding how we approach this. One of the challenges we face is the presence of various constituencies in Nepal. If you start saying ‘this is my friend’ or ‘this is not my friend’, it creates a problem. We must avoid being perceived as taking sides in what is essentially a domestic political dynamic. This is very important. India should not be seen as part of that. If we are not involved in that, we are in a much stronger position. The second point is that you should not view your relationship with Nepal solely through the lens of China. If every action in Nepal is framed by what you believe China is doing, you will encounter difficulties. Trying to match China in the way it exerts largesse, which I see as a kind of game, is not advisable. Why? Because you should leverage your areas of strength, rather than attempt to mirror Chinese strengths. This requires careful consideration. For example, consider one area — proximity. China faces more difficulties accessing Nepal than India. Isn’t that correct? Why is it that, despite years of efforts, the Chinese have been carving through mountains and building roads, or even talking about railways? Why, given our geographical advantage, have we not been able to achieve similar progress?
During my time as an ambassador in Nepal, I noticed that travelling from Nepal into India by road could give the impression that one was coming from a relatively developed country to a less developed one, given the poor state of our roads. Now, there has been a significant improvement in that regard. There has also been progress in attempting to revive, for example, some of the rail links that existed before. We have finally started working on a hydroelectric power cooperation between the two countries. These are positive developments, but with respect to Nepal, as with some other neighbouring countries, our overall approach should be to make India the engine of growth for the entire region. You can achieve this because the very asymmetry of power you hold over your smaller neighbours—which, in one sense, is a disadvantage because everyone fears you—could also be turned into an asset, allowing India to become the driving force of regional growth.
Supposing you open your market to everything that your neighbours can produce and sell to you, this will still be a small fraction of your market. Why not become the transit country of choice? Specifically, for Nepal, why insist that only this port can be used; no, only this highway is permissible. Tell them that you will give them national treatment, allowing them to use any channel for exporting or importing that they prefer, whichever is most convenient. You should position yourself as Nepal’s partner of choice. There are so many advantages to truly cooperating with India that I see no reason to look elsewhere. For example, consider the impact of just one project I mentioned when I was an Ambassador — the Barauni-Amlekhganj pipeline. Previously, there used to be a lot of pilferage when tankers delivered supplies, and accidents were common. Now, there is a completely safe supply of gas and petroleum to Nepal. These are the kinds of deep interdependencies that benefit both Nepal and us. That should be the approach we adopt. Sadly, there still exists a mindset that sees something hostile outside our borders. You need to change your mindset. When you do, many more possibilities open up.
Dhruv C. Katoch:
That’s been very well brought out. Let me get down to the next contentious issue. Given Myanmar’s ongoing civil conflict since the 2021 military takeover, and its implications for India’s Act East Policy as well as security in the North East, how do you assess the evolving internal power dynamics in Myanmar, and what potential consequences do you foresee for India amid increasing US involvement in both Myanmar and Bangladesh?
Shyam Saran:
This situation will likely persist for some time because neither side is in a position to overcome the other completely. Furthermore, there are powerful external forces involved, notably China, but not only China; for instance, Thailand is also engaged in what is happening, though China is especially prominent. Therefore, part of the issue for us is that there is little we can do to influence the course of the civil war there. Whether you like it or not, you are in a somewhat defensive position.
So, there is sometimes wisdom in recognising that you don’t have much leverage in this area. What can you do? I think what is crucial for India is that we share a 1400 km-long border with Myanmar. Some of our most sensitive Northeastern states border this region. We have experienced a history of insurgency and other issues, so ensuring the safety and security of this frontier is a top priority. Our focus should be on trying to protect ourselves, albeit not entirely, from the events that occur on the other side, while acknowledging that our influence on them is limited. Problems will arise because you have the Chins on the other side and the Mizos on this side, who share very strong inter-ethnic ties. Likewise, the Nagas are on both sides of the border. Ethnic spillovers are an inherent reality. Over the years, we have allowed these cross-border linkages to persist because they are vital for the livelihoods of those living near the border. Therefore, unless it directly impacts your security, there is no need to overreact or interfere too much with these interactions.
But what is truly concerning for us is whether this situation is creating the possibility of greater Chinese influence in a neighbouring country than would otherwise occur. That is a risk we need to be aware of. Even when I was ambassador in Myanmar, Chinese influence was growing very rapidly. Part of the reason we reached out to the military government, and why we tried to engage with them more than before, was because, if you remember, we strongly supported Aung San Suu Kyi and the NLD. While we did not cease supporting them, we also engaged with the generals. When I reached out to the generals, I found they were quite open and a little concerned about their over-dependency on China. They were therefore willing to increase cooperation with us. There are indeed opportunities here. Maintaining some of the links we have with the military government makes sense because they remain the most organised and powerful force in Myanmar. Completely cutting off engagement would not be sensible. The period of turmoil and uncertainty will likely continue, but as long as we focus on securing our very sensitive borders and stay engaged with key players on the other side, we will generally remain in a strong position.
Dhruv C. Katoch:
Now, as a side note on Myanmar, we sent one of our distinguished fellows there, and she conducted significant research, and everything you have mentioned has been confirmed by her. Now I will turn to one of the smaller island nations. Prime Minister Modi’s visit to the Maldives last month, during which six MoUs were signed, occurred after a period of heightened tensions marked by anti-India sentiment in the Maldives. What factors do you believe contributed to this change, and what impact might the visit have on the future course of India–Maldives relations?
Shyam Saran:
To the extent that countries are mindful of their larger interests and wish to pursue those interests, I see no reason why this more positive trend in our relationship cannot continue. I believe it will. Why do I say that? There is indeed a very strong constituency in the Maldives, similar to what we see in some other neighbouring countries, who believe their interests are better served by having a closer relationship with China, opening up to Chinese investment, and taking large credits or loans from China to develop their infrastructure. How can we object to that? If a country, whether a neighbouring one or not, cannot match China, and it turns to China for infrastructure development, there is no way India can object to that.
But observe what has happened. I am familiar with the Maldives because I had a very close relationship with President Nasheed. We were working during his presidency to foster much more substantial economic cooperation between the two countries. Unfortunately, due to the coup, we could not see this through, but I am aware of the different opinions that exist. A strong group in the Maldives believes that their interests are best served by a closer relationship with China, mainly because China can assist in their infrastructure development, which no other country can. Yes, that’s true. Additionally, before COVID, China had become the primary source of tourism for the Maldives, which generated significant foreign exchange for the country. There are many reasons why the Maldives thought that engaging more with China would be advantageous, and in pursuing that, perhaps downgrading the relationship with India might bring even greater benefits.
But what has happened? I will give you two examples. First, the bridge between the main island and the airport island. Major infrastructure projects, which are highly beneficial to the Maldives, cost a lot of money and were financed through credit. What is the situation now? The toll for crossing the bridge is so high that nobody uses it except tourists. The local people still prefer the ferry because it is much cheaper. As a result, the toll revenue is insufficient to repay the loan and interest. Clearly, infrastructure development is vital for any country, but it’s also essential that such projects generate income to cover their costs. Merely building infrastructure is pointless if it cannot produce income. That’s what happened with that project. Similarly, there was a large-scale low-cost housing project in the Maldives. Now that housing has become so expensive that no low-income person can afford it. Most of it remains vacant. I believe that in both the Maldives and earlier in Sri Lanka, they realised that while infrastructure development, especially with Chinese assistance, sounds impressive, it can sometimes become a heavier financial burden.
This is the reality that the new government eventually faced: instead of being a support for the Maldives’ development, it became a millstone around their neck. While 5-star hotels can obtain their supplies from Singapore and Dubai, what about the ordinary people of the Maldives? All essential supplies come from India at prices that we Indians pay. Remove that, and you’ll see what happens to the cost of living there. So, I believe we also played our cards well. I commend the government for not taking the bait. They stayed calm and did not respond with the same level of abuse, which also played a significant role. The kind of diplomacy practised is crucial. This approach allowed them, without losing Face, to return to a good relationship with India. Therefore, we are in a good position there, and by the way, we are also in a good place in Sri Lanka.
Dhruv C. Katoch:
So, in Sri Lanka, the political landscape shifted last year, and they now have a left-front government. Naturally, there was some concern about what might happen. But we have seen that nothing significant has occurred. Even with the left-front government, the relationship remains very good, and I think that’s a healthy sign. What has contributed to that? Is it the same as what happened in the Maldives?
Shyam Saran:
Just one thing has contributed, and that is when Sri Lanka was in a deep, deep crisis, we helped them out. India was the only country that provided significant assistance, helping the ordinary people of Sri Lanka deal with that crisis. We supplied them with rice, fuel, and fertilisers. Regarding their financial issues, we provided them with a swap line. So, if you look at how we were able, at a time of deep crisis, to support Sri Lanka, we were ready to reschedule our loans so they could obtain an IMF loan. The Chinese would not provide that letter until much later. What is very important is that in public perception in Sri Lanka, they suddenly realised, look, when we were struggling, only one country came and helped us. That has made an enormous difference, and I think the new government that has come in is aware of the fact that there is a shift in public perception. Therefore, maintaining a strong relationship with India is beneficial in terms of the public there.
Dhruv C. Katoch:
Right. Ambassador, I’ll move on to my final two questions now. I don’t want to cover the entire scope of the India-Pakistan relationship, as I don’t see much progress occurring, especially after Pahalgam and Operation Sindoor. However, I would like to address the internal situation within Pakistan, which is characterised by three primary challenges: economic, internal security, and political. In your view, do you think there will ever be, at least in the foreseeable future, a situation where politics can maintain control over the military, or is the military destined to rule, at least for the next few decades, if nothing else?
Shyam Saran:
I believe, as uncomfortable as it may be, that the only organised disciplined force in Pakistan is the army. Whenever there has been a crisis or significant unrest in the country, the fallback has invariably been the armed forces. That remains unchanged, by the way. So, if you are considering a future situation where the army is no longer influential, I am afraid that isn’t going to happen.
Also, be aware that the only time we have managed, relatively speaking, to improve relations between India and Pakistan has been when the army has been in control. The army there believes that improving ties with India is in its interest. So, this is the reality. Now, the third point we often forget is that the desire for parity with India is deeply ingrained in Pakistan. I wrote in one of my op-eds: “If you do five tests, I will do six.” There is always this mindset that I have to be one step ahead, to prove that I am superior to you. The belief that one Pakistani soldier is equal to ten Indian soldiers reflects this psychology. You may laugh at it, but it is very deeply rooted. Therefore, you must address this kind of mentality.
Having said that, the one thing that my view differs slightly from what we are trying to do at the moment is that I have always believed it is important, even when very difficult, to maintain some engagement and dialogue with Pakistan. Because, at the very least, it provides insight into their thinking. It offers a warning signal if things are heading in the wrong direction. Currently, it feels like a black box, and that is not ideal. As you mentioned, many internal developments and internal dynamics are happening. Part of our problem is how much knowledge India currently has about what is happening inside Pakistan. What is its economy doing? How vulnerable is this economy? What are its strengths? What are the sources of resilience that, whether you like it or not, still seem to exist?
So, unless you understand your adversary and how he thinks, it’s very challenging to develop a counterstrategy. My view is that you should safeguard your interests with respect. Keep your powder dry, but engagement is necessary. Even during the worst times of the Cold War, remember that the Soviet Union and the US still communicated. As a professional diplomat, I would say this is very important. But today, we are in a difficult situation, primarily because of recent events involving the US. This is a new, more dangerous situation. Why do I say it’s dangerous? Look at the statement made by the Army chief in Florida. He might think this is a good time to provoke India, believing he is protected by both China and the US. So, we are in a vulnerable position, and I hope we are aware that such thoughts might be on his mind.
Dhruv C. Katoch:
Ambassador, I have left China for the last question for this podcast. China today faces a range of internal challenges, including an economic slowdown, demographic pressures, and tightening political control. How do you think these domestic concerns are shaping Beijing’s approach to its relations with India, particularly in the context of ongoing border tensions and regional competition?
Shyam Saran:
You are quite right that China faces serious internal issues. One is the ongoing effect of the property crisis. Remember that 30% of the Chinese economy and much of the growth over the past 40 years was driven by real estate. When that has collapsed, everything related to the property sector has also fallen into disarray: demand for glass, aluminium for windows, tiles for floors—all have declined. The second problem is that bank deposit rates have been so low that the only two ways to generate some income are either the stock market or real estate. Since real estate was steadily increasing, it was the best savings option available. But now, with the collapse of the property sector, that savings source has also disappeared. As a result, demand remains weak despite all efforts, and consumption has remained nearly flat. These are serious problems, and the trade war will only make them worse.
But from a political perspective, if Xi Jinping has been under pressure, what he is telling his people is, ‘See, if you don’t have a strong leader here, how can you deal with this man there? That very uncertainty actually strengthens his position. When I was recently in Beijing for a conference, I asked my Chinese friends how it is that this doesn’t seem to be affecting the country’s politics. They replied that, in fact, his position has been strengthened by the ongoing developments. Regarding the external picture, the Chinese have, whether we like it or not, managed to claim: ‘Compared to that, we have stability; compared to the unpredictability there, we are a stable country; look at how they are reordering the entire trading system. We believe in free trade and a rules-based order.’ They are presenting themselves as everything the US is not, and do not underestimate the appeal this holds for many countries.
We must remember that the China challenge still exists for India. We might be able to make some tactical adjustments, and I believe you know, the Prime Minister is going to the SCO Summit. It is beneficial that he is attending to reestablish a relationship at the leadership level, or that we maintain a good relationship with Russia, which is also positive. However, we should also consider how we can diversify our relationships more than we have so far. My impression is that we have placed too much focus on our relationship with the West, and we have overlooked the importance of having a strong backing from developing countries. It is very important to secure a seat at the high table, but never by neglecting these connections, because ultimately, this is more significant for you. Therefore, if any crisis we face allows us to make a slight shift in how we engage with the world, I believe it would benefit us greatly.
Brief Bios:
Amb Shyam Saran is a former Foreign Secretary of India and has served as Chairman of India’s National Security Advisory Board. Amb. Saran is a career diplomat, having joined the Indian Foreign Service in 1970. He has served in several capitals of the world, including Beijing, Tokyo, and Geneva. He has been India’s Ambassador to Myanmar, Indonesia, and Nepal, and High Commissioner to Mauritius. In the Ministry of External Affairs, New Delhi, he headed the Economic Division and the Multilateral Economic Division and also headed the East Asia Division which handles relations with China and Japan. As a Joint Secretary in the Prime Minister’s Office in 1991/92, he advised the Prime Minister on foreign policy, nuclear and defence–related issues. After a career spanning 34 years in the Indian Foreign Service, he was appointed India’s Foreign Secretary in 2004 and held that position until his retirement from service in September 2006. Subsequent to his retirement, Saran was appointed Prime Minister’s Special Envoy for Indo–US civil nuclear issues and later as Special Envoy and Chief Negotiator on Climate Change. During his last two assignments, Ambassador Saran served as the Prime Minister’s personal representative, or “Sherpa”, at the Gleneagles and St Petersburg G8+G5 summits, and was present at the Toyako and L’Aquila Summits as an advisor on Climate Change issues. He also attended the Pittsburg G20 summit as a member of the Indian delegation. In 2011 Saran was awarded the Padma Bhushan by the President of India for his contribution to Civil Service. The Padma Bhushan is the third highest national award in the country. He holds a postgraduate degree in Economics. He speaks Hindi, English, and Chinese, and is conversant in French.
Maj Gen Dhruv C. Katoch is Director, India Foundation and Editor, India Foundation Journal.
