New Delhi: We often speak about the need to cultivate and improve relations with countries in our “neighbourhood". But we are, more often than not, quite confused about what constitutes our “neighbourhood". Many define our “neighbourhood" by loosely using the term “South Asia". This term entered the diplomatic lexicon of the US state department in the 1970s/1980s. It was increasingly used thereafter. “South Asia" was then defined as extending across what the British loosely called “British India", or the “Indian subcontinent".

Not surprisingly, many of our scholars soon started using the term “South Asia" to define the geographical limits of India’s strategic frontiers. With our economy on the verge of collapse in 1990-1991, we found it convenient to limit our international economic vision, till the middle of the 1990s, to what was popularly alluded to as “South Asia". This was only natural, given the fact that we had then adopted a disastrous economic policy of “import substitution", which was a recipe for an average annual rate of growth of 3-4%. Our economic policies had then also resulted in our having negligible trade and economic ties with the dynamic economies of East and South-East Asia.

This region of South Asia/British India was of little relevance or interest in the context of global economic developments. On the other hand, countries in our eastern neighbourhood, extending beyond the Straits of Malacca, were proceeding on a high growth path by the 1970s. This enabled East and South-East Asia to soon become the fastest growing economic regions in the world.

Most importantly, it was during this period that, under the visionary leadership of Deng Xiaoping, China commenced what was an economic revolution. Beijing dumped its “socialist" policies in the dustbin and thereafter became the fastest growing economy in the world. It required a visionary like former prime minister of India Narasimha Rao to realize the importance of integrating our economy with the fast-growing economies of East and South-East Asia, with what he designated as a “Look East" policy.

Comprehensive national power

In today’s world, the influence of a country depends largely, and indeed primarily, on the strength of its economy, which enhances its role in and contribution to regional and global trade, investment and economic progress. This has to be coupled with the country’s ability to defend its land and maritime frontiers. India and China had played a significant and even dominant role in world trade till the advent of European colonial domination and rule. India is estimated to have had the largest economy in the medieval world, until the 16th century. English historian Angus Maddison has estimated that India’s share in world income was roughly 27% back then, as against Europe’s share of 23%.

Following two centuries of colonial domination, India’s share of global trade fell to 1.9%, while China’s share was less than ours—a mere 1% in the 1940s. Our share of world trade has today reached around 2%. In marked contrast, China is today the world’s largest exporter, with nearly 14% of world exports. Trade in goods and services and the outward and inward flow of foreign investments play a crucial role in any country’s overall strength and influence in the world today. It is not surprising that China’s dramatic rate of economic growth over the past three decades has enabled it to emerge as one of the two leading powers in the world today—becoming the world’s second-largest economy. While economic power is a crucial element today in determining the influence a country wields, economic power has to be supplemented by national unity, political resilience and military strength for it to wield influence regionally and globally. India has much to learn from China’s experience. Mere rhetoric and pretensions are no substitute for what the Chinese refer to as “Comprehensive National Power".

Mercifully, the economic crisis of 1990-1991, when we were all but totally bankrupt economically, compelled us to liberalize our economy, throw policies of “import substitution" into the wastepaper basket and embark on a policy of economic liberalization. This was coupled with seeking economic integration with the fastest growing economies of the world in East and South-East Asia. These long-overdue economic reforms enabled us to accelerate rates of economic growth to over 7% annually. Our Free Trade Agreements with Association of Southeast Asian Nations (ASEAN) and Comprehensive Economic Cooperation Agreements with Japan and South Korea now place us in parallel with the dynamic, fast-growing countries to our east. This has been augmented by strategic partnerships with countries across East and South-East Asia. It is this growing economic integration that enables us to fashion partnerships beyond our eastern borders to balance the power of a growingly assertive and jingoistic China.

The conflict-ridden West Asia and Afpak

The political, economic and geopolitical situation in our oil-rich western neighbourhood is different from what is happening to our east. The 9/11 terrorist attacks on New York and Washington DC, accompanied by a growing American military presence in the region, have also changed the strategic scenario across our western borders. Our “Afpak" neighbourhood has now emerged as the epicentre of international terrorism. While the rest of South Asia is now focused on democracy and economic growth, Afghanistan and Pakistan (Afpak) are mired in a vortex of great power rivalry, pitting the US against Russia and China. We have to delicately manoeuvre in this region, where China and Russia have made common cause to strongly back the Taliban. While seeking to balance Chinese power, we have to combine our regional initiatives with sustaining our crucial defence and energy relationships with Russia.

This is the geopolitical scenario which is going to keep us occupied in coming years, especially given our concerns about Pakistan-sponsored terrorism. It is also a situation, which is going to be inevitably embedded with what is happening further westwards, from Iran to Turkey, across Saudi Arabia and the oil-rich Arab Gulf countries. This region, popularly alluded to by the Americans as South-West Asia, is now in the midst of fratricidal Shia-Sunni and Arab-Persian rivalries. Trump’s US is backing Saudi Arabia while imposing sanctions on Iran. Tehran is now virtually under a Russian-Chinese security and energy umbrella. We are also increasingly importing oil from the US, while at the same time having a thriving investment partnership on the exploration and refining of oil and natural gas with Russia. US sanctions on Russia cover both arms supplies and energy-related projects.

Over six million Indians reside in the politically volatile Persian/Arab Gulf Region. They remit back over $40 billion annually—money that is crucial for India to maintain a healthy balance of payments. Moreover, 70% of our oil imports are from this region. Being able to respond to emergencies affecting the lives of Indian nationals is crucial. The recent agreement, concluded during the “2+2 talks" with the US, enables us to cooperate and coordinate action with the US Fifth Fleet, based in Bahrain, across our western maritime frontiers. This is essential if we are to respond expeditiously to situations where the lives of Indian nationals may be endangered because of conflicts and regional rivalries. This agreement enables us to not only safeguard the security of oil and gas imports to India and beyond from the Gulf Region, but is also important for the security of over six million Indian residents there.

Rethinking our strategic frontiers

All these developments have now led to a more rational and realistic understanding of where India’s “strategic frontiers" lie. Our energy needs and the safety and security of our nationals will depend largely on how we contribute to the stability of a neighbourhood extending from our western maritime borders to the Straits of Hormuz and to the Gulf of Aden. Apart from actions to protect our energy security by interactions with countries across our western shores, our economic progress is also going to be significantly influenced by the speed and imagination with which we respond to economic opportunities and challenges across our eastern shores. The growth of Chinese maritime power is going to seriously affect developments across the entire Indian Ocean region, from the Straits of Malacca to the Straits of Hormuz.

A stable and effective balance of power has to be achieved across our eastern shores in South and South-East Asia to meet challenges posed by an assertive China in our eastern neighbourhood. This would require imaginative diplomacy with ASEAN countries, especially, Indonesia and Vietnam, apart from major economies like Japan, South Korea and Australia. We also need to remember that this entire region is substantially integrated economically. Much will depend on how we can contribute economically to growth and progress across our eastern shores. Dealing effectively with an aggressive and assertive China is going to require a careful and imaginative mix of diplomacy, economic cooperation, and military/maritime cooperation.

G.Parthasarathy is a former diplomat. He served as India’s high commissioner to Pakistan and Myanmar. This is the first part of a series on India’s extended neighbourhood.

Close