Biding time to enter the USD 10 tn club

I write this article with some authority based on my visits to almost all nations (except Afghanistan) of the Indo-Asia-Pacific region. I have not only lectured there, but discussed with think tanks and have also sailed in this region while in the Navy and Coast Guard. I have also visited India’s disputed border areas with Pakistan and China, and sailed the disputed waters of the East and South China Seas.

While I pen this piece after my recent visit to China, where I interacted with their top think tanks and saw at first hand the improvements made in the Chinese infrastructure, I wish to state that some of the recent talk about a meltdown of the Chinese economy is premature. The focus of this article is on Prime Minister Modi’s visit to the US, but I wish to clarify at the outset, that India will be taken seriously on the global stage only after its economy reaches $10 trillion and it is willing to use its military and diplomacy simultaneously to protect its national interests.

Mr Modi’s visit to the US, including his New York meeting with the 47 CEOs of Fortune 500 companies and his California meetings of September 26-27 with CEOs of Facebook, Apple and Google, have been a success till now, despite the black-flag waving Patels trailing him. The PM is scheduled to meet President Obama today, to discuss the US helping India boost its military and homeland security capability and also cooperation in energy security. India needs modern American weapons to offset the Chinese and Pakistani threats, and it needs modern American “clean” energy (nuclear energy, wind and solar power).

Mr Modi needs $1 trillion for infrastructure to kick-start the Indian economy, but the US does not have money to spare. Only China can write that cheque as it has $4 billion surplus, but it may expect that India, in return, agrees to the Chinese One Belt, One Road policy. OBOR focuses on connectivity and cooperation among countries in Eurasia, which consists of the land-based Silk Road Economics Belt and oceangoing Maritime Silk Road. India can’t, for geopolitical reasons and also because the $46 billion China-Pakistan economic corridor (part of OBOR) passes through PoK. Ironically, India may agree to another part of OBOR, i.e. BIMC (Bangladesh, India, Myanmar, China) economic corridor.

The US and China are aware that India is yet to implement critical reforms and speedy single window clearance for foreign investors. The Americans have also complained about the delays caused by Indian bureaucracy which needs to be replaced by “professionals on contract” as has been done in some advanced nations. India has border disputes with nuclear-armed China and Pakistan. The US wants a strategic relationship with India to counter China. That makes them likely to team up. While the US has openly supported India’s candidature for a permanent UN Security Council seat and also for membership of the Nuclear Suppliers Group, China may oppose it.

Clearly, Mr Modi’s leadership skills will be tested, especially since time is running out. Global oil prices may start rising again and a global economic crises looms.
On September 18, 2015, China Daily carried a report which stated that the representatives of the Chinese and American governments had met a 35-member Afghan government delegation in Washington DC, and that all three sides had reached “important agreements” on the future of Afghanistan. My first reaction was that this little known agreement meant that India’s $2 billion humanitarian investment in Afghanistan had been wasted because it seemed that the US and China had left the role of “policing” Afghanistan to the Pakistan Army and ISI.

Given this ground reality, there is little that India can do in Afghanistan. Pakistan (backed by the US, China and Saudi Arabia) will continue to flex its military, nuclear and terror muscle and happily play the role of a “regional mercenary force”.

China is not a democracy like India, but we in India can learn some lessons from its rise. During my discussions and visits I realised that the Chinese are confident that they can “manage and control” their territorial disputes by skilful “escalation and de-escalation”. With China-US annual trade pegged at $550 billion, the Chinese are not too worried about who takes which side.

China’s $10 trillion economy is four times larger than that of India. But by PPP India is the third largest economy after the US and China. Mr Modi’s military options to counter Pakistan and China are limited, since the US is still a “strategic partner” of Pakistan and Saudi Arabia, while Pakistan is a “strategic partner” of China. Mr Modi needs to emulate China’s policy of 1978 to “bide its time” till it became economically strong, before flexing its military muscle. India needs to focus on reforms, FDI and economic growth, avoid a war, build up its military strength gradually, and rely on nuclear deterrence to deter China and Pakistan till it becomes a $10 trillion economy.

The writer retired as Flag Officer Commanding-in-Chief of the Eastern Naval Command, Visakhapatnam