~ By : Gautam Mukhipadhyaya

India-Myanmar relations are poised to take-off, cross existing frontiers and attain new dimensions. We are on the threshold of a new Myanmar; Prime Minister Modi’s economic policies and energetic diplomacy promise to place the Indian economy into a qualitatively high growth path and India itself in the forefront of the international community; and with structural changes under way in the Arab world, Europe, not to forget challenges in the US and China, the world itself is in the throes of uncertainty and (possible) metamorphosis.

Together, these developments throw, as the cliché goes, both challenges and opportunities as some countries and regions face shocks and prospects of relative decline and others, emerge. How could India and Myanmar avoid the pitfalls of the first and capitalise on the possibilities of the second? Could India and Myanmar forge a strategic economic partnership in which we could be a major partner in new Myanmar’s democratic transition and sustainable economic development, and Myanmar could provide India an economic base to expand its presence in the nascent ASEAN Economic Community and the Greater Mekong sub-region up to the South China Sea and the South Pacific? Could India and Myanmar together with the other members of BIMSTEC, build a truly prosperous Bay of Bengal Community linking South and South East Asia?

While it is tempting to touch on the whole spectrum of the agenda of this Conference, I would concentrate in some detail on one strategic initiative that according to me deserves special attention: our economic relationship, in particular the role that Indian investment in Myanmar could play in promoting India-Myanmar relations, contributing to Myanmar’s economic development after nearly 50 years of self-imposed and forced isolation, and expanding India’s economic presence and political profile in South East Asia. This emphasis would mean the relative negligence of political, security, cultural and people to people initiatives.

It is commonplace at present to talk about India’s ‘Look’ and ‘Act East’ policy, and the North East of India as a gateway for it, but so far, discussions and initiatives in this regard have taken place largely in terms of trade and connectivity. The idea of Indian investment, especially private sector investment in Myanmar, has not really entered into India’s vocabulary as a separate category that requires a conscious policy, strategy and attention at the political and industry level.

Indeed, the rhetoric of ‘Act East’, ‘gateway’, ‘trade and connectivity’, etc. has tended to be framed in terms of an outlet for and development of the North East, and access to the markets of the ASEAN and South East Asia, with Myanmar implicitly as a ‘transit’ country. Though a bit of a simplification, this tends to overlook the potential of the Myanmar economy, or of its value to us for our economy, or of Indian investment in Myanmar as a ‘base’ and or ‘spring board’ for India towards the South China Sea and South Pacific. This is not a one-sided proposition and would benefit both sides.

This means that in the process a huge opportunity is missed that others are already cashing in on. In fact, Japan has already done that with Thailand in a previous generation and reaping the rewards in terms of market entry into south East Asia, and is now doing that in Myanmar. Similarly, Thailand has been aggressively promoting its products in Myanmar and pushing westwards through land and, via the planned SEZ in Dawei, the sea.

China’s investments have been mostly extractive, but even they are moving towards more strategic investments in oil and gas pipelines, a deep sea port, and a Special Economic Zone Kyaukphyu, and if they could help it, road and rail connectivity from Yunnan to Kyaukphyu, both as an outlet for Yunnan and access to the Bay of Bengal as part of its OBOR strategy. This obviously has strategic implications for India, which too have not been adequately realised.

Admittedly, all three have had a head start over us. But why has India, which has had the deepest cultural links of all three through history, and the closest administrative, trade, connectivity, migration and people-to-people ties for 150 years through British rule and 15 years of the post-independence until the 1960s, not realised the value of Myanmar as an investment destination?

How is it that despite the fact that India and Myanmar are cultural and geographical neighbours that share 1,600 kms of land boundary and a comparable maritime boundary in the Bay of Bengal and Andaman Sea, both countries do not think of themselves as neighbours psychologically in the same way as we think of Bangladesh or Nepal, or Pakistan, Bhutan, Sri Lanka, Maldives, Afghanistan, or even Singapore, Thailand, Mauritius or Malaysia, further away?

Similarly, in 50 years, Myanmar, a country that once tilted culturally towards India, has turned its face definitively towards the east; and now also looks to the West, ‘overlooking’ India as it were. We are neighbours, but practically strangers. Despite a huge Indian origin diaspora in Myanmar, Myanmar’s once large post-1960s population of Indian returnees, and a Myanmar exile population in India during the period of military rule, we hardly know each other. We hardly know our diaspora in Myanmar either. All that most Indians know about Myanmar is the saga of Daw Aung San Suu Kyi.

Is severance from British yoke and 50 years of reclusive and sanctioned military rule enough to cause such mental amnesia on both sides?

Further, why we do not as yet think of Myanmar as a land of economic opportunities, which is undoubtedly is? This is even more puzzling if we look around us.

It is obvious that Myanmar is our most well-endowed neighbour. With an area of 653,000 sq kms, it is second in size only to Pakistan (and about the same size as Afghanistan), but with a population density of only 82 per sq km, [higher than only Bhutan (20) and Afghanistan (48) in South Asia], and less populated than Bangladesh or Pakistan, by a factor of more than three.

It is strategically located between the huge markets and geo-politically important centres of India, China and the ASEAN. It has perhaps those most valuable of natural resources, plenty of land, water and sun. It has fertile agricultural land and potential, and rich forests. It has oil & gas, precious stones like rubies and jade, precious metals like gold, and copper and lesser metals in abundance.

It is poor but not as poor as most of populous South Asia (with a GDP per capita of US$ 1,228). It is a country with high social capital and degree of equality, and a relatively educated, culturally disciplined, and easily trainable work force. It is still a low cost economy. It has almost everything an investor could want and need.

Not that this was unknown to us. In our ancient history Myanmar was the original ‘swarnabhumi’ or golden land, ’Brahmadesh’, the land of Brahma. Just 100 years back, it was seen as a land of opportunity for hundreds of thousands of migrants from practically all parts of India. In his highly readable book, ‘the River of Lost Footsteps’, Thant Myint U notes that at one time between the wars, Myanmar received, under British rule, as many or more migrants than New York or the United States, almost entirely from India! Downtown Rangoon was practically an Indian city (and still bears the character of one).

Until Gen. Ne Win’s military coup in the 1960s, it was the Bangkok of today, a crucial transit point in the air routes to the east and west (and even to the Andaman Islands). Rangoon University was arguably the foremost university in South East Asia. Myanmar was in the forefront of the region, not part of the CLMV (Cambodia, Lao PDR, Myanmar, Vietnam), the least developed countries of the ASEAN. It produced civil servants of the class of U Thant.

It is my considered view that with the reforms unleashed by President U Thein Sein’s government, the voice and power of the people especially its talented youth liberated by the remarkable November 2015 elections which has brought the NLD to government, and its current growth rate of around 8% (albeit from a low base), Myanmar could easily become the new tiger economy on the block in 5-10 years, not just any tiger economy, but a large tiger economy whose roar could be heard well beyond the region. All the more reason why India should take it seriously.

It is true that there are also challenges: of peace, reconciliation, a not yet fully democratic constitution, a lack of, or poorly developed civil institutions; issues of land ownership, records, titles and forced or disputed acquisitions; need for a modern and enabling legal and regulatory environment; political stability and risk; and political, environmental and social opposition to some projects and investments. Not all is well between the elected government and the military. The constitution is disputed. The new government lacks administrative experience, and is still trying to craft its polices for peace and development.

But these are all being addressed. Most of the all, the leadership is rational and enlightened; highly educated expatriates are returning, the young generation keen to catch up with the world, and the public increasingly involved in decision-making. Issues are being debated. It is a thoughtful process.

It is fortunate in that between India and Myanmar, there are really no contentious political issues, and the few areas that require attention are not intractable and could be addressed reasonably. India also enjoys cordial, if not necessarily close relations with virtually all political forces in Myanmar. India should actively support and play a constructive role in Myanmar’s democratic transition, peace process, and sustainable economic growth and development.

Not that the Government of India has been inactive. In fact, successive governments have followed a very thoughtful policy on Myanmar since independence but particularly since the challenge posed by Gen. Ne Win’s coup. They have, in different phases covered political, security, trade, connectivity and development initiatives, but not the idea of Indian investment in Myanmar.

India’s initiatives in the areas of connectivity and development are particularly impressive. Not many know or are aware, that the total value of the Government of India’s development commitment to Myanmar totals nearly US$ 2 bn, US$ 1.2 bn on connectivity, capacity-building, social infrastructure and border area development projects, and another nearly USS$ 750 million on soft lines of credit for physical infrastructure such as power transmission lines, roads, irrigation, telecommunications, industry and rail transport according to priorities set by the Government of Myanmar for projects that it often cannot find financing for elsewhere.

This compares favourably with the most generous donors. To the best of my knowledge, no other country is fully funding and executing physical connectivity projects of the scale of the Kaladan project and the Tamu-Kalay-Kalewa-Yargyi roads and bridges that are part of the trilateral highway; nor mentoring high value, state of the art, capacity building projects like the Myanmar Institute of Information Technology (MII) and the Advanced Centre for Agricultural Research and Extension (ACARE) as India is, not even major donors like Japan, the European Union or even China which as a direct interest in connectivity. Not many even in Myanmar seem fully aware of this.

But while the Indian government is doing a lot in the area of development, our development partnership needs some tweaking and diversification. Most of our projects are infrastructure oriented, capital intensive, and once completed, be hands off. The human dimension has been limited. This is one reason why its public impact has been low compared to many western, Japanese and Korean projects.

We need to broaden the engagement to target first, the grassroots, through initiatives in agricultural extension, livestock, fisheries, decentralised, non-conventional energy, rural agro-based and other industries, garments and light manufacturing etc. where the large mass of Myanmar are concentrated and form the base of the economy; the intermediate strata through school, college, vocational and English language education that forms the catchment area for stronger social and cultural relations, through arrangements for the education of Myanmar students in Myanmar and India; and the business and intellectual elite through higher education, academic, university, professional and civil society linkages in the sciences, management, IT, accounting, law, development and all the other disciplines necessary for a modern economy.

We also need to decrease our dependence on large government executed or government-to-government projects, and diversify our development partnership to include proven NGOs, cooperatives, SMEs, and even United Nations development organisations on a case to case basis. We have so far been wary of involving these two categories that other, mainly western countries use to great effect, but both these categories have much greater capacity to get to the grassroots than government organisations and entities.

More importantly, we have been lagging behind the rest of Asia (and even Europe and the US) in the commercial economic arena. As you drive in from the spanking new airport into a booming Yangon, amidst the numerous Japanese, Chinese, Thai, Singaporean, Korean, Taiwanese, European, Gulf and even Vietnamese brands advertised, there is not a single Indian brand (except to a very small extent, Tatas) to be seen.

In trade, we have slipped from third place in 2011 to 5th place now with a bilateral trade of approx. US$ 2 bn, not because our trade has gone down, but because others, notably Singapore ($5 bn) and Japan (2.3 bn) have overtaken us. This is not at all commensurate with our proximity, historical ties, and size of our economy and market, and compares very unfavourably with Myanmar’s principal land and economic neighbours, China and Thailand. China’s official trade stands at over US$ 10 bn; Thailand’s at about US$ 6 bn; but if we include the high volumes of unofficial trade, would be considerably higher. We have not been able to achieve our trade target of US$ 3 bn for 2015 set in 2011. Yet others, like Korea and Malaysia, are catching up.

Tellingly, with much of the trade being Myanmar exports of primary agricultural and forest products, and Indian exports, except pharmaceuticals, mainly engineering goods, Indian brands and consumer goods which give visibility, are generally absent.

But those figures are not as negative as they look if we consider that we were Myanmar’s third largest trade partner until 2011 through 40 years of a political and economic hiatus in our relationship caused by nationalisation, suppression of democracy, isolation and sanctions, when, for various reasons, China and Thailand became much more plugged in to the Myanmar economy. The core of that trade has been Myanmar exports of beans and pulses and timber.

The importance of this trade for both sides can be appreciated if we realise that while exports from 1.8 MT of rice, easily Myanmar’s most important food crop, in 2014-15 (the highest in 50 years, 50% of which is sold to China), earned Myanmar US$ 644 million, exports of beans & pulses (approx. of 1.54 million metric tons), 75-80% to India, accounts for over US$ 1 bn in export earnings for Myanmar. India is also Myanmar’s third largest export market overall, and Myanmar, India’s second largest source of beans and pulses, a politically sensitive commodity. The beans and pulses export of over 1 million tonnes to India is therefore the single largest export item of Myanmar to any country.

The fundamentals of this trade relationship are therefore strong, and grown steadily through thick and thin regardless of the political weather. It therefore represents the base line in our trade relationship. In fact, given the political and economic openings of the last few years, the complementarity of our two economies, India’s current rate of growth, and the untapped potential of Indian exports and Indian investments in Myanmar, India-Myanmar trade should grow faster than those of Myanmar’s other neighbours whose trade is more saturated.

Indian industrial goods, pharmaceutical products and IT services have started entering the Myanmar market and enjoy a good reputation for quality, but given the head start that our competitors have, cost and price considerations, and the logistical handicaps we will continue to face, it is unlikely that we will be able to catch up with either of them or compete with several other players, through trade alone.

In my view the only way this can be done is if we build on the comparative advantages of Myanmar already outlined, and the market access to the AEC, India, ASEAN FTA partners and the EU that Myanmar can provide to actually also produce and manufacture in Myanmar for these markets. Taking China as an example, given Chinese pricing, we cannot compete with China in Myanmar by exports from India alone. But we can (compete with them) even beyond Myanmar (in the ASEAN and even China itself), if we combine lower factor costs of production in the CMLV countries with Indian technology and management and build a brand image in the region around quality, cost and reliability that India is already beginning to enjoy. I believe that India could also compete with Japan on the cost-quality index on many products if these were produced locally.

In so doing, our companies would also raise domestic industrial and service capabilities, create new employment opportunities, and add value to local products (that Myanmar is seeking from foreign investors), and create a symbiotic and productive (rather than extractive) economic relationship between India and Myanmar that would benefit both.

So far however, private sector Indian investment in Myanmar has been disappointing. Today, in contrast to the Government’s development investment commitment of nearly US$ 2 bn, India ranks only 9th in FDI, amounting to approx. US$ 730 million, with public sector oil and gas PSUs accounting for over US$ 500 million and the private sector accounting for only about US$ 200 million.

By way of comparison, approved Chinese investments stand at over US$ 18 bn or over 28% of all FDI (a major part of it in extractive industries such as mining and hydro-power); Singapore, US$ 13 bn (20.5%), Thailand, US$ 10 bn (16.5%), Hong Kong, US$ 7.35% (11.5%), Korea,  US$ 3.5 bn (5.5%), and Malaysia, nearly 2 bn (3%). 2 European countries stand in the top 10, UK with over US$ 4 bn (6.4%), and The Netherlands, nearly US$ 1 bn (1.5%). Vietnam and late comer, Japan stand at 10th and 11th.

The are several reasons for this: Myanmar’s self-imposed isolation and externally imposed sanctions; our mental amnesia towards each other as neighbours, lack of connectivity, especially air connectivity that is crucial as our trade becomes more service oriented; lack of banking channels; and perhaps also a risk averse Indian industry. These are gradually being addressed, but will need some gestation time.

But the most important reasons are two others. First, as has already been pointed out, Myanmar falls in a cognitive and information blind spot for Indian industry. How many Indian investors think of Myanmar as a neighbour, and a resource rich neighbour at that? Or appreciate the strategic economic value of Myanmar for our ‘Act East’ policy? Or the importance of Mandalay as distribution centre for goods from the north, south, east or west? Or have even heard of the SEZ’s in Myanmar, Thilawa, Dawei, or Kyaukphyu?

And second, that we have rarely thought of Indian investment abroad as an arm of our foreign policy or as an instrument of political and economic influence. All our efforts have revolved around building domestic industrial capacity, with foreign investment and integration global value chains as the relatively elements. Though there are growing exceptions, Indian industrialists too have thought more in terms of the domestic market than global markets, and when they have, the reasons have sometimes been questionable.

Perhaps, in our ambivalence towards Indian investment abroad there is a fear that this would mean an outflow of badly needed investment and jobs that could be had in India. This would be somewhat short-sighted because ‘Make in India’ does not have to be at the expense of ‘Made by India abroad’. There are comparative advantages in investing abroad in many cases, and opportunity costs of not doing so.

To give an example, Indian garment manufacturers investing in Myanmar’s SEZs, could get additional access to the European market (and hopefully in future, the US also) that they cannot get from India. Conversely, global chains and companies from Korea, Taiwan, Thailand, Japan and others will cash in on the opportunity, as they are already doing, and we will be the losers.

At the very least, our neighbourhood could be integrated into our ‘Make in India’ campaign through PM’s ‘neighbourhood first’ policy as indeed it seems to have been envisaged in the North-East India-Myanmar industrial corridor that is part of ‘Make in India’.

With a view to working out the different areas of Myanmar’s economy that Indian investment could flow into, I would propose a fresh strategy for India than prevailing trends and orthodoxy.

Out of a total, cumulative approved foreign investment of US$ 67 bn in Myanmar until May 2016, over 66%, or two-thirds, are destined for the oil & gas and power sectors, sectors that require heavy investments and that are not particularly employment intensive. About 4.5% goes into mining (that is extractive), 5% into real estate and construction (that is mostly in the luxury segment for the wealthy and expatriates), and only 10.3% into manufacturing, 8% into transport and communication, and about 4% into hotels and tourism that are employment generating. Only a little over 1% is going into livestock, fisheries and agriculture where nearly 70% of Myanmar’s population is engaged in.

As we can see, the pattern of foreign investment in Myanmar is in the most capital intensive and revenue generating rather than employment generating sectors, and is bypassing the vast majority of the people. Additionally, notwithstanding the rhetoric of sustainability, inclusivity and equitability advocated by major international development and financial institutions and foreign investors on grounds of need, scale and viability, large, capital intensive projects tend also to be the ones that are the most socially, economically and environmentally disruptive, forcing people from the countryside into cities, from inner cities to shanty towns on the outskirts and suburbs, and with the greatest environmental impacts.

Of course, large projects are also required, but as a matter of development and investment strategy, I would advocate a very different approach for India. Having undertaken major connectivity projects which will serve Myanmar’s development and our trade interests, we should now focus our development and investment efforts towards the base of the economic pyramid where the largest numbers of Myanmar are engaged in their livelihoods, sectors like agriculture, livestock, fisheries, agriculture and food processing, and light industries including garments, and the infrastructure support for them like small irrigation projects, renewable energy for the countryside and rural industries, vocational training, education, etc.

These are precisely those areas where the least investment is now heading, and where small investments, spread wide, would benefit the largest number of people directly, be least disruptive, and bring about equitable development from the base of the economy upward. This would also be a good political investment at the level of the people.

One of the fundamental problems for investment at this level and sectors is that while it is not difficult to find financing for large projects and investments, mobilising finance for small scale investments and for SMEs is not easy. We have done this in India quite successfully, but need some viable strategies for handholding and finance for such investments abroad.

Recognising Myanmar’s basic strength as an agricultural country, the top leadership of the NLD has a vision of developing Myanmar as a 21st century organic agricultural power. The Party is being criticised for not coming out with a clear economic policy as yet, but given their base among the people and public interests that are at variance from international development orthodoxy, they are thinking hard about these things.

With our investment in the ACARE and Rice Biopark, and a healthy line of credit that can be used for agriculture, we have the opportunity of taking the lead and partnering Myanmar in this effort. By doing so, we would be aligning our investment with Myanmar’s priorities as indeed, as a good neighbour, we should.

This is also very much in our interest. As the largest agricultural surplus country in our vicinity already bound to India through its trade in pulses, Myanmar is already important for us for our food security. This could be developed and formalised into a strategic food security relationship for both countries.

For some time now, we have been trying to promote the idea of a stable arrangement for procurement and supply of beans and pulses with Myanmar that could serve the interest of Myanmar farmers for an assured market and predictable, remunerative prices as well as availability of pulses and price stability in India. Recently, Minister of State for Commerce & Industry Nirmala Sitharaman has had intensive discussions with the Myanmar Minister of Commerce on the subject. So far, it has not yet fructified not because Myanmar is not willing to consider it, but because it does not have a procurement and canalising agency. Discussions are on.

An agreement on beans and pulses can be the building block of a much larger food security relationship. These could include increasing production through extension of Indian agricultural scientific, technical (including adaptation measures to climate change), market access services, procurement and import of not only beans and pulses, but also rice and edible oilseeds (which too Myanmar produces for export and which we import on a large scale), and mutual food assistance in case of floods, cyclones and other natural disasters which typically affect both of us. Such an agreement would be novel and worthy of signature at the level of Prime Minister and the top leadership of Myanmar.

I would like to particularly mention the strategic significance of rice trade with Myanmar. Presently, we do not import rice from Myanmar. Proposals for import of small quantities of rice from Myanmar for political and strategic reasons have been made by our Ambassadors in Myanmar from time to time, but run up against resistance from our public food distribution agencies on economic and other grounds. It was made once again two years back to supply rice to Manipur and Mizoram while the Lumgding-Silchar railway line was being upgraded to broad gauge. It could not fructify.

Currently, Myanmar supplies nearly 1 MT of rice to China (900,000 in 2014-15, and expected to increase). But the trade which is crucial for Myanmar farmers and traders, is subject to quality and arbitrary barriers and arm-twisting by authorities and importers on the China side. Even modest, 10,000-20,000 tonnes of rice imports for the North East (which is close to Shwebo, one of finest rice growing areas of Myanmar) where Myanmar rice varieties are appreciated, would be a great political gesture to Myanmar farmers, establish our image as a good and friendly neighbour, and promote the kind of North East-Myanmar trade ties that would benefit both sides, without making much of a difference to us.

Of course, agriculture and related industries are not the only areas of investment interest to Myanmar and foreign investors. Recently, in the third week of May (2016), the Embassy of India hosted a major business conclave at CIM’s initiative on the theme of ‘How Indian Business can contribute to Myanmar’s development’ that was attended by three key economic ministers of trade, construction and industry and one Chief Minister besides leading businesses from India and Myanmar.

The event was an eye-opener for our industry and highly welcomed by the Myanmar as a signal that India was serious about Myanmar. It was structured around agriculture, livestock and fisheries; light industry; training, education, health and IT; connectivity & tourism; energy and power; investment hubs and corridors; and rounding it all up, financing investments. I would particularly like to highlight garment manufacturing and consumer goods, air connectivity, capacity-building, health and IT, tourism, and renewable energy as areas for trade and investment that would bring us particularly good dividends in terms of business, branding, and image of India.

Having addressed the question of why and what areas, sectors and level to invest in, I will next turn to where to invest. This too is of strategic significance as investing in Myanmar can enable us to expand our economic footprint across the Greater Mekong Sub-region all the way to Vietnam and to the South China Sea.

If we look at a connectivity map of Myanmar and the GMS or the ASEAN Master Plan on Connectivity you will see the whole region seeking to be interconnected by a network of north-south and east-west road, rail, maritime and riverine routes. As I have said earlier, India itself is making huge investments in surface connectivity from Sittwe via Ponnagyun industrial zone, Paletwa and Myeikwa to Mizoram through the Kaladaan waterway and valley; and about 200 miles from Moreh-Tamu-Kalay-Kaleywa to Yargyi along the trilateral highway to Thailand via Monywa, Mandalay, Meiktila, Bago, Hpa-an, Kawkareik and Myawaddy.

Each of these places along these routes can be investment centres depending on their local strengths. Sittwe port can and should also be connected to the beans and pulse growing hinterland of Magwey through (a place called) Ann, and southwards to the Ayeyawady delta.  Sittwe is the obvious base for trade and investment in Myanmar and Rakhine state from Kolkata (as it used to be under the British).

The diagonal, north-west-south-east Trilateral Highway from Moreh to Myawaddy also intersects with the highway from Mandalay to Ruili in China (AH 14), and the northern East-West highway (AH 2) from Meiktila to Laos and northern Thailand through Shan state. While there is quite a lot of excitement about the Trilateral Highway (and the central and coastal east-west highways though Thailand and Cambodia), we should look at the potential of this route as a trade route and investment corridor leading towards the northern GMS, to Laos and onward to Vietnam via Dien Bien Phu to Hanoi.

This is unexplored territory in general especially from Laos to Vietnam, but it goes through incredibly rich agricultural lands in Shan territory, and though conflict affected to the north and south, it has tremendous potential for investment in the  agriculture sector, and another strategic link to Vietnam.

The second set of zones to invest in are the three Special Economic Zones that are in various stages of development at Thilawa near Yangon, Dawei on the eastern shore of the Andaman Sea near Thailand, and Kyaukphyu, on the Bay on Bengal coast, just south of Sittwe, and some 25 plus industrial zones coming up in various parts of the country along major trunk routes.

There is some uncertainty about the status of some of these SEZ’s and industrial zones under the NLD, but if given the green light, each of these SEZ’s and industrial zones offer specific advantages.

Thilawa, being built with Japanese partnership, is the most advanced and the best connected for international trade, but until May, not a single Indian investor had invested in the zone.

The SEZ for Kyaukphyu and deep sea port, hurriedly awarded by the outgoing government in January to a Chinese-led consortium headed by CITIC, is ideally suited for us as an investment destination in the Bay of Bengal for Indian and international markets. It can be developed for fisheries, agriculture and food processing, other light industries, and downstream oil and gas industries from the nearby oil & gas blocks.

Though at an early stage, Kyaukphyu is of strategic significance for us as it is part of China’s OBOR, and with oil and gas pipeline terminals, an SEZ, a deep sea port, and ambitions to connect it to Yunnan province, there is little doubt that the Chinese will need to securitize the investment within Myanmar and in the Bay of Bengal.

There is, at this stage, very little knowledge, let alone understanding and appreciation of the Chinese plans and implications of this project in strategic or commercial quarters for us. There is some opposition to the project in Kyaukphyu and Rakhine state in general on Rakhine nationalist grounds as well as environmental and anti-Chinese feelings, and we have been approached by several Myanmar businessmen, even those working closely with the Chinese, for India to be part of the SEZ, and not to let the Chinese monopolise the project. The Chinese too realise that India is a natural partner to make this project viable.

We need to take a serious call, taking into account Myanmar’s views on these projects, whether it is in our interest to keep a distance from these plans, or join them if we cannot beat them.

The third planned SEZ in Dawei too has offers strategic economic possibilities for us. Dawei SEZ is a Thai-Myanmar project being promoted by the Thai that is basically conceptualised as an SEZ and transhipment point for shipping from the Gulf and Red Sea, Colombo and the eastern seaboard of India cutting through Kanchanaburi and Thailand to the South China Sea and East Asia, bypassing Singapore. It has still not achieved financial closure and is undergoing restructuring with the Myanmar and Thailand trying to rope in Japan. For some odd reason, nobody has thought of courting us for this project.

Dawei stands due west of Chennai, location of a number of Japanese and Korean investments in the auto, electronics and other sectors and close to one of the garment and hosiery manufacturing centres of India. Potentially, it could serve as potential processing point for value chains between India and East Asia, and local products, once again typically marine and agricultural products, light and medium industries, and downstream hydrocarbon industries drawing from the offshore Yetagun and Moattama oil fields. Dawei could also be a serious launching pad for Indian investments eastwards to the Pacific.

In addition to these SEZ’s there are several industrial zones scattered all over Myanmar of varying degrees of readiness, interest and viability. For geographical, connectivity and resource reasons,  besides those along our connectivity projects that I have already referred to, we should look at the agriculturally (especially rice) rich Shwebo in Sagaing Region adjacent to Manipur, Pathein in the Ayeyawady delta in the deep south west of Myanmar, Nyaungshwe near Inle lake and/or Namshan on the Meiktila-Kyaingtong highway, Mowgaung-Tanai in Kachin state, and in a number of more central areas like Pyay and Bago, north and east of Yangon respectively which are well connected.

Finally, how should one structure Indian investments in Myanmar especially in the SME sector? I do not have the economic experience to provide answers, but as Ambassador, I was often confronted with Indian businessmen keen to invest in the power or capacity-building sectors, and others willing to consider investing in Myanmar. My suggestion is that Chambers of Industry, big ticket consultants or interested large entrepreneurs should take the lead in forming a consortium of companies willing to invest along with a power provider and a training partner to propose consolidated, Indian industrial zones in areas of interest, with power and training solutions and surplus capacity open to all. This would also give our investors the necessary bargaining power to get a good deal.

Second, we really need to find a way to hand hold and finance small investments broadly in the rural sector, perhaps through some kind of partnership between institutions like the NSIDC, NABARD and others.

Third, we need to give a push and support for capable dairy and agriculture cooperatives to replicate the Gujarat dairy model in Myanmar where the east Indian origin populations in Bago Region could easily provide an opportunity for a pilot project for the rest of Myanmar.

Fourth, in certain poorly endowed areas like Chin state, there is merit in encouraging our border states and the kindred Mizo-Kuki-Chin of Mizoram and Manipur to extend successful all purpose cooperatives and some of their development programmes (like the NELP in Mizoram) across the border.

Fifth, we need to see how we can encourage and mobilise successful examples of extension services, hiring (rather than ownership) of farm machinery which few can afford, and market information, storage and warehousing and access for agricultural products to markets through not-for-profit NGO or commercial rather than government channels to help the Myanmar farmer and rural sector.

We certainly need to go beyond the government to involve a range of potential partners from NGOs to private enterprise and border state governments in our relations with Myanmar.

India would do well to look beyond the political and other areas of its relationship with Myanmar and focus on one area that is still, I think, under valued rather than spread myself thin. In any case, the way I see it, the economic case that I have made, is basically political not perhaps in the sense of day to day, or party politics, but politics in the larger sense.

(The author is a former IFS official and a former Ambassador to Myanmar and Afghanistan. The article is the gist of the key-note address delivered on 5^th July, 2016 at the Bilateral Conference on “India-Myanmar – Frontiers of New Relationship” hosted by India Foundation at New Delhi.)

~By Rajat Sethi

Publisher: Penguin Random House India

Price: Rs.599/-

Casual readers of history always limited the study of oceans to understanding the economics and trade of various epochs. Political power mostly flew through land based empires. Historical gaze traversed from land to sea and not the other way round. Seldom one tried to connect seemingly unconnected historical dots in a well nuanced narration of history that spanned politics, economics and sociology of the times. Breaking free from this mould and sticking true to the adage, ‘well researched facts are more interesting than fiction, author Sanjeev Sanyal has tried to recapture historical facts in his book, The Ocean of Churn.

Indian history writing is besieged with colonial and postcolonial biases serving the parochial interests of the sponsors of those studies. Bringing out evidences from archaeology, genetics, popular cultural anecdotes and personal travels to various sites has helped Sanyal break the stranglehold on India’s historical narrative. This is where Sanyal’s book serves a unique purpose. He establishes the central and dominant role Indian Ocean had in the region’s history.

While reading our own history from the Western colonial or postcolonial eyes, as if it isn’t ours, we have glorified some and lost several other important icons in the narrative. For instance, Tipu Sultan and Ashoka are not the legends they are. Seen from the perspective of the Orissa and Kerala coasts, they appear as mere marauders. Sanyal’s book explains these facts and more.

In the middle of the 18th century, Maratha navy was led by a skillful Admiral, Kanhoji Angre. While the British navy were mute spectators on the political happenings on the western coast of India, Angre employed Dutch to command his best vessels and keep British and Portuguese away. He attacked several merchant ships of East India Company. The latter planned an attack on Angre but aborted  realising his might in the Konkan coast. To suit their interests, European powers branded Angre a pirate!

While  the Russian defeat at the hands of Japanese in 1905  is generally accepted as the first time when Asians defeated Europeans, Sanyal suggests that the rightful claim should  be of Marthanda Varma, king of Travancore. At a time when Dutch East India Company was way more powerful internationally, as compared to the British one, and took over Indonesia and Sri Lanka and pepper growing areas of Kerala, they looked invincible. Marthanda Varma crushed the Dutch expansionist designs at the Battle of Colachel in 1741. Post this internationally important event, the Dutch power went on a decline.

The book throws light on the initial seeds of growing international diplomacy and power struggle. India systematically lost its leadership as a seafaring nation in the Indian Ocean to Chinese and Arabs starting in the 11th century with the destruction of temples by Turks. The question  why India became inward looking suddenly presents a fascinating intellectual inquiry within this context.

An argument floated in the book  traces this turnaround to the collapse of finances due to plundering of temples by the Turks and Mongols. At that time, temples did not just serve cultural functions but were also bankers and financiers to merchants. The systematic destruction of temples not only emasculated cultural life but destroyed the financial structure of ocean-based trade. While the Indians, unable to overcome the Turk and Mongol attacks, decisively became inward looking, they conceded the dominance of the Indian Ocean to Chinese and Arabs. Interestingly, Indian Muslims continued to trade far longer than the Hindus due to their earlier links to Arabs. Meanwhile, China continued to play its chess moves in the Indian Ocean. However, due to China’s domestic policy, there was gradual withdrawal of Chinese power  which allowed the Europeans to come in.

Sanyal’s beautifully stitching together rich anecdotes spread across the history of the Indian Ocean should be lauded.  This need to be appreciated because of the richness in the anecdotes with respect to India’s exemplary past. To cite an  example from his book – that Angkor Vat was the largest urban conglomeration in the world largely controlled by women. In the larger global debate on women and feminism, this historical fact  presents the erstwhile ‘Orient’ (east) in a different light.

Similarly, in the 15th century, there was a sudden decline in the Hindu Buddhist kingdoms of the region. Kingdoms that had lasted for a thousand years fell like dominos. The reason for the sudden fall of Angkor is attributed to the failure of hydraulics on which rice cultivation depended. Climate change has been the main reason behind the fall of rice based civilizations. This is another cue to reflect on in the wake of the global climate change negotiations.

There are more such interesting stories. Most of the initial Western colonisers were really corrupt adventurists who turned up in India. Notable among them was Elihu Yale, who  rose up the ranks of East India Company to become the Governor of Madras. He  amassed a huge amount of wealth through his activities in secret trades, even slavery. A part of this money was used to build the Collegiate School, today known as the Yale University.

Sanyal engrossingly connects the theft of textile technology, beginning of Evangelisation in South Asia, the Opium wars and the founding of Singapore. All these activities were carried out at gigantic scales for the nefarious interests of the European criminal enterprise. For instance, Singapore was set up as an attempt to build a naval base for the British so that the Dutch could not shut off their trade route for carrying opium from India to China. Similarly, opium business lay at the heart of building Hong Kong.

The book posits Indians as very outward-looking, risk-taking, and willingly assimilators of experiences from the outside world. This is contrary to the perception of Indians as a race hiding behind the walls of protecting their identity.

Sanyal’s own journey for the book mirrors the cosmopolitan outlook he has managed to conjure up for the primitive Indians. He travelled to most of the sites bringing to life several folklore and myths in order to weave an interesting yet complete story replete with facts and speculations. His physical engagement with history from the coasts of Zanzibar to Oman to Kerala to Orissa gives a special touch and feel to his anecdotes.
Indian Ocean mystery  is full of over the top characters. Sanyal provides a kaleidoscopic view of  these characters in a rich synchronized play narrating the story of their long forgotten churns in the ocean. India was an intrinsic part of this world of churn in several ways. Sanyal’s book is a must read for anyone interested in reinterpreting the historical discourse.

The reviewer is a Senior Research Fellow & Project Head at India Foundation.

~ By N. N. Vohra

For too long now there has been a general sense or general understanding amongst the people of India that the security management is the business of the central government or more particularly the Ministries of Defence and Home. But smart border management is not possible unless the whole country is involved in security management. Border is one segment of security management. If the people at large have no sense of security, no regard for security and no notion of what their responsibilities are in terms of security management, our borders cannot be protected. We often use the words unity and integrity of the country and often we do not realise what it means exactly. If we set the connotation that the citizens of India have the enormous responsibility of contributing to the preservation of unity and integrity of India in protection of its territorial integrity, there is a lot than can be done in terms of redefining mindsets. And that is what is needed to secure smart border management. Looking at various perspectives, best practices and on-ground experience, we can state that effective border management is not possible unless the whole country is involved in security management.

We have nearly 23,000 kilometres of land and sea borders. We have on our maritime borders nine little states, two union territories, what I may add to this is we have almost 1200 islands and seven million square kilometres of exclusive economic zones which also need to be guarded just beyond our coastline. We don’t discuss our aerial borders; they are managed by the air force.

By the end of the Second World War, the general belief was that the world would be a peaceful place to live in. The founding fathers of our Constitution did not fathom the extent of aggression and competitiveness that would emerge in all its geo-political implications with respect to border limits. Therefore, the Constitutional ambit of securing the nation and our borders were defined, and rest with specific institutions.

The Constitution stipulates that the defence of India, and all parts thereof, shall be the responsibility of Union or the Government of India. The constitution also enjoins that the Union shall protect the States against war and external aggression. A further provision in the Constitution mentions that the Union should protect the States against internal disturbances.

It is not enough to guard just the border but also the hinterland. If the hinterland is disturbed, guarding the border becomes a far more difficult proposition then it otherwise would be. The Constitution lays down that the States of the Union shall raise, train and maintain an adequate, effective, professional, civil and police service to maintain law and order across the length and breadth of the country.

After the Chinese war, the Parliament decided to set up the Indo-Tibetan Border Police, particularly for guarding of the Himalayan borders. After the 1965 war, the Parliament decided to set up a special force called the Border Security Force for guarding the western frontiers. At the borders, there is a mixture of forces deployed. In the north-east we have a large scatter of the Assam Rifles, one of the oldest security forces in the country, set up at the time of the British. We have the ITBP and the BSF. We have the Seema Suraksha Bal. At moments of heightened problems, other forces are also used to do border guarding. In terms of the Constitution and administrative arrangements, Army is the final guardian of the frontiers supported by the ITBP, BSF and such other forces. Coastal borders had so far been neglected.

In 1993 I happened to be in the home department. Earlier when we quickly reviewed what happened in Bombay, how did three tons or more of RDX get transported, got landed on the western coast, off loaded and then loaded into vehicles, brought all the way to the Maharashtra capital Bombay, who did it with whose assistance, with whose involvements did all this happen? We found out that we did not have on the coastline, leave aside the maritime police, any kind of force to even see how many fishermen in their boats went out in the sea, when did they go out, how many of them came back or didn’t come back, how many got lost or drowned, what other boats were coming and landing on the coast etc. So despite the intelligence coming out with the information that three tons of RDX or more had been brought by boats from Pakistan coast, we could not do much about it. Since then, the maritime police, state maritime police became our focus.

Having worked along the borders for many years in my earlier career, I can share that it is significantly important to see that the people living around the borders and behind the borders are taken care of. If we have a satisfied border community that contributes positively to the work or border force or border management, it goes very long way in extending strong support to the army and BSF in terms of supply of information and logistical support.

During the 1965 war, we did not have a very large army or developed infrastructure. We did not have enough vehicles or enough budget for defence. Hundreds of civilian trucks loaded their goods on the grand trunk road. Ordinary people carried ordnance material to the frontier. Vegetables, fruits were loaded with ammunition consignments. The kindness and support which came from the border communities could not be ignored.

In Jammu and Kashmir, infiltrations are attempted throughout the year across the high, snow mountains, the plains, river beds and drains. Therefore, if the frontline force does not succeed because of the mountain, terrain and geography in apprehending anybody who seeks to come in, highly trained militants and terrorists penetrate the hinterland. It becomes the responsibility of everybody physically present in that area, sector, subsector to offer great amount of coordination and collective effort in order to secure the borders.

Borders need much larger investments, allocations and attention. From 2012 onwards we had four successful attacks from Pakistan into our territories. We have deficiencies along the borders. We need a national security policy which details on security management. We need enormous involvement and cohesive coordinated functioning between the centre and the states on national security management.

(This article is the gist of the speech delivered by Mr N. N. Vohra, Hon’ble Governor of Jammu and Kashmir at the Conference on ‘Home Land Security 2016 – Smart Border Management’ on 6^th September, 2016.)

~ By Puspa Kamal Dahal ‘Prachanda’

I feel honoured for being felicitated amidst this august gathering by the India Foundation on the occasion of my State Visit to India. This is a rare privilege and I do not have words to express my gratitude.

I am equally thankful to the Foundation for giving me the opportunity to share my thoughts on Nepal-India partnership for 21^st century at this gathering of intellectuals and luminaries from different walks of life.

It was back in September 2008, I embarked upon my first visit to India as Prime Minister of Nepal. That was a historic visit, a visit from the first Prime Minister of Republican Nepal. The visit provided us with an opportunity to cultivate friendly relations with Indian leaders and to explore the new avenues of cooperation in the context of vastly changed political landscape of Nepal.

The memory of that visit is infused with the affection shown by the friendly people of India; with the assurances of support and cooperation expressed by the leaders of India.

And as I am visiting your country second time as prime minister, exactly after eight years, the affection has got more generous; the assurances have got more genial; enthusiasm is enormous; and hope is high.

Ladies and Gentlemen.

My life has been a journey of struggles. Struggles to dismantle the clutches of feudalism, of autocracy. Struggles to set the democracy free from the shackles of tyranny. Struggle for people and their rights. Struggles against the social discrimination. Struggles against the despotism in all hues.

In my struggles I had always carried two weapons with me. Two most powerful weapons – determination and optimism.

Determination for vibrant present,

Optimism for better future,

Determination for change,

Optimism for development.

These resolves have been tested on many occasions. I have witnessed the setbacks; encountered the hurdles; and experienced the obstacles. However, my hope and enthusiasm could not be shaken up. My determination did not die. My optimism did not succumb to cynicism.

I have faced the ebb and flow of politics. However, my quest for change, my determination for progress, couldn’t be drained away.

Ladies and Gentlemen, Dear Friends

India is our close neighbour. Our two countries, Nepal and India, have an immemorial history of harmonious co-existence. We are connected by geography as well as history, by our religions as well as culture.

Our relations are sanctified by the wisdom of saints and sages. Our bonds are strengthened by connectivity as well as commerce.

Our relations began even before the history began to be recorded; they began in the dawn of human civilization in this part of the world.

Our friendship stands on the bastion of good will – good will emanating from the people of Terai, Pahad, and Himal.

The foundation of relations between our two countries rests on cordiality, goodwill, cooperation and mutual respect for sovereign equality. Peaceful coexistence defines our stable friendship.

As friendly neighbours, our two countries have been aware of each other’s concerns and sensitivities. Nepal has not allowed its land to be sued against the sovereign interests of India. We are firm in our resolve to maintain that position. And it is natural that we expect similar assurance from India.

Today, in the 21^st century, our age-old relations have emerged as more extensive, and multidimensional. The depth of relations has been enriched and the scope of cooperation has been broadened.

The depth of our relationships cannot be fathomed merely through the formal relations between the two governments. The people-to-people interactions and exchanged are at the core our relations. The open border between our countries dictates us to share a bond of good friendship forever.

As the world sees new walls and barriers, ours can be an example of free movement of people.

As the world sees new conflicts and animosity, ours can be an example of unique amity.

True, we have seen some intermittent glitches in our relations. But they are mere aberrations. The transient aberrations have no potency to dilute our relationship.

True, we have seen some misunderstandings on both sides. But they cannot hold our mutual goodwill in hostage.

As the world sees the insular fences that are hostile to dialogues, ours can be an example of open and constant exchanges.

True, we may not agree on all of the issues. But our differences cannot hijack the prospect for collaboration.

And the history implores us to take our relations to newer vistas of opportunities, to newer heights of mutual benefits, to the novel territory that suits the intricacies of 21^st century.

Dear Friends,

India is the land blessed by noble saints and sages, learned rishis and munis. It is the land of Gandhi – the apostle of non-violence. It is the land of Swami Vivekananda – the key figure to promote Vedanta as well as inter-faith awareness. It is the land of Tagore – an epitome of art and literature. It is the land that has conceived many other geniuses who inspired the human civilization.

As the largest democracy in the world, India has an important role to play in global affairs to make the world order just and democratic.

This century belongs to Asia. And India has an important role to make the 21^st century an Asian century. The astounding strides made in the industrial development; the inspiring examples unleashed in the field of invention and innovation; the pioneering progress in IT; the remarkable growth of the economy. All of those are set to put India on the global forefront.

The illustrious journey of India as a major economic powerhouse is an inspiration for me and my country.

The splendid stride of India as a nation of innovators is an encouragement for me and the people of my country.

The impressive march of India as the global hub of IT and digital economy is a stimulus for the young generation of my country.

It is my belief that the development trajectory of India will further succeed under the able leadership of Prime Minister Modiji.

For Nepal, India remains the largest trading partner. However, the problem of bilateral trade deficit looms large. We need to focus our attention to diversify our trade basket and scale up the volume of exports from Nepal.

To increase the flow of good and augment trade, we need to invest in infrastructures and streamline the procedures.

India has extended generous assistance to finance development endeavours of Nepal. It has helped to diversify our economy, build up the infrastructure, and enhance our industrial base. However, there is much to do to scale up our economic cooperation.

To further intensify the economic cooperation, we must create the stories of success; we must translate our pledges into performance.

Nepal and India are endowed with resources, both natural and human. The 21^st century should not be the mere century of potential and resources – lying untapped and dormant.

The abundance of resources needs to be transformed into the opulence of wealth. That transformation will trigger the development.

Potential needs to be unleashed for prosperity. That unleashing of potential will propel the prosperity.

And that transformation can excel only at the behest of closer partnership and stronger commitment.

Nepal’s hydropower development is an important sector for bilateral partnership. It will benefit the people and industries of both of our countries. It is my belief that Nepal’s hydropower, if developed properly, will not only help transform Nepal’s economy, but at the same time can contribute to ‘Make in India’ initiative launched by Modiji in September 2014.

To accelerate the investment in hydropower projects, we have to implement the Power Trade Agreement, which we had signed back in 2014. We need to ensure unrestricted market access on both sides in order to convince the investors. We may think of going sub-regional to promote energy cooperation, and I see a better prospect within the framework of BBIN.

The people of Nepal stood by India during its struggle for independence. Today, they are standing by the people of India in their quest for development.

India remains one of the most preferred destinations for students from Nepal. The prestigious institutions, high-quality academic ambience and ever evolving innovative rigor of Indian universities and schools have lured students from Nepal. This has facilitated the sharing of ideas, connected the minds and has brightened up the prospect for collaborative future.

Thousands of Nepali nationals are working in the Indian job market. They have contributed to the economic development of India. And the remittances they bring home have equally helped the economy of Nepal.

Similarly, a sizeable Indian workforce is in Nepal. Some are engaged in semi-skilled sectors. Some are employed in skilled sectors. Their contribution is mutually rewarding to both our countries.

This exchange of workforce is not just the exchange of people. It is the exchange of skills and exchange of experiences.

This flow of remittances is not just the flow of incomes. It is the flow that links our two economies; it is the flow that feeds several thousands of families in both countries.

Nepal is an attractive destination for Indian tourists. Attracted by the natural heritage as well as religious sites, Indian tourists have contributed to Nepal’s economy.

Similarly, India is an attractive destination for Nepali tourists and pilgrims too. The beautiful heritages of this large country and its pious shrines have enticed a large number of Nepalese.

These phenomenon of visits, for vacation as well as veneration, have been the vehicles of familiarization with each other’s countries, interaction among the people. The air connectivity, direct bus services and open border have augmented this exchange.

To enhance the flow of people, for enterprise as well as tourism – we need to further expand air connectivity and road linkage.

To infuse our relations with more substance; to imbue our friendship with more harmony; to make our relations mutually rewarding; and to contextualize our relations as per the needs of 21^st century.

We need to build on our commonalities.

We need to engage in dialogues to enhance understanding.

We need to synergize our engagements.

And, we need to capitalize on our strengths.

Ladies and Gentlemen,

When the devastating earthquake struck Nepal last year, India acted promptly and spontaneously for the rescue and relief of victims. At the difficult hour of national tragedy, people of India stood by us. That reflected the closeness of our relations.

Allow me, dear friends, from this podium to express once again my thankfulness to the Government and people of India for the generous assistance they extended in times of crisis.

Also, allow me to thank the Government of India for its generous pledge for the reconstruction works. This gesture of fraternity is fresh in our memories and will remain so for many years to come.

Dear Friends,

For the last two decades, Nepal has undergone unprecedented political transformation. People’s movements and struggles for democracy succeeded to usher the nation into the new era of democracy and inclusiveness, new era of federalism and decentralization.

A decade-long armed conflict came to an end, when we signed the Comprehensive peace Accord in 2006. Yearning to charter their own constitution, Nepali people elected their representatives and formed the Constituent Assembly.

This gave way for the end of feudal era and the establishment of the republican government, where the sovereignty rests with people, where human rights and fundamental freedoms are guaranteed to all Nepalis without any discrimination.

In all these epoch making events – from the people’s war and people’s movement to the promulgation of the constitution – my own party, CPN Maoist Centre, was on the forefront. Support and solidarity received from the international community including India in our home grown political transformation and peace process were definitely of great importance.

Our quest for democratic polity, inclusive governance and federalism was materialized last year when the second Constituent Assembly promulgated the Constitution of Nepal. The new constitution has embraced the system of inclusive democracy, federalism, rule of law, and respect for human rights as per the aspirations of diverse communities in the country.

Within the last two decades, many epoch-making changes have occurred; significant political achievements have been made. And the responsibility lies on our leadership to institutionalize these changes through the effective implementation of the constitution.

Therefore, the present Government has prioritized the implementation of the Constitution by bringing all segments of Nepali society on board.

I would like to mention that the dialogue with Terai-Madhes-based political parties has already started. I believe that this dialogue will soon bring about tangible result.

Concluding the remaining task of the peace process is equally important priority for the present Government. The Government is committed to concluding the remaining tasks, including the transitional justice, as envisaged in the Peace Accord and according to the spirit of the peace process.

Ladies and Gentlemen,

Political transformation remains fragile in the absence of socio-economic transformation. Creation of inclusive and right-based society remains elusive without economic development. Peace cannot prosper if society starves in poverty.

Aware of this reality, socio-economic transformation is high on our agenda.

The world in this century is interconnected like never before. The scale of globalization is unprecedented. The scale of interdependence is extraordinary.

In this globalized and interconnected century, individual efforts alone will not be sufficient to achieve the objective of development. It demands collaboration and cooperation at bilateral, sub-regional, regional and multilateral levels.

Nepal and India share the collaborative platforms in various regional and sub-regional forums. Our countries have vital role in the SAARC and BIMSTEC. In the pursuits of regional development, we have engaged closely in these forums. BBIN initiative provides yet another important platform for sub-regional collaboration.

The tremendous growth performance of our two neighbours comes with plethora of opportunities for growth and development. And, as both of these economic giants are engaging in large volume of trade and investment, those opportunities are getting more pronounced. We need to capitalize on unfolding opportunities to forge a productive partnership for development.

Ladies and Gentlemen,

Yesterday, I had a very friendly and fruitful meeting with Prime Minister Narendra Modiji. We covered a wide range of areas of mutual interest in our discussions. Our deliberations were substantive and positive.

We are ready to inject new dynamics into our relation, without letting the misunderstandings of the past derail our friendship.

To embark upon the path of closer partnership, we should buttress trust and enhance understanding.

To inoculate understanding of higher order, we should not be dragged down by the unpleasant experiences.

The enablers for cordial friendship, collaborative partnership and mutually rewarding relations are there. We must build on those enablers to boost our relations. We must seize the opportunities to make our relations fruitful to the lives of our peoples. As close neighbours, we share a common destiny which demands collective pursuit of prosperity.

I firmly believe, and hope you all would agree, a peaceful, stable, prosperous and democratic Nepal is in the interest of India as well as that of our larger neighbourhood. This reality must inform our thoughts and actions in forging a partnership for 21^st century. A partnership that befits our intimacy and shared destiny.

Finally, let me conclude by reiterating my hope for closer and mutually rewarding relations between our two countries in this 21^st century.

I thank you once again for such a wonderful opportunity.

I thank you all for your kind attention.

(This article is the text of the speech delivered by Puspa Kamal Dahal ‘Prachanda’, Hon’ble Prime Minister of Nepal, on the eve of civic reception in his favour hosted by India Foundation on 11the September, 2016.)

~By Guru Prakash and Raghav Pandey

Needless to say the  controversy in JNU incited the essential law student inside us to do some research and come out with a comprehensive article on the Law of Sedition in India. The present discourse on the issue is unfortunately dominated by parochial groups and the race is to prove that my idea is better than yours.

According to the Oxford Dictionary of Law, sedition is:

The speaking or writing of words that is likely to incite ordinary people to public disorder or insurrection. Sedition is a common-law offence (known as seditious libel if the words are written) if it is committed with the intention of (1) arousing hatred, contempt, or disaffection against the sovereign or her successors (but not the monarchy as such), the government of the UK, or either House of Parliament or the administration of justice; (2) encouraging any change of the law by unlawful means; or (3) raising discontent among Her Majesty’s subjects or promoting ill-will and hostility between different classes of subjects. There must be an intention to achieve these consequences by violence and disorder. An agreement to carry out an act to further any of these intentions is a criminal conspiracy or the speaking or writing of words that are likely to incite ordinary people to public disorder or insurrection.

The above stated definition clearly outlines the nature of the offence.

‘LAW OF SEDITION’ IN INDIA

The British first introduced the provision relating to sedition into the Indian legal system. The establishment of the East India Company in India led to them bringing in their own laws for the sake of convenience. Gradually, English law was brought into the English settlements in India. This system started affecting the life and liberty of the people in India as these laws considered to be ‘foreign’ and ‘alien’ were interfering with the personal lives of the people, which was not really accepted. Although the extent to which the English law applied in India could not be definitely ascertained, the Presidency towns were subjected to the stringent restrictions of the early English law and did not have the benefit of the later statutory and judicial liberalization in England.  Over time, there were many uprisings including mass movements against the British rule in India. A need was felt to enact a law that would act as deterrence  for the people trying to revolt.

Eventually, a Bill was drafted on the lines of Section 113 of the Draft Penal Code. It was piloted by Stephen, the legendary criminal law jurist, and was passed as section 124-A of the Penal Code as a part of the Act XXVII of 1870.

Section 124-A was re-enacted by the Act of IV of 1898. It read as follows:

“Whoever by words, either spoken or written, or by signs or visible representations or otherwise, brings or attempts to bring into hatred or contempt, or excited or attempts to excite disaffection towards the Government established by law in India shall be punished with transportation for life or any shorter term to which fine may be added, or with imprisonment which may extend to three years, to which fine may be added, or with fine.”

Explanation 1: The expression “disaffection’ includes disloyalty and all feelings of enmity.

Explanation 2: Comments expressing disapprobation of the measures of the Government with a view to obtain their alteration by lawful means without exciting or attempting to excite hatred, contempt or disaffection, do not constitute an offence under this section.”

The Slippery Slope: Law of Sedition & Freedom of Speech and Expression

The Individual versus State Debate

On achieving independence, India adopted its own Constitution, which guarantees to all its citizens the ‘freedom of speech and expression’ under Article 19(1) (a). All citizens under this fundamental right are guaranteed the right to express their convictions and opinions freely. A democratic form of government attaches a lot of importance to the freedom of speech and expression as it lays the foundations to a truly democratic form of governance. The freedom of speech and expression ensures a healthy participation of the citizens in the governance of the country.^[i]

At the same time, Article 19(2) imposes ‘reasonable restrictions’ on the freedom of speech and expression. The perpetual problem it seems to raise is that of striking a balance between individual freedom of expression and the security of the State. Thus, the freedom of speech and expression are not absolute in nature. The collective interests or the interests of the State have been given more importance than the individual’s freedom of speech and expression. But the imposition of restrictions does not mean that the right to speech and that of expressing oneself are restricted always. Whatever restrictions are imposed should not be unreasonable and arbitrary in nature.

While discussing sedition and the freedom of speech and expression, it can be said that sedition under section 124-A does impose certain restrictions on this fundamental right of the citizens, even though it has not been made a part of the ‘reasonable restrictions’ under Article 124-A. Such words or expressions that are capable of causing hatred in the minds of the people against the government should be avoided. The State too has to have certain provisions in its hands to prevent any person from causing hindrance to the peaceful working of the State machinery, which is something that is wished by all the citizens. Thus, in certain cases the individual rights have to give way to the State, which is working for the welfare of the citizens as a whole.

Some Initial Experiences

There came up two cases, which challenged section 124-A on the ground that it violated the freedom of speech and expression.

In Romesh Thapar v. State of Madras^[ii], the validity of section 9 (I-A) of the Madras Maintenance Public Order Act, 1949, which empowered the Madras government to impose restrictions on the circulation of a publication in the interests of public safety and the maintenance of public order was in question.  The majority of the Court declared that the provision of the Madras Maintenance Public Order Act, 1949 that imposed restrictions on the fundamental right of freedom of speech, to be in excess of Article 19 (2) and was thus held void and unconstitutional.

In Brij Bhushan v. State of Delhi^[iii], section 7 (1) (c) of the East Punjab Public Safety Act, 1949, which authorized the imposition of restrictions on the freedom of speech and expression for preventing or combating any activity prejudicial to the public safety or the maintenance of public order. The Court held the provision to be in excess of Article 19 (2).

In the aforementioned two cases, Justice Fazal Ali gave his dissent. Augmenting difficulties about the use of the word ‘sedition’, he said that the framers of the Constitution must have found themselves face to face with the dilemma as to whether the word ‘sedition’ should be used in Article 19(2) or not and if at all it was to be used, in what sense it was to be used. He referred to the probabilities that on one hand the framers must have been possessed with the view that sedition was essentially an offence against public tranquillity and on the other hand with the pronouncement of the judicial committee that sedition as defined under the Indian Penal Code did not necessarily imply any intention or tendency to incite disorder. Thus, finally the framers decided to drop the word ‘sedition’.

Some Recent Experiences

• Cases of Arundhati Roy and Syed Ali Shah Geeelani

A conference on the “Kashmir deadlock” in New Delhi was held titled “Azadi: the Only Way” in October. It was organized by a Committee for the release of political prisoners. The conference was supported and attended by Naxal organizations and some rights activists and journalists. The prominent figures among the participants and speakers were: Chairman, Hurriyat Conference Syed Ali Shah Geelani, Writer and Social activist Arundhati Roy, Prof. S A R Geelani, Dr Aparna, CPI-ML- New Democracy, Revolutionary poet Varvara Rao and Sujata Bhadra among others. A case of sedition  was been filed in a local court against noted writer Arundhati Roy for her controversial remarks on Kashmir. The complaint was lodged by one Ashish Kumar Singh. A Delhi court ordered registration of FIR against hard-line Hurriyat leader Syed Ali Shah Geelani, writer Arundhati Roy and five others for allegedly making anti-India speeches.

JNU, SEDITION AND FREEDOM OF SPEECH AND EXPRESSION

Earlier this year, a group of students held protests in the JNU campus who inter alia demanded independence of Kashmir from the Indian state. Among many slogans used in the protests, some slogans called for the dismemberment of the Indian state into pieces. This incident became the genesis of the present debate on the law of sedition, when the students who indulged into the protests were booked under Section 124-A of the Indian Penal Code.

The courts on various occasions have registered strict objections to the unhindered use of freedom of speech and expression. Any law or a conceptual sanction needs to evolve with changing time and circumstances. Freedom of expression has had a long tryst with reasonable restrictions that accompanies it in the Constitution of India. The authors are of the opinion that the observations of judiciary on the interface of sedition and freedom of speech and expression reflect pragmatism and evolving dynamics of our society. The belligerent sloganeering at the JNU campus clearly amounted to an act potentially causing disruption, disrespect and disaffection to the idea of India as a nation. In our humble opinion, no one institution or individual can legitimately claim to represent the idea of India. India is a land of diversity and there will be diverse perspectives on the idea of nationhood. The uprising in JNU is plagued by the idea of exclusivism and an element of intolerance towards different viewpoints has corrupted the institutional discourse to the core.

Hence, it can be averred here that the form and purport of the law of sedition in which the British enacted the law has definitely changed. The law at the time of enactment prohibited the criticism of government, which certainly is now an integral part of the democratic process. If we examine the recent judgements on the law of sedition it can be seen that the courts only uphold those prosecutions where the accused has acted in contempt of the Indian state and not the government alone. This stand is definitely in harmony with our Constitutional values and established norms of democracy.

(Guru Prakash is a Senior Research Fellow & Project Head at India Foundation and Raghav Pandey is a Research Scholar at School of Humanities, IIT, Mumba.)

[i] V.N. Shukla, Constitution of India, 105 (Eastern Book Company, Allahabad, 10^th edn., 2006)

[ii] AIR 1950 SC 124

[iii] AIR 1950 SC 129

~By Raghav Pandey

John F. Kennedy who served as America’s 35^th President said before a few weeks of his tragic death that “I can tell you that there is nothing that has occupied our attention more than India in the last nine months.” The year we are talking is 1963 and hence even the sincerest students of history will be forced to reread that statement of Kennedy, thinking that he must have meant Cuba or the USSR. This is the period when the USA was reeling with the Cuban missile crises and hence China’s attack on India posed a monumental foreign policy challenge for the Kennedy administration.

In 1962 the world came within a hairsbreadth of the third world war due to the Cuban Missile crises. Nikita Khrushchev famously blinked and withdrew Soviet nuclear weapons from the Caribbean island. In exchange, Kennedy removed US nuclear weapons from Turkey without much hue and cry.

Not many people will recall that the first wave Chinese attack on India came just five days after the CIA uncovered the presence of Soviet missiles in Cuba. Kennedy himself admitted that it was a “climactic period” for his administration.

The then US Ambassador to India John Kenneth Galbraith, was a plenipotentiary diplomat, who was very close if not the closest diplomat to the President. He writes “In the same week, on almost the same day, that the two great western powers confronted each other over Cuba, the two great Asian countries went to war in the Himalayas.”

In the western minds of contemporary history there is a huge disparity in terms of memories of Indo-China war and the Cuban missile crises. The Kennedy Presidential Library boasts of hundreds of books on the Cuban missile crises but not a single one on Indo-China war. Bruce Riedel, who has been the National Security Advisor to four Presidents writes that one book which needs to be in that library. The book is a gem on sophisticated contemporary history writing. This book is the pioneer document which illustrates the role of Kennedy in the war.

America’s help to India in the war is still a subject of political debate, successive Congress led dispensations in India have denied the fact that Nehru even asked for America’s help ever, naturally such a line would have conflicted with the then policy of non-alignment. Also, Nehru advocated “Hindi-Chinibhaibhai” and was very disdainful of the USA.

Eventually when Mao Zedong attacked India, India’s army was too stretched out and most of the troops remained deployed on the western border due to the fear of a possible second front by Pakistan. Nehru was left with little choice and he in due course sought help from Kennedy. Riedel claims that Kennedy gave his unconditional support to India and immediately sanctioned military aid to that effect, he writes “by November 2, eight flights a day were each bringing in twenty tons of supplies to Calcutta…. The Royal Air Force (RAF) also soon began air-lifting supplies to India, and London was consulting with Australia, New Zealand, and Canada on providing aid from the British Commonwealth”

Riedel emphasises that due to the above, Mao Zedong became conscious of the fact that America meant business in this war and the situation might escalate to the level of Korean war. Mao certainly would have wanted to avoid a second ground level confrontation with the Americans like that in Korea. It might also be pertinent to factor in the position of Soviets at this juncture. As per Riedel, Mao kept Stalin in loop and informed him before attacking in India as a gesture of communist comradery, where Stalin was the leader of the communist world. But this argument of Riedel is obviously open to scrutiny and subject to debate, but the fact that Soviets didn’t supply the promised MIG-21 fighter jets is explanatory of the fact that Stalin had sided with Mao.

The author successfully builds a case for Kennedy, where he is projected as one of the most favourable US Presidents for India. This narrative should cautiously be viewed in the backdrop of Korean War, where a decade ago USA was forced into a stalemate through Chinese hands. Hence, the foreign policy shifts of USA towards India which Riedel claims, can have underpinnings in the decade old war. Hence, Kennedy was left with very little choice but to support India.

Riedel also discusses in the book the Pakistani angle very elaborately. He highlights that the Kennedy administration was almost blackmailed by the Ayub Khan administration by leveraging a covert CIA base in Peshawar which was critical for the U2 flights that took off over Tibet. He also brings to light that the CIA intervention in Tibet became a major irritant in Mao’s eyes and he was led to believe that India was complicit in this with the CIA which in fact was Pakistan. More importantly the author’s hypothesis that Pakistan was tremendously pressured by Kennedy to not open the western front of war with India is quite believable because what else was stopping Pakistan.

During the last periods of the second and the more devastating wave of Chinese attack on India, Robert McNamara, the Secretary of Defense to Kennedy apprised him “we should recognize that in order to carry out any commitment to defend India against a substantial Chinese attack, we would have to use nuclear weapons.” To this Kennedy responded, “We should defend India, and therefore we will defend India if she were attacked”. The above passage is perhaps the most interesting part of the book which has been sourced from the secret tape recordings of that era. This suggests that Kennedy was willing to go to any length to protect India. Riedel also claims that the overall attitude and functioning of Kennedy at that time suggested that it was President who was preparing for war.

The above argument of the author is obviously his perception, but it is imperative to note that the Chinese forces withdrew and declared ceasefire shortly after this conversation happened in the White House. Hence, there is some substance in what the author has highlighted in terms of the possible use of nuclear weapons.

The most important takeaway from this book for India’s foreign policy enthusiasts is perhaps the utter failure of Indian diplomacy in the Johnson and Nixon eras which followed Kennedy. The same country – the USA, which was giving military aid to India in 1962 was looking to intervene against India in 1971 for Pakistan. Hence, this book is about seizing opportunities in International relations at critical junctures and building strategic partnerships at opportune moments.

Introduction

The BRICS summit in Goa scheduled for mid-October (2016) has spawned a number of events all over the country on a whole host of subjects. It would not be incorrect to say that the word BRICS has appeared in the media more often in the last two months than over the past 10 years. Post- Cold war and with the unilateral moment in international affairs seemingly over, does BRICS present India with a viable alternative to carve out its own geo-strategic space? Many India strategic thinkers do not appear reconciled to the increasing irrelevance of the Non Aligned Movement and stress on retaining strategic autonomy. There is a distinct discomfort with what is seen as India hitching its fortunes with that of the United States.

It is therefore necessary to understand what BRICS is before one can see whether it has a future? There is scepticism that an acronym (BRIC) that came out of a global investment firm (Goldman Sachs) to draw the attention of international investors to the potentialities of large emerging markets that were currently under-priced with possibilities of huge gains. These countries with large domestic markets had the potential to become engines of global growth but needed sustained investments in infrastructure and productive investments, an attractive proposition for pension and long-term funds that were not looking for quick payoffs; such a relationship could benefit both once these economies could trigger sustained growth. But what is BRICS at present beyond an acronym? Samir Saran of the ORF very clearly explains, BRICs is not ‘a trading bloc or an economic union per se, nor a political union.’ What brings these countries together is ‘neither attractiveness of the economics of these countries nor a cosy ideological confluence.’ It does, however, reflect a desire for a new multipolar world order. Critics have pointed its members are ‘dysfunctional misfits.’ Their geopolitical compulsions have considerable variations with more dissonance than agreed agendas. Similarly, the structures of their economies have more competing and opposing interests than complementarities, e.g. China and India would like low petroleum prices while Russia’s imperative is high petroleum prices. Similarly Brazil relies on high international prices of soya and maize which it exports to China, who would like to pay less for its food imports.

Emergence of BRICS

So what accounts for the continuance of BRICS, if increased salience is still not on the horizon? It would be necessary to look into the historical context in which BRICS emerged. Though the acronym was coined in 2003, one can really trace its origin in the political sense to 2008. The Afghan and Iraq wars had exhausted the United States and there was a major inward shift to American politics. The rise of Obama as a presidential candidate overcoming the far more internationalist Hillary Clinton reflected this shift. The collapse of Lehman brothers and Obama’s subsequent sweeping win in the Presidential elections sealed this shift. (The rise of Bernie Sanders as a credible challenge to Hillary Clinton in 2016, and Trump’s emergence as the Republican candidate to challenge her indicates that insularity not global inter-connectedness is still the most important pole in American politics. And the BREXIT vote is a sign that this phenomenon is much larger than what most analysts gave it credit for). Economically, the 2008 financial crisis lead to a loss of confidence the US had in its abilities to affect global change far in excess of the physical loss it actually caused. What made it worse from the US point of view was that many others, like China and Russia saw it similarly.

In fact, globally this was seen as the end of the unipolar moment that the US had occupied since the fall of the Berlin Wall though it was still seen as predominant. This shrinkage of the US’s abilities and confidence was attributed to hubris of the Bush years. So while the US was able to lean on China to get India the NSG waiver as part of the US-India nuclear deal in 2008, it had to do considerable heavy lifting, a sign that its influence was waning. Similarly, Russia could prevent President Saakashvali  from ending the illegal status of North Ossetia and Abkhazia, parts of Georgia which functioned as de facto independent regions but the Russian army had to do so under the guise of ‘peacekeepers, a fig leaf it would not need when it seized Crimea from Ukraine in 2013. Similarly, China made aggressive moves in the South China Seas (SCS), far in excess of its actions in the past, but did not precipitate matters. Unlike again the 2015-16 seizure and build-up of defence assets on ‘islands’ created by reclamation in different parts of SCS and its brazen disregard of the ruling of the Permanent Court of Arbitration in the case brought by the Philippines.

However, as the financial crisis unfolded and became contagious and the West unable to reverse its affects, Russia and China saw this as a good opportunity to increasingly challenge the extant international system. China’s ability to keep on adding capacity and capturing more and more of the western markets, running huge trade surpluses was unprecedented. This gave it financial resources that it used adroitly to invest in infrastructure and prestigious projects in developing countries across continents. And launch its One Belt One Road initiative by merging the New Silk Road and the Maritime Silk Roads initiatives. However, the situation is not as simple as it looks, with the BRICS countries themselves, by and large, mired in economic and political difficulties.

Status of BRICS’ Economies

The Chinese economy is saddled with considerable excess capacities, with recent growth driven by public investments in non-viable infrastructure projects funded by the repressed financial sector. The shift from export-led growth to one fuelled by domestic demand is turning out to be much more difficult than expected, and but for the (unnecessary) investments across the country, the growth rate of the economy would be far below the expected 6.2%. Simultaneously, the success of President Xi Jinping in centralising powers has made him the arguably most powerful Chinese leader since Mao. This and the political purges carried out in the name of the anti-corruption campaigns threatens to upset that institutional arrangements that Deng Xiaoping had put in place to ensure collective leadership of the Chinese Communist Party, and by implication of the Chinese State. The apparent refusal to choose a successor anytime soon underscores the political tensions, which combined with economic stagnation could be potentially destabilising.

Brazil’s economy was driven by exports to China and high petroleum prices, the unravelling of which has led to recession with no signs of recovery, not even little green spouts in any sector. The unprecedented political crisis with the impeachment of President Dilma Rousseff has left it with an unpopular caretaker government that is unable to break the political logjam needed to adopt necessary policies to restructure its economy.

Putin’s political opportunism in the Ukraine and the ensuing economic sanctions would have hurt Russia but when compounded by the collapse of petroleum prices led to a free-fall of the economy. While this has since stabilised, but not recovered, the Russian leadership needs political diversions to retain credibility. The armed intervention in Syria in support of the Assad regime while popular in the short-term could land up bogging Russia down in wars that no one would win. While Putin has adroitly brought, or bullied, Turkey into breaking away from the West insofar as Syria is concerned, the fundamental contradictions in the strategic objectives of both countries would ensure that the alliance is likely to be short-term.

South Africa, a politically correct add-on to the original BRIC, has the smallest, and weakest, economy amongst the BRICS nations. President Zuma is bogged down in corruption scandals and its economy is going nowhere. Other than optics, it has no reason for being grouped along with the others. If Nigeria could get its politics right, and improve its governance systems, it has the potential to become the engine of growth of Africa and a better claim to be seen as a major emerging economy. But that seems some time away.

India, under Prime Minister Modi, is the odd one out for the moment though in sheer impact on the global economy, it would continue to lag China for some time. However, in the short period of just over two years, it has demonstrated the imagination and willingness to create new instruments that has started delivering growth, a far cry from the policy paralysis and crony capitalism of the UPA days. A whole range of activities e.g., re-starting the infrastructure story, the emphasis on skilling India, financial inclusion (Jan Dhan Yojana etc.), improving the investment climate, transparent access to natural resources (think coal, spectrum), cooperative federalism through enhanced devolution of taxes, Goods & Services Tax etc., have changed the mood and image whose real impact would only be felt over the medium term. No wonder, India is, and would remain, the fastest growing large economy for some time.

Expectations of China, India and Russia

In the face of an obvious economic rationale for the group, it is useful to try and understand why these countries meet as BRICS, which is a subset of their world view. China is not just the leading country of this grouping but also the only one with immediate international aspirations. Its actions and policies suggests that it is not in thrall of the existing world order having ridden it successfully to emerge as the second largest power, poses the USA a challenge that the erstwhile Soviet Union could never do. China’s rise, as that of Germany in the last decades of the 18^th century is hugely disruptive; the Soviet Union’s heroic role in the defeat of Nazism enables it along with the USA to emerge as the only two real victors of World War, thought at huge human costs. This allowed the Soviet Union to become a very important rule maker of the post-War world order. China’s effort to become a rule maker is not going to be readily accepted as there is no Carta Blanca waiting to be written upon. Its forcible seizure of atolls in the South China Seas and rejection of the verdict of the order of the Permanent Court of Arbitration coming on top of other unilateral actions have caused trepidations in the neighbourhood. And made it less likely to win friends despite the seeming unlimited cash it is rolling out worldwide in infrastructure projects.

India, on the other hand, though hurt by past humiliations has never let history complicate its faith in its future. And since 1991, underscored the need to interact with the world to achieve its ‘manifest destiny’; a tendency strengthened dramatically with the assumption of office by Prime Minister Modi. It has no wish to challenge the international order based on liberal principles of rule of law, even though it would like them tweaked to accommodate its rise, or recovery of past position. Hence the desire to become a permanent member of the United Nations Security Council, of the Nuclear Suppliers’ Group and so on. However, it is not prepared to gatecrash and accepts that it would be though its emergence as a major economic power and as a provider of security in the Indo-Pacific that its case would be taken seriously. It remains prickly about formal alliances and accepts that while there may be strategic congruence with the USA, as there was with the Soviet Union for a while, ultimately each country must pursue its own interests.

For Russia, BRICS like SCO and the attempted Eurasian Union, represents its efforts to remain globally relevant even as economically it is a middle power unlikely to emerge as a major economy. The continued reliance of export of natural produce limits its ability to even retain its traditional markets of Central Asia, which though largely dependent on remittances from Russia, are much more plugged to China economically. Russia itself frequently lands up looking like China’s junior partner; the recent aggressive moves in Syria and challenge to the US should be seen in the light of Putin’s moves at retaining a larger role for Russia in world affairs.

Conclusion

Has BRICS delivered? If no, or not sufficiently, should the grouping continue to exist? The reform of International Monetary Fund’s quotas to better reflect China’s, and to a lesser extent, India’s economic weight, the establishment of the New Development Bank (NDB) and of the Contingent Reserve Facility is considerable achievements. However, the quotas would need further reforms going along and how credible the NDB emerges as a reliable and independent funding agency indicate that the journey is far from over. In fact the establishment of the China-promoted Asian Infrastructure Investment Bank (AIIB), where unlike the NDB, it is the dominant shareholder signals China’s discomfort at having to share power at multilateral forums. On the positive side, the rise of the NDB and the AIIB has forced the World Bank and the Asian Development Bank to simplify its lending norms; these so-called Safeguards were put in place to placate Western NGOs that saw themselves as speaking for the poor of the world since they mistrusted governments of developing countries who the NGOs saw as predatory. As a result, the autonomy of borrowers to frame their own social and environmental policies was seriously compromised. Worse, in effect lending cost went up as borrowers had to undertake various interventions and processes that were time-consuming and costly. This has been slightly rolled back and if NDB and AIIB were to develop into major financiers of development, the World Bank and other multilateral development agencies would be forced to become more sensitive to the needs and circumstances of the borrowers.

Politically, BRICS did coordinate their positions on the Libya issue, preventing a full-fledged international military intervention but failed to prevent the disintegration of the State and the country. Similarly on Syria, the initial discomfort with foreign military involvement finally gave way in the face of the persistent conflict and the rise of the Islamic State. It must be accepted that there are limitations in how politically relevant BRICS as a grouping can ever become. As three of the members (Brazil, Russia and South Africa) have varying degrees of economic dependency vis-à-vis China, they can be left out of the discussion for the time being. China and India have as many issues of dissonance as there are of congruence, with the former becoming larger over the years as China seeks to expand its footprint over areas and issues that threaten India. Internationally, India is committed to freedom of navigation and therefore of keeping the Sea Lines of Communications open. China’s unilateral moves are a serious challenge to this. Regionally, the continued use of Pakistan to keep India bogged down in its neighbourhood and to distract from its growth efforts far from reducing seem on the ascendant with China’s refusal to accept the naming of known Pakistani terrorists and the launch of the China Pakistan Economic Corridor that runs through India’s territory in the illegal occupation of Pakistan. Prime Minister Modi’s best efforts to isolate problem issues from others where cooperation should be further developed have not been reciprocated by the Chinese leadership, yet.

That however does not mean that BRICS should be disbanded or could have no role to play in global affairs. Technological disruption, Climate Change combined with the relative ‘withdrawal’ of the Western societies from globalisation poses substantial challenges to the growth stories and plans of BRICS, particularly China and India. Inward looking USA and the European Union lack the capability and credibility to lead on these serious issues, e.g., e-Commerce, monetary flows, agricultural coping strategies and others. The WTO negotiations seem to be going nowhere, challenged by plurilateral arrangements like Trans Pacific Partnership and the Regional Comprehensive Economic Partnership (RCEP). If the different components of BRICS are to achieve their geo-economic and geo-political goals, this grouping offers them a platform where they can develop common understanding and values that would contribute to global rule-making that is transparent, non-hegemonic and supportive of sustained economic growth. And for that BRICS would have to be sensitive to aspirations of its members and work in a spirit of partnership and equality.

The author is Director, South Asian Institute for Strategic Studies (SAISA). This is an adapted excerpt of key note address delivered at the One Day national Seminar on ‘Brick-Upon-Brick, For a Stronger ‘BRICS’: Challenges and Opportunities’, hosted by the Centre for Latin  American Studies, Goa University with the International Centre, Goa, August 12, 2016

 

The Twenty First Century world politics is seeing a sea change in the power calculus through the emergence of some of the major economies of the world in the form of BRICS. It leaves us with no doubt that this new phenomenon in  International Politics has created a new constellation and has been challenging the existing notion of the super power on several fronts. It needs to be noted that the West has been constantly making an effort to put down the BRICS initiative through different propaganda and several academic writings. The Wall Street Journal came up with a series of articles warning the readers and investors across the world to be wary of  growth and also not to get carried away. Today, BRICS together account for 30 per cent of global land, 43 per cent of global population, 17.3 per cent of the world’s merchandise trade, 12 per cent of global commercial services and 45 per cent of the world’s agricultural production and yet the West does not accept the fact that others are growing along with the United States and other developed economies. A question would emerge then-why is the West wary of the rise of BRICS?

The answer to the above question is quite interesting as it is not just the economy that is making the West to behave in a particular manner, rather it has to be credited largely to the courage and effort from the BRICS nations to boost their economies and the confidence in their approach to the world order. If we  look at the present scenario of the BRICS nations, on several counts  it is challenging the present world order. Firstly, on the economic landscape; secondly, on the leadership component, and lastly, the alternate view on politics which they have discovered from within and have not  borrowed from the West unlike  in the past. Each of these issues need elaboration to make a case that these factors seems to be unsettling the West and making them to go out of their way to somehow destabilise  BRICS as an entity.

If we look at India, China, Russia and to an extent South Africa with an exception of Brazil for the time being, all of these countries are economically doing well. India under the leadership of Narendra Modi has found a new direction in its economy. Though there are detractors who would not want to give credit to his economic reforms,  statistics prove otherwise. The present economic condition of India is considered one of the best since the adoption by India  of the LPG (Liberalisation, Privatisation and Globalisation) strategy in 1991. One may argue that the economy during UPA I was also good but the conditions were different as the world financial crisis came only in 2008 and by then the UPA I was finishing its last lap of the term in office. By the end of UPA II, the economy had gone from bad to worse and the scam ridden government was unable to sustain growth in a scenario of high inflation. It is at this juncture that Narendra Modi had to step in and take the mantle of the country . The type of radical economic reforms Modi has been able to bring in whether it is GST or transparent auction of the telecom spectrum, has put the country in the right direction ensuring high growth rate. No doubt that these reforms were also part of the mandate of the previous government, unfortunately they were unable to garner enough support of the legislators and States and also to a large extent,  willingness too was  lacking. One of the senior economist of the country said ‘If the Monsoon in 2016 is as expected, then the first three years of Modi will be the best three years since 1996, and possibly the best three consecutive years for Indian economy since independence’. It is this achievement that West did not anticipate with regard to India and also did not expect radical reforms in the economic sector. India has been steadily growing at 7.6 %, though  this was expected only in the beginning of 2016. The vibrant Make in India campaign and boosting the manufacture sector is a cause of concern for the Western market  as they have had monopoly in certain sectors for centuries now.

Same is the case of China, which since 2006 has been the largest holder of foreign currency reserves, estimated in 2015 to be more than 3.8 trillion dollars. According to the International Monetary Fund (IMF), China’s gross domestic product (GDP) surpassed that of the United States in 2014, making it the world’s largest economy in purchasing-power parity terms.

Even when there is constant propaganda against Russia from the West, there are some scholars who have taken realistic view of the economy and what Putin has done to Russian economy after Boris Yeltsin. One of the scholars opines that ‘net private capital outflows in 2014 stood at $150 billion, which is equivalent to 8 percent of GDP.  This is a record high for Russia, a country well-known over the past couple of decades for its capital flight, owing to an erosion of the population’s confidence of investing at home’. Yet the world goes blind as it wants to demonise Russia and its influence in the continent in particular and world in general. Another scholar says that ‘according to data from Bloomberg, some 78 percent of Russian companies on the MICEX index showed greater revenue growth in the most recent quarter than their global peers did. And Russian companies on the whole are now more profitable than their peers on the MSCI Emerging Markets index’.

There can be an argument that the other two members, Brazil and South Africa, are in trouble and not doing so well .  Similar is also the case of the European Union and yet it is  acceptes it as a success. The RIC (Russia-India-China) of the BRICS are capable of helping Brazil and South Africa.  Also there is a hope that very soon with political stabilisation there would be recovery.

With regard to the second argument, namely  the leadership component, the RIC countries have probably  the strongest leaders of the world at this juncture. United States, probably by default being the super power might want to call its President a strong leader but the RIC countries have leaders who are capable of speaking their mind and ability to back  their words with deeds. Xi Jinping and Putin were anyway known as strong leaders whereas India has got one now in the form of Narendra Modi. Without any hesitation and probably with the lone exception of some of his detractors in India, the rest of the world has accepted him as one of the most charismatic leader, who is part of the agenda setting in the international affairs. Meeting with Barack Obama  six times over last two years of him since coming to power  proves that even Obama seems to be convinced of the leadership qualities of Modi. Xi Jinping is experimenting with his country and the people have accepted him. He is even hailed as the greatest after Mao by many. Jonathan Fenby says ‘Projecting a folksy image domestically as “Xi Dada” (Uncle Xi), he appears popular, as a leader with ambitions that match China’s economic weight, the strongest chief of the world’s most populous nation since Mao Zedong’. This is a considerable achievement in international politics to lead a country of the might of China. Putin has been made to look like a villain and also has been dubbed by the West as the next Hitler. Putin is much more strategic than Hitler;  for that matter he is the Mr. Cool and task master in the international politics. One just needs to  to remember what he has done to Syria where the Western powers seem to have  no clue about their mission. Look at someone like Erdogan and see how he has succumbed to pressure and has gone back to Putin, and not to the Western powers, to fight the ISIS and extremists.

Though  the spark of  great leadership  was seen in Dilma Rousseff and Zuma, off late these two have fallen prey to corruption charges. This is seen as the only  rough patch in managing BRICS leadership. The RIC countries are confident than ever before to take the mantle and move further. This has been done so even when the two leaders of Brazil and South Africa have been in trouble.

The last argument to put forward is that of the alternate politics and ideology being provided by the RIC leaders of the BRICS. Putin has proved his mettle as a strong leader and has proved this against all his opponents in Russia and abroad. His politics is still not understood by many in the world; he has continued to remain as one of the strongest leaders of the world. He has strengthened his United Russia as one of the strongest political parties in Russia. When everybody wrote Russia off, it was he alone who believed that he could bring stability to the political situation of his country. His tactics and manoeuvrings can be called as his politics from within. He is least bothered about the glorified concepts of the West used to abuse him. He has convinced his people to accept him as he is and  he has proved through  elections every time. Xi Jinping believes that China’s “consultative democracy” – or system of consultative conferences – as the country’s unique way of fostering public consensus and reaching out to citizens on important matters. He does not see the democracy envisaged by the West as the model. Though it may sound that China is an authoritarian country and it has to become democratic, the Chinese leader feels that the Western model need not be the only model. He is one who has been able to be popular as a leader by taking up issues of corruption and many other evils of the society without copying everything from the West. The urge to come up with their own model and ideas itself is a point of departure from the hegemony of the West in some concepts based on ideology. In case of Narendra Modi, though he endorses the present day ideals such as democracy and human rights, he feels that these have been practiced and preached by India much before the West was a civilised society. He would every time get back to ‘Vasudaiva Kutumbakam’ and ‘Ekam Sat Vipra Bahuda Vadanthi’ rather than ‘Liberty, Equality and Fraternity’ slogan. He fought against all the odds that came in his way to the most powerful office of India. The West painted him as a villain with the Godhra incident, yet he did not spew venom on them and grew beyond their expectation by embracing them and calling them good. This itself is seen as one of the biggest failures of some of the Western countries. His ‘country first’ slogan, Make in India to Clean India have gone past regular rhetoric’s used by the leaders of the world. His politics is not borrowed one but a genuine understanding of his country and the soil. This component of politics from within is highlighted to prove the point that these leaders are not in dearth of ideas and are capable of pulling their respective countries out of crisis.

The emerging world order is shaped by BRICS due to their capability to give alternate options to the present system in the world and that emerging world order would be shaping the politics of the Twenty First Century. Every step of BRICS, whether it is a bank or university or for that matter even thinking beyond the boundaries to create alternate politics from finance to literacy, would be the greatest point of departure in world politics.

Introduction

The BRICS cooperation is at the crossroad,   initially tagged with five major emerging economies, is now far beyond the original concept tailored for the financial markets. One the one hand , BRICS has rapidly become a new and promising political-diplomatic entity, explored different kinds of dialogue mechanisms covering economic, trade, finance, business, health, education, academic, combating transnational crime and security among others, enhancing the grouping’s ability to shape the global agenda. One the other hand, BRICS cooperation is facing some common economic and political challenges, with some Western analysts non-stop trying   to “bury” the alliance, saying that it will inevitably fall to pieces because of the differences existing within the organization’s framework.  The fact is that BRICS cooperation is standing at a new historic starting point to reshape their cooperative strategy. BRICS needs to continue deepening their mutual-political trust, fulfilling the current consensus and transforming itself into an influential common voice.

The Common Challenges

With the rapid changes in the   international economic situation, the world economy is slowly recovering, however geopolitical issues are still to be settled. There are also lots of global challenges that are coming up. It is in this backdrop, that BRICS cooperation is faced with new situations and new problems. Firstly, the BRICS countries’ economic growth are facing unprecedented challenges and they continue with the adjustment process; the complicated external economic environment continues exacerbating divisions in the BRICS countries’ macroeconomic policies. Secondly,  multiple dialogues leads to  better understanding among five countries but are still far away from substantial cooperation which leaves the impression amongst the public  that as far as BRICS cooperation was concerned, form prevails over  substance.. Therefore, BRICS could consider setting up a standing committee to prioritise agreements and ensure implementation. Thirdly, BRICS needs to deepen the areas of cooperation  to build the confidence of the outside world  about its future, properly handle the sensitive issues that could enhance the mutual-political confidence and help propel rapid development of the BRICs economies.

BRICS: Speak with One Voice

BRICS has become an important player in the international arena, having an influential voice in international discourse and in shaping the international agenda. This mechanism was established as a marked feature of the global multi-polarization in response to the needs of the time. It carries the burden of  expectations not only of  the people of BRICS countries, but also of those from emerging markets and developing countries.  The BRICS members are committed to coordinating in multilateral forums with focus on economic and political governance. To deal with the complex and volatile international situation, BRICS countries should enhance their abilities to speak with one voice.

BRICS countries should improve the global economic governance. The volatile global stock market and energy prices are caused by the limitations of the global governance system which should respond to  the international reality of developing countries’ collective rise and reflect the changed international political and economic landscape. Consultation and decision making based on equality between developing and developed countries would make for historic progress. BRICS should continue to guide the international community to form rational expectations over cooperation in BRICS,   help boost reform  of global economic governance and elevate the  representation and voice of emerging market countries and developing countries.

BRICS countries should advocate international cooperation in development. BRICS countries are active promoters of global development partnership. The Hangzhou Summit formulated the G20 Action Plan for the Implementation of the 2030 Agenda for Sustainable Development and proposed the G20 Initiative on Supporting Industrialization in Africa and the Least Developed Countries.  This highlighted development the most and yielding the best outcomes. BRICS countries should proceed to improve the global development partnership and urge developed countries to fulfil their promises of supporting developing countries. BRICS is playing a more and more important role in safeguarding world peace. In recent years, with efforts of all sides including BRICS countries, the Syrian crisis didn’t repeat the tragedy in Libya and has moved on to the path of political settlement. The purposes and principles of the UN Charter have been maintained and an increasing number of countries are offering their support in establishing a new model of international relations with win-win cooperation as the core. BRICS countries need to continue to promote dialogues and negotiations and solve hotspot issues through peaceful and political measures.

BRICS: Reshape Confidence to Lead the Global Economic Growth

BRICS cooperation has already gained historic achievements and should continue its leading role in promoting world economic growth and implementing the sustainable development agenda. BRICS should reshape its confidence to lead the global economic growth and make concerted efforts to push forward the reform on global governance and cope with global challenges together. In face of the complicated international situation, BRICS should stay confident and determined to handle challenges together, give firm support to each other and launch innovation cooperation in order to let the BRICS cooperation burst out stronger vitality. Also, BRICS countries should continue promoting the establishment of a fairer and more just international order and stepping up coordination and cooperation on major political and economic issues, so as to tackle all kinds of global challenges together and build a favourable environment for the development of all countries.

After a decade of development, BRICS cooperation has gradually grown in strength. The five countries have also exchanged views on international counter-terrorism cooperation, the 2030 Agenda for Sustainable Development, climate change, the Middle East situation and peacekeeping in Africa, forming an all-round and multi-layered cooperation framework that covers extensive areas and setting an example for cooperation among emerging market countries and developing countries. These year have witnessed effective cooperation in different fields including people-to-people and cultural exchanges, agriculture, railway and tourism among BRICS countries. BRICS countries should reinforce cooperation in innovation, digital economy, poverty reduction, public health and other areas. All countries should ratify the Paris Agreement as early as possible and fulfil relevant commitments on emission reduction. All parties should deepen the BRICS cooperation and support such initiatives as the BRICS credit rating agency, the New Development Bank Academy and the agricultural network.

BRICS: To Enhance the Mutual-Political Confidence

Over the past few years, BRICS has made big progress over the economic and financial cooperation. With the support from BRICS countries, the G20 Hangzhou Summit has achieved a complete success, charting the course for the global economy. However, down the road BRICS cooperation would seem to face  rising geopolitical risks which could badly influence  the mutual-political trust among the BRICS members. Lacking mutual trust, powers usually come into increasing structural conflicts which  would be reflected in: Sino-Pakistan ‘quasi-alliance’, China’s ‘March West’ and India’s ‘Act East’, also the quadrangle of China, India, Russia and United States.

It is hoped that such cooperation could be further deepened as the BRICS working together towards a cooperative strategic partnership. BRICS countries should condemn terrorist attacks together and join efforts in combating terrorism, and strengthen confidence in growth and boost coordination within the emerging-market bloc so as to jointly cope with global challenges. Last but not the least, standing at a new historic starting point in BRICS cooperation, the BRICS countries should respect mutual core interests in order to promote  friendly people-to-people exchanges . Next year China would assume the rotating presidency of the BRICS mechanism, and as the five BRICS members have strong willingness to push forward the BRICS cooperation, this mechanism would continue to achieve the fruitful results.

The writer is an Associate Researcher at Hainan Institute of World Watch