India: Neighborhood Policy

Sunday, March 22, 2009

Despite India's success in Economic development there has been little impact on our neighbors. India's budget for military expenditure, Education, Infrastructure development and lobbying for political influence have all increased manifold, yet our neighbors are unmoved in their behavior.

Pakistan is an unmitigated disaster by all measures; yet it continues to behave as a regional power when the reality is that it cannot even control its own territory. Nepal is a disaster, its main income source is Tourism and with its constant violent clashes this industry has gone for a six;yet it continues to irk and irritate the giant at its border.  Bangladesh is a disaster and yet it continues to irritate India with its illegal migrations and providing sanctuary to terrorists.  All of these countries would benefit enormously by creating friendship with India on the basis of economic development and security...yet they defy all common sense by continuing militant agitation which is costing them generation after lost generation.

These neighbors of India need to think differently; a new paradigm is required.  The blueprint these countries should use is the relationship between Canada and the United States.  Despite a border which stretches over 5500 kilometers (today, completely undefended)...a population difference of 10 to 1..economy size which is 10 to 1...these two are the largest trading partners in the world.   And a Canadian's definition of himself is:  I am not American..that is enough.   And a proportion of Americans still believe Canadians live in Igloos...

And then there is the country to our North, China. What is the basis of the friendship between China and Pakistan? Clearly, the friendship has not led Pakistan along a path to development let alone can understand Pakistan wanting to make friends with a giant neighbor but why would China want to be friends with a country which can only beg and provide little the last three months alone we have seen the President of Pakistan go begging for money to the IMF, Saudi Arabia, USA and China...

Pakistan has only one potential friend in the world...and that is India because we are people of the same soil...everyone else will focus on the opportunity to exploit a stupid people with visions of grandeur.  In our case, a emotional bond exists...

It is now clear the Taliban, moderate or extremists, will gain more say in Pakistan. This is a reality which all nations, including India have taken as given. What should India's response be to this development?

Let us first look at the ambient environment today..a sea change has occurred..

  1. While Kashmir continues to be a sore point between India and Pakistan, it has diminished substantially because of the success of elections and climb down of the Hurriyat.
  2. Furthermore, the developed world economies are in contraction..the effect is being felt in all export-oriented economies...notably China and most of Asia. India is less effected because export forms a smaller part of GDP...but our growth is fueled by capital inflows which depends on world wide prosperity and subsequent search for higher yielding investments.
So India could use a carrot and stick approach towards China..while China has been using a stick/stick approach...

The Stick:
There are substantial Muslim majority regions in Eastern China which are clamoring for rights...It seems to me that India should find ways to encourage Al Qaeda and Taliban to focus away from India, as a battle already won, and focus on China as a battleground to be conquered.

After all, China's dalliance with Pakistan has cost India is time that the monster that China has coddled should rise and bite it in the arse.
The Carrot:
Increased access to the fastest growing consumer market in the world and investment opportunities for that huge hoard of foreign currency reserves which need some diversification away from the US dollar Treasuries.
The carrot is a win-win for all in the region...the stick is an India win- China lose proposition.  China may be wise enough to choose the Carrot.

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