Vol. XLI No. 50 December 10, 2017

India‘s Strategic Extravagance to Bail-Out America

B Arjun

MODI’S foreign policy is in doldrums. It suffers from fixity syndrome. It refuses to jettison the Cold War mindset. As in the mid- 1950s, New Delhi’s only agenda is to counter China and present itself to the West as a credible competitor to Beijing. It has got into a rat race with China and is splurging money on overseas projects merely to offer a counter to Chinese investments. For example, India’s US$ 300 million investment in Hambantota’s ghost airport.

The foreign policy advisors to the government in Vivekananda International Foundation (VIF) and India Foundation feel that it was important to acquire stakes in Mattala Airport to checkmate the Chinese in Hambantota, a key port in multi-trillion dollar Belt and Road Initiative (BRI).The Chinese had built the airport at a cost of $253 million. They reportedly bid to operate the airport, but failed to strike a favourable deal with the Sri Lankan government. India pitched in and inadvertently indulged in a buy out of Sri Lanka's debt to China.

India’s investments in the Iran’s Chabahar port is largely in response to the Chinese development of Pakistan’s Gwadar port. Our acceptance of the term Indo-Pacific, popularised by USA, is also guided by our desire to take on China in South China Sea. Most of our naval procurements, like the P8I maritime reconnaissance aircraft, is to keep an eye on China. Our recent involvement in the Quadrilateral Initiative (Quad) at Manila with Japan, Australia and the US is also directed at China. India joined the Asian Infrastructure Investment Bank, a financial body erected to fund BRI projects, but is vehemently opposed to the very idea of BRI. India has joined the Shanghai Cooperation Organisation (SCO) but sees itself more as a party popper. 

Why is Indian strategic thought so obsessed with China? The opportunity cost of sustaining a rivalry with China is too high. We have experienced similar set of problems with Pakistan where complete focus on security has had a negative impact on economic integration of South Asia’s regional economy. This has prevented the two countries to pull-up millions from below the poverty line.

The common problem in India-Pakistan and China–India relations is America. It used Pakistan as a proxy to balance India and is now using India as a counterpoise to China. Unless we tackle American imperialism, regional integration will remain a pipedream. Unfortunately, the Indian elite, intricately linked to American financial and intellectual networks, cannot imagine a different world. As in the British Raj, our elite continue to be ‘more loyal than the King’. Preserving the American empire at the cost of India’s economic health seems to be the sole purpose of Indian strategy.

The debt-ridden America (the US debt is more than $20.1 trillion, the largest in the world) lacks the capacity to take on China singlehandedly. It simply cannot afford to fritter away its dwindling economic and financial resources dealing with the rise of China. The Chinese are confronting the dollar hegemony, US navy’s command of the Oceans and the US monopoly of global trade routes.

Beijing is launching a yuan-denominated crude oil futures market that may severely dent the dollar-based Brent exchange. In an additional, the new “petro-yuan” is being made convertible into physical gold at the Shanghai and Hong Kong gold exchanges. The Saudi King, a close ally of American capital, has refused the Chinese offer to accept yuan for oil trade but countries like Venezuela, Russia, and Iran are ready to accept Yuan-Oil. As the petro-dollars loses its sheen many other countries will join the Gold-Yuan-Oil bandwagon. The emergence of an alternative to petro-dollar will be a severe blow to American habit of making others work to fund the extravagant war-games that yanks play across the globe. The rich American military industrial complex is perpetually on a look out for war zones where it can test its latest weapons, just as their pharma industry is constantly seeking guinea pigs in poor countries for trial of new vaccines and dangerous drugs.

The Chinese are also attacking the US monopoly of international trade routes on the high seas by building alternative routes on land and in the maritime domain. The US economy earns a great deal by controlling the marine service industry which plays a huge role in manipulating the freight rates, and insurances rates of the cargo that uses sea as a medium to travel from one end of the world to another. The Chinese Belt and Road initiative that has connected up the entire Eurasian landmass through railways and roads will draw a large chunk of global trade away from the oceans. The undermining of the oceans is something that the Anglo-Saxons find it hard to digest, because it is on sea routes that Western capitalism travelled to become imperialism. 

Navy is the instrument that helped European and later American power to control the oceans. But this colossal power at sea is finally meeting its competitor. Currently, the US navy is the biggest in the world. It operates about 275 ships and more than 3,700 aircraft. ‘And its battle-fleet tonnage is greater than that of the next 13 largest fleets combined.’ The US Navy operates 11 aircraft carriers, the Chinese have only one. But the Chinese plan to alter the global naval dynamics by building a 351 ships navy by 2020. The growing Chinese expertise in robotics and artificial intelligence is likely to modernise their military in all respects by 2035.  

Americans can clearly see that the financial, naval and trade order erected by her, after dropping nuclear bombs on Japan, is crumbling apart. Bankrupt America is left with no option but to gather its old allies like Japan, Australia and India to pool in their military and other resources to meet the Chinese challenge. India is conveniently ignoring the past US record of forging such alliances. In 1955, the US initiated the signing of Baghdad Pact with Iran, Iraq, Pakistan, Turkey and the United Kingdom. The pact was later renamed as the Central Treaty Organisation (CENTO). The pact was dissolved in 1979 and from then on peace has eluded Middle East and the regional order has been in tatters. 

Modi as chief minister of Gujarat chased Chinese money but as prime minster he is hardly bothered about China. His primary focus is formulating a “100-year long strategy” with the US. Trump can go to China and happily sign US$ 250 billion deals with them but for India the Chinese investments are seen to be laced with security threats.

The irony is that while Modi wants India to be wary of Chinese investments, but Adani, his favourite crony, is seeking money from China. The worst is that Adani is not negotiating with China for investments in India but is bending over backwards for $1.54 billion from the China Machinery Engineering Corp (CMEC) for financing his controversial coal mines in Australia. It would be naïve to imagine that China would not extract its pound of flesh. What deal will Modi sign with China to procure funds for his friend is the question that needs to be addressed.

Modi’s foreign policy sees growing Chinese involvement in Nepal as a problem but ignores the American networks that are at play both in Nepal as well in Bangladesh. Take for example, the work of Omidiyar Foundation, the new-age American philanthropic organisation, currently active in Nepal. Pierre Omidiyar was the founder of eBay. And incidentally, the union minister in Modi’s cabinet, Jayant Sinha till recently was a partner with Omidiyar Networks. Why Jayant Sinha worked with Omidiyar is not the problem. The issue is the influence of these networks on our policy making and in shaping our approaches to the American empire.

Under the US influence, India is fast inching towards maritime neurosis. Modi is busy building strategic assets on Mauritius and Seychelles and the navy chief says that “warships and aircraft are deployed from the Gulf of Aden to the Western Pacific on an almost 24x7 basis.” How will a failing economy fund the strategic extravagance of its elite, when it is unable to afford the educational expenses of martyr’s children and proper pension for its veterans?