Opportunities and challenges


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IT is only logical that relations with countries in one’s neighbourhood receive high priority in the conduct of a country’s foreign policy. But there has been little understanding about what really constitutes India’s neighbourhood. Are we to regard ourselves merely as a ‘South Asian power’, as some Chinese friends choose to characterize us? Addressing senior commanders of the armed forces on 1 November 2003, former Prime Minister A.B. Vajpayee said that in maritime terms, India’s frontiers extended from the Straits of Malacca in the east to the Straits of Hormuz in the west. Further that India’s security boundaries also extended from Afghanistan and Central Asia in the northwest to China in the northeast and across East Asia to our neighbours in ASEAN. Prime Minister Manmohan Singh gave a similar description of our ‘extended neighbourhood’ when he addressed senior commanders in October 2004.

The countries in our extended neighbourhood that have substantive economic and military potential to influence events are China, Japan, Iran and South Korea. China, with its rapid economic growth and growing military muscle unquestionably poses the greatest challenge to the conduct of India’s foreign policy in the neighbourhood. Pakistan too has the potential to act as a spoiler because of the Islamic dimensions of its foreign and security policies, its nuclear potential and an ability to project itself as a valuable asset for the United States and China. This ability to influence events has, however, been considerably diminished in recent years because of domestic turmoil within the country and a growing fear worldwide that Pakistan has become an epicentre of global terrorism.

Russia has an important role to play in the region primarily because of its military and political ties with China, India and Iran, and its residual influence in Central Asia. The European Union wields economic power and has a security role whenever NATO interests so demand. But the only country with power to dominantly influence events in our neighbourhood is the United States. Its global policies, therefore, will be a crucial determinant of the course of events across our strategic frontiers, more so since NATO forces are deployed in strength at our virtual doorstep, Afghanistan.


There is considerable logic in the manner in which prime ministers Vajpayee and Manmohan Singh have defined what constitutes our ‘neighbourhood’. To our west, Pakistan and Afghanistan have become the epicentre of global terrorism. The porous border between Pakistan and Afghanistan today allows the free movement of terrorists from across the world, ranging from China, the Philippines and Myanmar to our east to Algeria, Uzbekistan, Yemen and Saudi Arabia, apart from EU countries like the UK, France, Germany and Spain, to our west. Whether it is the terrorist strikes of 9/11 in New York and Washington DC, or the train bombings in London and Spain, the origins and planning of such acts of global terrorism can be traced to Pakistan and Afghanistan.

Worse still, Pakistan today faces the ire of its erstwhile Taliban protégés and their sympathizers and supporters within Pakistan for supporting the US in Afghanistan. The security situation has deteriorated to such an extent that even the capital area of Islamabad-Rawalpindi is no longer immune to terrorist attack. Apart from the assassination of Benazir Bhutto, there have been four other major terrorist attacks in Rawalpindi targeting the army and ISI headquarters and personnel in 2007.


The American ‘War on Terror’ and the ouster of the Taliban from Afghanistan have resulted, not in the destruction but the dispersal of terrorism worldwide. The cadres of the Taliban and its Pakistani allies have crossed into Balochistan and the tribal areas of the North West Frontier Province (NWFP). A substantial portion of the Al Qaeda fled into Pakistan, with some members returning to Arab countries. With NATO forces stationed in Afghanistan, there is a sense of unease in neighbouring Iran, given the strain in US-Iran relations.

Further westwards, Iran’s seven Gulf Arab neighbours too are uneasy, with Saudi Arabia facing a number of terrorist strikes by pro-Al Qaeda elements. Iranian-Arab rivalries and suspicions remain rooted in the Persian Gulf from where India gets 70% of its oil supply, and nearly four million Indian nationals work and remit over $ 15 billion annually to the economy. Tensions and instability in the Persian Gulf will have serious implications for India’s economic stability and energy security.


India also faces an uncertain political situation in virtually every one of its South Asian neighbours who are members of SAARC. Maldives is facing a crisis of credibility of its leadership, with periodic acts of terrorism by radical elements motivated by religious-political ideologies prevalent and preached in Pakistan and Saudi Arabia. The fairness and impartiality of elections held by President Gayoom have been called into doubt. The ethnic conflict continues in Sri Lanka, with President Rajapakse’s government appearing determined to seek a military solution – a policy that can only complicate the search for a durable political solution. India has to actively work with the international community to persuade the Sri Lankan government on the crucial need for a political settlement which meets the legitimate aspirations of its Tamil minority, while guaranteeing the unity and territorial integrity of the island nation.

Bangladesh also faces an uncertain political future, with no sign as yet about precisely how the political process will be put back on track and the army returned to barracks. Moreover, radical Islamic groups operating from Bangladesh are now getting increasingly involved in acts of terrorism across India. In Nepal, uncertainty continues and concern is voiced about whether the Maoists will genuinely give up arms and join the democratic fold. Will Nepal succeed in developing viable democratic institutions in a new post-monarchical era? Bhutan alone, among India’s South Asian neighbours, appears to present a picture of stability and progress.

While outlining relations with neighbours, one should not fail to acknowledge that India itself faces many challenges within its body politic – problems arising from poor governance coupled with rampant corruption and criminalization of politics. It is not unlikely that in these circumstances, neighbours like Pakistan and Bangladesh may take advantage of religious and ethnic faultlines within India. Recent terrorist strikes in Bangalore, Hyderabad, Mumbai and in Uttar Pradesh have been carried out by disaffected Indian nationals deriving inspiration, motivation, support and sustenance from across our borders.

Neither the causes of this development, nor its possible remedies are publicly discussed, far less effectively addressed. Moreover, the writ of the Indian state no longer runs in nearly one third of the country, which is now under the shadow of Maoist control. Ethnic insurgencies continue in the Northeast with support from across the India-Bangladesh border. Though levels of terrorist violence have substantially reduced in the recent past in Jammu and Kashmir, problems of disaffection among sections of the population in this turbulent state remain to be addressed.


The picture, however, improves as India looks further east. India’s interaction with ASEAN, as a part of its increasingly successful ‘Look East’ policy, has grown substantially. Two-way trade with the booming economies of ASEAN countries has risen to around $ 19 billion in 2006-2007 and with China to $ 38.7 billion. But in comparison to China, whose trade with ASEAN was $ 140 billion in 2006, India has a long way to go before it can become a major economic player in East and Southeast Asia. Fortunately, India now figures in the security and economic calculations of its ASEAN neighbours, having become a ‘full dialogue partner’ of ASEAN, with annual summit level meetings with its leaders. It is also a participant in the East Asian Summit, bringing together the ASEAN countries with China, Japan, South Korea, India, Australia and New Zealand.


With China emerging as the major power in Asia, India now has to face the challenge of cooperating with it, even while building a stable balance of power in Asia. China’s policy of providing assistance to Pakistan’s nuclear weapons and missile programmes, the efforts to expand its presence through a ‘string of pearls’ strategy with facilities in the Indian Ocean ranging from the Cocos Islands in Myanmar to Gwadar in Pakistan, its policy of encroaching politically and even militarily into Bhutan and Nepal, and its insatiable quest for oil, gas and other natural resources to the exclusion of India are challenges India can no longer ignore.

Moreover, with its growing demand for water, China could pose serious ecological and other problems for India were it to divert the waters of the Brahmaputra river for its own use. These challenges will necessarily have to be countered with much wider exchange and cooperation with China’s neighbours in the Asia-Pacific, like Vietnam and Japan. Hopefully, increasing cooperation with the US will add credibility and clout to these efforts. At the same time, a continuing engagement with China is required on issues like global warming, maintenance of peace and security along the borders and in promoting trade, investment and other economic ties.

Despite the internal problems besetting virtually all the countries in South Asia, the one silver lining is that economic cooperation in an increasingly interdependent and globalized world order could well serve as a catalyst, not only in promoting prosperity but also in bringing the South Asian countries together. In a report titled ‘SAARC Vision Beyond the Year 2000’, a group of eminent persons from the member states recommended working together in a phased manner to make the South Asian region a Free Trade Area by 2010, a Customs Union by 2015 and an Economic Union by 2020. The Heads of Government of the SAARC countries endorsed these recommendations during the Kathmandu Summit in 2003 and the framework of a Free Trade Agreement was finalized at the Islamabad Summit in 2004. Except for Pakistan, which has refused to implement this agreement in its trade with India, all other SAARC countries are moving ahead.


In the meantime, Afghanistan has been admitted to SAARC and is set to join its Free Trade Agreement. With growing international interest in seeing SAARC succeed, the US, EU, China, Japan and South Korea have been accepted as observers at SAARC summits. Iran is set to follow suit. This is a welcome development as it will lead to international pressure on Pakistan if it persists in scuttling efforts to promote free trade and greater economic integration in the region.

Moreover, India has also worked to develop a new regional organization, BIMSTEC, to link littoral and hinterland states in the Bay of Bengal in a process of economically integrating SAARC members – Nepal, India, Bhutan, Bangladesh and Sri Lanka – with two geographically contiguous members of ASEAN, Myanmar and Thailand. With BIMSTEC committing itself to free trade by around 2016, there could well be free trade areas extending from Delhi to Manila in the east and from Kabul to Delhi to our west. Moreover, if Pakistan continues to act in a recalcitrant manner on trade and economic cooperation with India, it could well find itself isolated from the larger trends of increasing economic integration within Asia. It must, however, be acknowledged that despite India’s rhetoric about a commitment to economic liberalization and free trade, it is widely considered as having one of the most protectionist trade policies in Asia.


As a result of the various regional initiatives India is now participating in, we have a framework for growing economic integration in our neighbourhood. At the same time we are exploring the possibility of widening our regional economic network by negotiating a Comprehensive Economic Cooperation Agreement with the six oil-rich Arab states who are members of the Gulf Cooperation Council (GCC). Given our past aversion to military blocs, however, we must acknowledge failure in developing viable structures for cooperative security in the neighbourhood.

The ASEAN Regional Forum (ARF) is the only regional security organization of which India is a member. The ARF functions on the basis of consensus and has endeavoured to develop mechanisms for cooperation in areas like maritime security and disaster management. But we need to review our earlier policy of avoiding multilateral engagement in military matters and explore the possibility of developing viable security structures with groupings like the GCC, whom we regard as being vital for our energy security, and for the welfare of millions of Indian nationals resident abroad. Such a security architecture has to be inclusive and should accommodate both Iran and Pakistan. Its working should be consensual and cooperative, much like the manner in which the ARF functions.

India’s role in its ‘extended neighbourhood’ will be effective only if we can maintain an annual economic growth of around 9%, and if the process of growth progressively reduces socio-economic tensions. Moreover, a country with its politics beset by corruption and criminalization can hardly be expected to serve as a role model for its neighbours. Further, while the conduct of foreign policy had enjoyed a broad national consensus in the past, this is unfortunately no longer the case.


There is also a tendency within India to believe that problems with neighbours like Pakistan and Bangladesh, where the politics of defining national identity in positive terms is still being played out, can be instantaneously sorted out. This is unrealistic. Due to the dilemmas and contradictions over issues of national identity, some of our neighbours continue to attribute their problems to India’s alleged malevolence. Moreover, ruling military elites in Pakistan and Bangladesh have a vested interest in whipping up fears of alleged Indian ‘hegemony’. Despite these complexities, there has been progress in recent years even in relations with Pakistan. India has endeavoured not only to promote cooperation, but for the first time address differences on complex issues like Jammu and Kashmir imaginatively and flexibly.

We live in a neighbourhood that is both volatile and challenging. It remains to be seen whether we have the resilience and will to address these tensions and challenges. Much will depend on the ability to keep our own house in good order and our determination to develop a national will and unity of purpose to face these challenges.