Indian Defence Review

Although embroiled in disputes with Japan and ASEAN over islands in the South China Sea, China has just announced a ‘Look West’ policy which includes steps to deal with India. As per Kissinger, China’s ‘String of Pearls’ strategy to surround India with friendly ports in the Indian Ocean Region (IOR) is based on the game of Weiqi; India’s ‘Iron Curtain’ for influence in the IOR is based on chess. India’s MEA and PMO who direct India’s foreign policy are adept at ‘chess-like reactive moves’ in the absence of stated national interests and strategy directions. Earlier, Indian diplomats practiced the status quo policy of ‘Non Alignment’ which is now giving way to pursuance of national and economic interests, and a ‘Look East’ policy, though shades of Non-alignment still breathe. China looks to thwart India’s moves in the IOR and India’s ‘Look East’ moves, which now extend to Vietnam.

Two years ago at a China-US Naval War College Conference at Newport in USA, the delegates discussed the Chinese board game called ‘weiqi’ (pronounced ‘weychee’) known as ‘Go’ in Japan. ‘Weiqi’ is based on long drawn strategic moves, with white and black stones on a 19X19 gridded board and the game ends when the opponent’s stones are surrounded signifying victory. Former US Secretary of State, Henry Kissinger in his latest 586-page tome On China (Allen Lane 2011) has analysed Weiqi, and its lasting influence on China’s geo-political strategy and compared it with chess, a comparatively shorter game of reactive moves that terminates with ‘checkmate’ or a ‘draw’. It is a game at which Indians excel.

Although embroiled in disputes with Japan and ASEAN over islands in the South China Sea, China has just announced a ‘Look West’ policy which includes steps to deal with India. As per Kissinger, China’s ‘String of Pearls’ strategy to surround India with friendly ports in the Indian Ocean Region (IOR) is based on the game of Weiqi; India’s ‘Iron Curtain’ for influence in the IOR is based on chess. India’s MEA and PMO who direct India’s foreign policy are adept at ‘chess-like reactive moves’ in the absence of stated national interests and strategy directions. Earlier, Indian diplomats practiced the status quo policy of ‘Non Alignment’ which is now giving way to pursuance of national and economic interests, and a ‘Look East’ policy, though shades of Non-alignment still breathe. China looks to thwart India’s moves in the IOR and India’s ‘Look East’ moves, which now extend to Vietnam.

How ‘Look East’ Began

The beginnings of India’s ‘Look East’ policy took shape in Singapore in October 1991, as an economic necessity to avert Free Foreign Exchange (FFE) default when India was obliged to hawk gold to UBS to pay for its import bills. India has a record of not defaulting on its dues. It was a reactive strategy to garner Foreign Direct Investment (FDI) from the ASEAN Tiger economies. Finance Minister Manmohan Singh and Finance Secretary Montek Ahluwalia proceeded to Bangkok to request an urgent loan of $2.8 billion at the World Bank-IMF Board of Governors meeting held in mid-October. The duo flew in to Singapore around October 18 and was joined by a large team of Government officials and industrialists from India led by the then Commerce Minister P Chidambaram from New Delhi. On the IMF meet, Montek Ahluwalia had this to say, “We were able to project India’s exceptional balance of payment difficulties and the consequent loss of confidence in India’s economy, which had led to a freeze on new lending by commercial banks, and continuing outflow of NRI deposits.

The withdrawal of these normal flows meant that India faced a substantial ‘unfilled gap’ in its external payments requirements. Even on the assumption of substantial important restraint unless these gaps could be filled, India would have to resort to drastic import restrictions beyond the present levels which would precipitate serious decline of industrial production, severe shortages of essential products such as diesel and kerosene and unavoidable pressure on prices”.

The task in Singapore was to aggressively canvass for investment. A large forum of potential investors was invited by High Commissioner Yogesh Mohan Tiwari at Hotel Imperial in Singapore to witness presentations by the Indian delegation. India’s emissaries from Philippines, Myanmar, Malaysia and Thailand were also present there. Economic Adviser Deepak Nayyar, NK Singh, Ambassador Preet Malik and Power Secretary Geeta Krishnan were in the team from India. They had also canvassed for investments and for the Enron power project that the World Bank had declined, and for other Independent Power Projects (IPPs). Incidentally, Shri and Shrimati Khullar who rose to the rank of Secretary were the respective Private Secretaries to Dr Manmohan Singh and P Chidambaram for that historic meet.

Whilst the meet was on in Singapore, news arrived that IMF-World Bank had granted the stand-by loan requests to India for the next two years on the condition that India liberalise her economy. Dr Montek Singh Ahluwalia’s message to PM Narasimha Rao was, “India can be out of the woods.” Investors in Singapore also took steps to invest in India.

This decision to garner investments made Prime Minister Rao give his Principal Private Secretary AN Verma, the powers for the Foreign Investment Promotion Board (FIPB) to sanction FDI requests and a new chapter in India’s economy was scripted. This economic policy later converted itself into a security strategy euphemistically called the ‘Look East’ policy, and was strongly welcomed and supported by Singapore and the ASEAN. The Indian Navy, DRDO and Coast Guard took full advantage to strengthen bonds with Singapore and the Navy has four serving officers in Singapore in various capacities while the Singapore Armed Forces have stationed military assets for training and a few personnel in India. The Indian Navy has annually exercised in 16 unbroken SIMBEX naval exercises in the Bay of Bengal and in the South China Sea, and Exercise Milan is held bi-annually in the Andamans for neighbouring navies.

India’s Strategic Initiatives in The Indian Ocean Region (IOR) Losing Steam?

India has executed many successful chess-like moves to cultivate the island states in the IOR. After the withdrawal of the Royal Navy from the East, India assumed responsibility for the security of Mauritius under an agreement in 1974. In effect, Mauritius swapped one security guarantor for another. India transferred patrol boats and a helicopter to Mauritius and the Navy took responsibility for the Mauritian Coast Guard. A majority of Mauritian population comprises immigrants from Bihar, who look to India as their ‘Mother Country’ with sympathy and bonding. Mauritius has no Army or Air Force.

In 1983, the Government under Indira Gandhi crafted a treaty to allow investments without capital gains tax through Mauritius called Double Taxation Avoidance Agreement (DTAA), which has garnered some $41 billion FDI, much through round tripping of Indian money in cases. Mauritius became an offshore financial centre and an attractive route for foreign investments into India. However, ideological differences among the leaders in Mauritius surfaced.

Due to the friction between Prime Minister Anurud Jugnauth and Finance Minister Paul Berenger, coup attempts by the latter were thwarted in a timely intervention by India. The Indian Army and Navy were ordered to plan an amphibious operation, codenamed Operation Lal Dora, to Port Louis with warships and units of 54 ready Army Division from Hyderabad. Forces were assembled at Bombay, and the threat worked. Since 1984, the National Security Adviser to the PM of Mauritius has been deputed from India’s R&AW.

The DTAA is currently floundering after Vodafone was ordered to pay $2 billion in capital gains tax for its investment to purchase Hutchinson Whampoa from Essar via Mauritius through retrospective taxation legislation. This, despite Vodafone’s success in the Supreme Court, where the Tax authorities demand was not upheld. Chief Justice Kapadia apparently decided in favour of Vodafone on form, though in substance Vodafone had lost its case in the Mumbai High Court earlier and was asked to pay.

The DTAA has benefited Mauritius and India immensely since the 1980s and FDI has been routed from offices in Port Louis. The DTAA is being re-negotiated and Admiral DK Joshi, Chief of the Naval Staff, recently visited Mauritius and handed over an Inshore Survey Vessel (ISV) ‘Pathfinder’ to the Minister of Housing and Land in Port Louis and stressed the need for strong maritime ties between the two nations. The Indian Navy has worked hard at co-operation with the Island states, which China seeks to disrupt in ‘Weiqi’ style as its economy can afford largesse and aid to smaller nations. President Pranab Mukherjee was the Chief Guest at the Mauritius Independence Day celebrations this year.

India has provided aid to Seychelles and in June 1986, in ‘Operation Flowers are Blooming’ INS Vindhyagiri under Captain S Ramsagar in Port Victoria was sent with the support of intelligence agencies and Soviet Union, to stave off a coup attempt by Defence Minister Patrick Berlois against President Renee’s government. Although Seychelles has been an Indian ally all along, China has made inroads recently and secured Operational Turn Around (OTA) facilities for PLA (N) ships on the pretext of assisting Seychelles on piracy patrols and for the protection of Chinese tourists.

In 1987, Prime Minister Rajiv Gandhi signed an agreement with PM Jayawardhene of Sri Lanka and hastily deputed troops to Sri Lanka in ‘Operation Pawan’ to help quell the JVP and mediate for LTTE in Sri Lanka for federalism but the foray ended in failure by 2001 with 1,400 army deaths, and little achieved. Many attribute Operation Pawan to being a diversion for the Bofors scandal that broke out in 1987. Since late 1990s, Sri Lanka has been embroiled with combating the LTTE menace and its attitude towards India has been cool. From 1998 onwards, the Sri Lankan Armed Forces with weapons supplied by China, decisively crushed LTTE by 2009 killing the LTTE leader V Prabhakaran in the process.

India cultivated the Maldives with military and economic aid, educational support and the survey of the Maldivian coast by ships of the Indian Navy. In 1988, in ‘Operation Cactus’ the Government of President Gahyoom was re-instated through Indian military intervention. But now, with Weiqi-like moves and ‘cheque-book’ diplomacy, China is moving into the ambit of influence in the IOR with economic sops. India’s relations with the Islands, that the Indian Navy had contributed to strengthen, need regenerated attention.

Surprisingly, Chinese tourists make up 25 per cent of the tourists to Male and other Maldivian islands. GMR’s contract to build and run Male airport was cancelled; soon after pro-Indian President Nasheed was replaced by President Waheed in February last. GMR lost its legal battle in Singapore whose judiciary prides in upholding a nation’s civil and criminal law. In February 2013, former President Mohamed Nasheed had taken an 11-day refuge in the Indian Embassy in Male as he faced criminal charges which he dubs to be politically motivated to ensure his disqualification and non-participation in the September elections. With Indian intervention, Nasheed left the Embassy but was re-arrested and freed. Nasheed may have fair support for his party but the situation is most unstable as Maldives has a fragile economy and China’s interests to make inroads appear evident, in Weiqi style.

China and Pakistan- The Close Links

China has an incestuous security cum economic relationship with Pakistan. Chinese leaders have dubbed the relationship as ‘higher than the mountains and deeper than the seas’. Chinese moves are based on the strategy that Sun Tzu advocated to cultivate an enemy’s neighbour as a friend in a ‘Cats-Paw’ circuitous manner. Pakistan has received military aid, missiles and nuclear know-how from China. In turn, not only has Pakistan given up a part of the Shaksgam valley in POK but has also signed an international border delineation agreement near Siachen.

More recently, Pakistan has given China a free hand to build the challenging Karakoram highway in POK and to link the two countries with the strategic port of Gwadar constructed mainly with Chinese aid worth $248 million. The port of Gwadar has been handed over by the Port of Singapore International (PSA) to China Overseas Ports Holding Ltd. to operate. China’s southern state of Xinjiang will connect to the warm waters of the Indian Ocean and plans are afoot for an SEZ and refinery at Gwadar. The Chinese move is reminiscent of the ‘Great Game’ attempted by Russia in the nineteenth century from Central Asia through Afghanistan. Pakistan has also signed a multi-billion dollar gas pipeline agreement to link Chabahar port next to Gwadar, to Pakistan’s hinterland.

A secret agreement to get the Chinese to build a naval base at Gwadar has also been mentioned in Pakistan and this would fit the game of ‘Weiqi’ to encircle India with a necklace of friendly ports and forward bases in the long term. China clearly wants to counter the US’s ‘Pivot in the East’ and emulate a similar forward-basing policy. With bases in Japan, South Korea and Philippines, the USA has leased Diego Garcia in the IOR from Britain. The lease expires in 2016 but renewal must be agreed upon by 2014. The US is looking to the Island of Gan in the Maldives.

China and Sri Lanka

Since 2006, China has made deft ‘Weiqi’ moves to provide aid to Sri Lanka for strategic port and airport construction projects worth around $200 to $300 million, which Chinese term ‘small change to developing countries’. China Harbour Engineering Company and Sinohydro Corporation constructed the strategic port of Hambantota at a cost of $360 million. 85 per cent of the funding was provided by the Chinese Government and 15 per cent by the Sri Lanka Ports Authority. Phase-I of the project and modernisation of the airport was completed by November 2010 and Chinese ships have begun calling.

In 2008, China got an opportunity to provide military hardware including planes, helicopters and ammunition to Sri Lanka when the Sri Lankan military under President and C-in-C Mahendra Mahinda Rajapaksa wanted to decimate the LTTE (2007-2009) in a full-fledged war. India did not interfere despite Tamil goading but the then National Security Advisor MK Narayanan and Foreign Secretary Shivshankar Menon proceeded to Colombo and cautioned Rajapaksa not to seek arms from China or Pakistan. This apparently did not go down well with Rajapaksa who went ahead with his war with the LTTE and emerged victorious – again with Chinese support.

Sri Lanka is grateful to China and will try use the ‘China’ card against India in realpolitik. On August 14, 2012, Sri Lanka’s Supreme Group signed an investment agreement with China Greatwall Industry and Sino Satellite Communications Company Ltd., to set up Sri Lanka’s first Space Academy at Kandy. The facility consists of a state-of-the-art Satellite Ground Station to control the already co-branded satellites of SupremeSAT and Chinasatcom.

China’s long-term plan is to utilise the planned orbital slot of Sri Lanka, which is located at 50 degrees East, and launch SupremeSAT, Sri Lanka’s first telecommunications satellite, on the lines of the Dong Fang Hong-4, which means ‘The Rising of the Shining East.’ India’s ISRO has been bypassed. China has also made investments in Myanmar in ports and pipelines and offered Bangladesh military equipment and aid to construct ports in what it terms as ‘friendship projects’.

China’s strategy of ‘Weiqi’ is working to pierce India’s ‘Iron Curtain’ in the Indian Ocean, and needs to be heeded by Indian planners.