The Kelkar Doctrine: Economic development as foreign policy

Vijay Kelkar’s statement that 10% GDP growth was the best foreign policy for India merits greater public debate
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First Published: Mon, Dec 31 2012. 10 39 AM IST
A file phto of Vijay Kelkar, chairman of the 13th Finance Commission. Photo: Ramesh Pathania/Mint
A file phto of Vijay Kelkar, chairman of the 13th Finance Commission. Photo: Ramesh Pathania/Mint
The great poet Ramdhari Singh Dinkar concludes his poem “Shakti Aur Kshama” (”Power and Forgiveness”) with the following lines:
Sahansheelta, shama, daya ko tabhi poojta jag hai
Bal ka darp chamakta uske peeche jab jagmag hai
Roughly translated, Dinkar writes that the world respects the virtues of tolerance and mercy only when they are found in the strong. In the context of nations, power has multiple components—military power, economic power and socio-cultural power. The latter is seen as “soft power”, which is increasingly important but irrelevant without the first two. In recent decades, economic capacity is becoming more important even within hard power.
Vijay Kelkar, chairman of the 13th Finance Commission, recently said that a 10% GDP growth rate was the best foreign policy for India. This erudite observation by the former finance secretary merits greater public debate. One might call it the Kelkar Doctrine.
Military strength, despite its great importance, offers diminishing marginal returns. Possibilities of asymmetric power projections preclude any simplistic linear comparison of military resources. This is especially true for those who have crossed the nuclear rubicon - notice how India and China have astutely said “No, thank you” to matching America or Russia when it comes to the size of their nuclear arsenals. When a weapon is so massively destructive, there is no real difference between having a hundred or having ten thousand. Moreover, economic strength and military prowess are inter-linked - the proceeds of economic growth when invested in creating military technology can generate a mutually reinforcing cycle of innovation, productivity gains and military strength.
Direct military aggression is giving way to indirect economic aggression. India was at the receiving end after the Pokhran nuclear tests in 1998 attracted the ire of the international community and economic sanctions were imposed. India responded by accelerating economic reforms and liberalizing the economy. The tests paved the way for the nuclear deal a decade later that recognized India as a “legitimate” nuclear power. There was substantial partisan opportunism in the aftermath of Pokhran II - Congress president Sonia Gandhi had said that “”Real strength lies in restraint, not in the display of shakti.” Public intellectuals like Amartya Sen may also find that their criticism of the tests was misplaced – Pakistan already had nuclear weapons, so the Vajpayee government’s decision to go overtly nuclear did not result in India losing its conventional advantage: that had already been lost perhaps a decade ago. The deterrence engendered by nuclear weapons has contributed to preventing a full-scale war between India and Pakistan over the last three decades, although it also provided cover to the latter for cross-border terrorism.
Harvard University’s Steven Pinker expounds in his book “The Better Angels of Our Nature” how, relative to centuries past, war and political violence have declined dramatically in the second half of the 20th century, a phenomenon he characterizes as the “New Peace”. He suggests that the maturing of the idea of nation-states has contributed to bringing this about - governments can step in to restore law and order when violence erupts. Hyper-nationalism, which caused so many wars, seems to have been somewhat tempered with a near-universal enunciation, if not internalization, of basic human rights. One can also credit the rapid increase of global commerce for curbing inter-state wars. With nations being tied together economically, destructive military entanglement is not in anybody’s interest.
These assumptions contain in them an implicit teleological ordering of history moving towards a liberal order in almost a linear fashion – something brought into question by the unprecedented violence in the first half of the 20th century despite a rise in trade and peace in the 19th century. The counter-strain to such Kantian optimism or “liberal internationalism” has its roots in Kautilyan and Machiavellian pessimism, updated and packaged for modern times as the important framework of “realism”. Realism says that nation-states are by far the most important actors in geopolitics, not supra-national organizations or intra- and cross-national civil society actors. This description of foreign affairs is largely valid. But realism does not come with any specific prescriptions except the anodyne, indeed tautological, dictum of “following the national interest”. The question then is what is the “national interest”? Can there even be one coherent “national interest”?
A country ordering its interests presupposes a Weltanschauung inherent in foreign policy makers. This is where “constructivism” comes in, the third theory in modern international relations studies, and one that has completely different axioms from the other two. Instead of having a neo-Hegelian liberal view or a neo-Hobbesian realist view about the world, constructivism asks that one first specify one’s preferences, priorities, and time frames for desired results and only then would a foreign policy “answer” emerge.
One version of a “constructivist” foreign policy would be the controversial but much misunderstood neo-conservative worldview which is not averse to the interventionist promotion of democratic and liberal values abroad as a relatively high priority. America’s misguided Iraq adventure has somewhat discredited this school of thought – and rightly so - yet as India helplessly looks at Maldives reorienting towards China after a virtual coup, our eminent intellectuals would certainly be rethinking some of their views.
While one should be opportunistic, there must be some philosophy that guides decision-making in foreign policy. Being just a “realist” therefore, as it is increasingly fashionable on the right-wing of the political spectrum after the collapse of the Soviet Union, is like merely stating that India must become a rich nation, and doesn’t answer the “how”.
Since independence, two consistent strains in India’s foreign policy have been to first keep India united and physically secure, and then to maintain a largely reconciliatory, accommodating posture in international relations. Our time frames have not been the long run – we have no explicit grand strategy – and our preferences have certainly been influenced by internal political vote-banks not just when it comes to Sri Lanka and Israel, but in trade talks too, where we have been excessively protectionist. This negates the realist idea of nation states as black boxes whose internal considerations do not influence policy, only relative power and imperatives of geopolitical balance do.
Foreign policy design, then, requires that we think about our priorities – how important are individual rights as we think about various civil liberty violations? How important are our “values” – should we ask the Dalai Lama to take asylum somewhere else to warm our ties with undemocratic China? After all, the cold-blooded realist argument could go that we have no territorial interest in Tibet so why not exchange the Tibetan leader for some concessions from the Chinese? Should our state-owned companies go on a mercantilist overdrive in Africa, Americas and Australia in a clear imitation of Chinese policies? Should FDI in defense be permitted? Empirical evidence suggests that military technology has been a feeder for civilian sector innovation. These are some questions that require a discussion that is more philosophical, because the eventual strategy is dictated by the priorities that emerge from the fundamental belief system underlying that philosophy.
Economic size and solvency expands the scope and scale for a nation’s defense and diplomacy. In an age when full-fledged wars are becoming rare, economic strength also makes available funds for the deployment of strategic international aid to win friends and influence people. Money talks more, now that muscle walks less. A young Theodore Roosevelt wrote a book on the importance of a strong navy.
More than a century later, political leaders must understand the importance of higher sustainable economic growth rates not just for domestic prosperity but for international influence. The American economy is eight times bigger than India’s, and the Chinese economy is about three times larger. India needs liberal economics to make Kelkar’s sustained GDP growth rates of 10% possible, because that’s what will strengthen the nation with Dinkar’s “Shakti”.
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First Published: Mon, Dec 31 2012. 10 39 AM IST
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