Indian Defence Review

The China-Pakistan Economic Corridor (CPEC) has drawn strong interests of not only the two partners, but also the attention of entire West-, Central- and South Asian nations plus Russia, if not the Middle-East.  In India, Times of India trumpeted a breaking news towards last year end, saying – “Russia backs China – Pak corridor and keeps India on tenterhooks”. Substantial head-shakes followed in diplomatic and political circles with India fuming in disenchantment with consequences for decision-making reverberating into future. CPEC presents India a tough problem, but it was in the making when at least over a decade ago China began work on China-Pak Karakorum high-way. Neither easy solutions, nor clear-cut perceptions are at hand even today. But it need not remain that way. A way out is feasible.

The CPEC is a serious reality from India’s political, strategic and economic interests. Indian public reaction made it out as though India got a painful hit below the belt. One of India’s top strategic analysts, Brahma Chellaney, sought for augmented India-U.S.-Japan relations as a consequence.  The matter, however, is more  complex with political implications sadly misread/over-read.

A principal truth is, India’s hands are as much tied as are Russia’s, due to varying dependencies affecting both with respective uniqueness. Chellaney, has always been a patron of stronger India – U.S. – Japan ties. However, on this issue, a “liberal” perception is needed, due to its complexity. For e.g., one cannot be sure whether CPEC is wholly against India’s “core interest”, as Chellaney might want us to believe, especially when seen from long-term economic interests of all South and Central Asian States and China, particularly from Eurasian and Shanghai Cooperation Organisation (SCO) angles. There are other cold factors defining this problem one needs to be considered :

•  China’s long-term intentions with CPEC go beyond Pakistan’s boundaries. It wants to capture the markets of oil-rich Arab nations and that of entire Africa to flood that continent with cheap Chinese goods in exchange for ensuring raw materials from entire Africa and Middle East at low price for China’s industries. As a consequence China  will not stop with CPEC, but will go further building an African rail-road network for the entire continent and would squeeze India out of Africa . That would help China catapult to the powerful number one status in world economy dislodging the US, curtailing American power.

•  Russia, labouring under Western sanctions, is keen to extract any economic advantage it can from the China-Pak project, especially when China has placed a massive $400 Billion energy order for Russia’s oil and gas export.  As “quid-pro-quo”, Russia has reciprocated with state-of-the-art military hardware (S-400 Anti-Missile Defence) for China against potential U.S. threat in South China Sea and the Pacific coastal border rim. China is Russia’s biggest external financier. Thus, Russia will do everything not to hurt or go against China’s major economic interests, because indirectly Russia stands to gain commercially from CPEC, even if it hurts old friend India a bit. It is pure economics that drives Moscow, plus Russia’s belief that improving Pakistan’s economy now in shambles will help reduce terror growth within Pakistan. It knows too that India is dependent on Russia for military hardware and will not want to risk that relationship, as no one has transferred military and strategic high-tech to India as Russia has. In fact PM Modi recently exemplified it when he declared India-Russia relations as an “abiding” one (see RIR report …..) It’s also time India had no illusions about Russian game-play.

•  For all practical purposes the division of Kashmir since 1948 with Cease Fire Line (CFL)/Line of Control (LOC) has been in place and is not likely to change in future. India, however, can make it clear that while India will not, in principle, accept that division in Pakistan’s favour, it will not object to a CPEC bringing benefits to India and other South and Central Asian nations. Cooperating on CPEC does in no way imply India is palming Gilgit-Baltistan over to a Pakistan that illegally occupied it.

•  Russia’s hitherto veto-backup support for India at the UNSC is something India’s foreign policy makers cannot lightly overlook. What if Russia in future abstains from voting at the UNSC, if China were to raise the Kashmir issue in connection with CPEC, as the U.S. under Obama did recently on Israeli West Bank settlements, especially when India is not that strong militarily vis-à-vis China and Pakistan together, nor economically vis-à-vis China to ignore eventual UNSC sanctions. India then will be forced to seek veto support from the U.K., France and the U.S. and all three, as we know from past colonial/imperial history, will bind India with heavy conditions tying India’s hands in total dependency!

•  China with more than $50 Bn CPEC investment envisaged and Russia rendering open support, signal, that both will potentially wield enormous influence over Pakistan’s  policies in years to come, especially under Eurasian Union and SCO., that would tie Pakistan’s hands. (Already Hafeez Saeed’s recent house-arrest ordered by Pak government seems to lend semblance of pleasing Beijing’s demand on a terror-insulated CPEC functioning). Under such a dependency, it will not serve Pakistan’s economic interests if ISI were to promote terrorism in an area over which the CPEC passes through. Undoubtedly, Russia and China are explicitly opportunistic on CPEC; consequently the former benignly, but the latter aggressively, have shoved India’s claim of Gilgit-Baltistan in POK and Pakistan’s  Member of Parliment’s (MP) apprehensions of Pak soil becoming another East India Company to dustbin. In the Eurasian Union, it is Russia and in SCO China, who call shots and gyrate direction and goals. India is relegated to a secondary role only and Pakistan least of all with exception to anti-terror agenda for an ISI-inspired in-house machinations Pak can ill-afford for rational economic reasons; Pakistani military too has expressed its tacit approval of such a perception recently. In fact one Pak general has even asked India to join hands on CPEC with back-support from China.

•  A dilapidated Pakistani economy improving via CPEC is not a disadvantage for India; rather it would be bolstered to embark on more trade with India.

•  Russia has big political and security stakes in the Syrian war to defeat ISIS and hence seeks dialogue with Taliban forces (something India does not relish due India’s support for Afghan security) to wean it out from ISIS network. Isolation of Taliban is better than ISIS collusion with them as per Russian perception. That could also pre-empt invisible Pak-in-house terror mauling CPEC business success.

•  China can sell its goods to India via Gwadar port that enables India to bargain for lower product price instead of the expensive long route via the Indian Ocean. Additionally, China can pressure Pak to open a CPEC land outlet exit directly to India carrying Chinese goods destined for India.

•  The political hurdle for India from CPEC seems, India will get pressured to back-roll tangible support openly or in kind for a “Free Baluchistan” movement. Both Iran and Russia are averse to Baluchi independence support.

•  Iran, for whom India builds the Chabahar port, like Russia, supports CPEC and keenly wants to get connected with it for trade profits.  India has to factor in that in its calculus. Additionally, India should massively augment efforts to complete that sea-port with an additional airport to land goods to be distributed to Middle-East and other close African nations requesting Iran to grant the port a duty-free goods status, like Aden was once. That would make it a window shop for quality Indian, Iranian and Russian goods. That would help India compete with China in the Middle East and  Africa. India so far has been too slow on this mission despite contract that now Iran seems to have got “unenlightened”.

•  In view of Indo – U.S. – Japanese Malabar naval exercise, there is nothing India can non-contradictorily complain about Russia helping Pakistan in a small way to fight terror or Russia’s collusion with China on defence matters, or its support for CPEC. One should not forget that China’s need of Russia as Nuclear Superpower backup is pitted against United States and Russia is opportunely exploiting it to have China finance its economic agenda.

•  With President Trump’s avowed soft-heart for Russia, American-led Cold War mongering is slated to stop; Western sanctions lifted will help Russia regain old European energy markets and augmented opening of Russian raw material markets for Western industries running into several digit  billion dollars. That would relieve Russia of its current bondage with China, thus enable it a stronger and more independent stand on Indo-Pak issues re-favouring India, because Trump is pro-Russia and pro-India, but seemingly not pro-China, if not anti-China. Thus a new extra leverage won via Trump presidency will melt unnecessary Indian fears of isolation, retroactively also dispense with Russian misgivings of augmented Indo -U.S. – Japan relations and military deals.

•  With CPEC success and India’s potential de facto acceptance and cooperation with it, will witness a flooding of Pak market overwhelmingly with Chinese cheap consumer goods. Even Indian goods could dislodge Pak goods from its very market. Thus the fear of Pak MP’s that Pakistan is pre-programmed to be the home of a new East India Company (aka CPEC), is not to be lightly shrugged off. Pakistani people will in addition have to pay for the Chinese energy-related projects, making debt-swollen Pakistan China’s first colony of the 21st century!

•  By joining CPEC with its registered reservation on POK, India can compete with China in the Pak market, instead of leaving it solely for China’s dominance in areas where India will have an edge.

CPEC – A Challenge to India with Multiple Deficiencies/Dependencies

For the first time in its post-Independence history, India confronts prima facie a granite diplomatic wall of CPEC threatening its vital interests.  Indian policy maker’s need to, unmistakably discern the fundamental problem, i.e. India’s economic weakness vis-à-vis China’s economic strength with over $ 2- billion supported ‘China Brand’ all over Globe, though that clout is tainted with a ‘communist’ hue. Secondly, India is dependant militarily on external help. Pakistan’s case is far worse. India is mired in multiple dependencies and needs to learn how China and Japan wriggled out of them after WWII end.

The WWII ended with Japan and Germany literally shattered. But Germany had a highly strong science/technology know-how built over centuries that India does not have, courtesy to colonial rule. Japan built its know-how base with extra post WWII technological assimilation through imitation and copying (from West), and China followed Japan by sheer copying alone. It is only after reaching a certain minimum quality standard level through imitation and copying did Japan and later China turn innovative. Today Japan is the leading nation in innovative consumer electronics.

Chinese dependency is marginal compared to India’s. Japan’s dependency problem is substantial as it has no raw material. But they have money, which India does not. So Japan began band spreading its dependency on raw material via purchases in several countries around Globe at whatever price it could get including global on-shore buy-out of companies.. In India it bought out Mumbai’s leading generic pharma manufacturer (Reddy Laboratories).  China tows the same line all over with its new-earned hard money importing raw materials and exporting/re-exporting in finished goods sparing their own home reserves.

Abe’s Delhi visits the last few years and meetings with Modi, based on realists strategic requirement in that Japan by agreement with India ensured a guaranteed flow of rare-earths (RE’s – extremely crucial for heavy industries, consumer and defence electronic products) the day after China put a temporary ban on its RE-sales to Japan to politically pressure Tokyo on islands’ dispute and the release of a Chinese captain captured in Japanese waters  and to put a stop to arrogant Japanese War Shrine visit rituals. Japan lost no time to sign deals with India, Australia, Malaysia and CIS (Commonwealth of Independent States nations for supply of Rare Earth (RE) minerals. The Times of India (09/12/2010) recorded, a subsidiary of Toyota Motor Corp, the Toyota Tsusho Corp, planned to build an India-based RE processing plant as part of that strategy. When the ban came and Japan in retaliation threatened to pull out its electronic production in China entirely, China gave in. RE-sales restarted. India sells out its RE’s without getting in return any substantial, genuine, vertically-integrated Japanese microelectronics know-how (from crystal growth to ASICs – Application Specific Integrated Circuits). It is grotesque that India with RE reserves of 3.1 million tonnes (mts) only, should lose out its RE’s against China’s 36 mts reserves, America’s 13 mts and CIS (Commonwealth of Independent States) with 19 mts.  REs’ procurement by advanced nations is a hidden, non-vocalised top priority. Ex-President Obama unleashed a crash programme of cash distribution for all green-field start-ups in RE’s in the U.S. after China plugged in a temporary ban.

China’s big strength is, it produces 95 to 97 per cent of world RE’s (official Chinese govt. Statements & Wikipedia estimate). It bought out RE mines in Mongolia, Chile and even in Canada, lithium mining in Afghanistan and all types of raw materials’ mines for extracting special rare metals all over Globe. Unfortunately, India took a long nap while China burnt its mid-night oil toiling silently and diligently to amass this bounty. Even though China lost its face at WTO in 2015 on its RE- conservation policy defending RE-export restrictions, including the appeal, China wielded this weapon so successfully that one insider, Mark Strauss, wrote (11/03/2014(http://io9.gizmodo.com/how-chinas-rare-earth-weapon-went-from-boom-to-bust-1653638596),“Couple the rare earth story with China’s behavior on other fronts — the state subsidies that help firms gain key contracts, the pressure on foreign companies to move production to China and, above all, that exchange-rate policy — and what you have is a portrait of a rogue economic superpower, unwilling to play by the rules. And the question is what the rest of us are going to do about it.”

Survival Muscle via Innovation

India needs a totally new approach, because India all alone cannot compete with China for obvious reasons. India does not have the volume of resources China has at state level, its huge forex (world’s largest – $3.2 trillion) and its infrastructure. China today thinks and acts from a position of hardware strength. But Indian private companies can help minimise India’s dependencies. Sadly though, a lot of them are paisa-greedy monster turn coats sans far-reaching national interest vision, nor a nationalistic ethics(as in pre-Independence times) but vibrant today in China and Japan, nor do these companies possess advanced state-of-the art microelectronics know how to appreciate the immense strategic importance of this field to the economic health of a post-War independent nation. One has to learn from Japan which built this key infrastructure by buying out technologies from West in the 60’ and 70’s at a heavy cost with state support only to rule the world today as an unchallengeable past-master of the game.

India’s Achilles heel of titanic infrastructure deficit, rampant caste-based prejudices and corruption have principally weakened and incapacitated the nation’s fast economic growth potential. Meritocracy seems a strange word for India’s sloppy-sleepy bureaucracy.  With its human resources’ and raw material abundance India can grow at much faster rates. It is a sociological fact that corruption has taken deep roots in India, no matter which government rules.  At the technological level India’s ‘software elitism’ cannot match the innovation sophistication of Western counterparts, or that of a Russian company Kaspersky. In micro-electronics hardware India is far behind even a small nation like Israel. Unless India works its way out to the top bracket in advanced microelectronics through massive investments and in other innovations in many substantial fields like what Japan did and does, and this will take decades, India will remain a permanent slave of its aggressors, and never be “truly independent”.  One cheering news, however, is that digitization has made some headway in India.

Advances in Space and Nuclear sciences and coolie-software market penetration alone will not lift the country out of its poverty to draw international respect. There is no control either by the government on a runaway population explosion (not limiting to 2-children per family) that eats away all progress made hitherto, unlike China, although now China plans to re-adjust to a 2-children family. It is sheer bunk to argue, what many official sources revel in citing ad nauseam, such and such big percentage of population is under 25 or 30 in India when a good lot of them are unqualified and unfit for qualified, high-end, high-tech and qualified industrial labour markets due to lack of access to education and technical training, or if when qualified, no job recruiters to absorb them. How long can we unashamedly fool ourselves with empty phrases and beliefs? Only two Indian institutions are listed in world’s best 100 universities. It is time for authentic hard work in innovation from top to bottom line; innovation alone can kick up the economy and Indians are potentially capable of that. It is in their genes. It has to start at primary school level. Borrow educational standards from outside India where you can get in raising benchmark science standards and comprehension quality.

To use Obama’s words, ‘We can”, but we do not! That’s the genuine reality and the reason why we are being kicked around despite our bigness and potential. Blaming colonialism and citing past glory are not going to change anything a bit. Vain pride has no takers in this world of hard-core ground realities. We need to beat China in microelectronics hardware. That will give us a fundamental basis to turn out tope defence products too.  That can only come from learning, copying (not imitating!) and innovating. Only then will we see Russia turn 180 degree towards us, parting company with China in this field. It is time too we seek intense cooperation with Israel in nano-tech and III-V technologies, because Israel would be more willing to transfer know-how, unlike Japan.