Flag Follows Trade
In the company of defence and foreign policy analysts and at the invitation of think tanks like the Institute for Defence Studies and Analysis (IDSA) and the Rajiv Gandhi Foundation (RGF), I have travelled to such fancy places as Paris, Munich, Rio de Janeiro, Perth, Seoul and Washington DC, over the past two years explaining the significance of India s new economic polices for her relations with the world. Strategic policy analysts in each of these countries are fully aware of the significance of the increasing importance of foreign trade and foreign direct investment in India, and her growing interest in regional economic co-operation both within South Asia and with East and South-east Asia.
Was IDSA s initial judgement to get an economist on board in its bilateral dialogues justified? Discount for my subjective view and you will still get an emphatic yes . The dialogue with French and German foreign policy analysts took place in 1995 in the midst of the raging controversy on India s unwillingness to sign the Comprehensive Test Ban Treaty. The defence policy analysts on both sides repeated known national positions. Not much scope for a dialogue there! However, what broke the ice was the discussion on economic policy.
Not surprisingly, economics continues to remain at the centre of the current strategic dialogue between India and the United States. At a recent bilateral Indo-US conference on India and the World , jointly organised by IDSA and the Washington DC-based National Defence University (NDU), economics once again acquired centre-stage, but with a difference. If in Paris and Munich in 1995, French and German analysts were willing to give India the benefit of doubt on the as yet slow pace of change and tentative liberalisation, last week in Washington, US analysts were exhibiting signs of boredom. We have all heard of India s economic potential , yawned a strategic policy specialist, how long will the potential remain a potential? I want to know when its going to be the actual!
The clever definition of India as a threshold nuclear power is being spinned around to suggest that India is also a threshold economic power! The question is when will we cross the threshold? Interestingly, a strategic policy analyst from NDU offered an optimistic view of India s economic, and hence strategic, future. Impressive economic growth is going to alter the South Asian security environment in India s favour, argued a US analyst. If the Indian economy can sustain its recent record of over 6 per cent growth, the analyst suggested, India will solidify its dominant role in the region . The performance of the Indian economy, it was clear to this security policy analyst, would determine India s political clout both within South Asia and in the wider world.
The single important lesson one draws from the end of the Cold War, the dissolution of the Soviet Union, and the emergence of China as a potential superpower, is that it is not just the armed might of a country which defines its real power, important as nuclear weapons are, but it is its economic power both in terms of performance on growth and well-being and resilience to withstand crises, which is the vital ingredient of great power status.
There is a lesson economists, especially in India, can learn from the discourse of strategic policy analysts. The strategic policy analyst lives in a world where a dialogue is defined by three elements: an explicit understanding that each side has a bottomline to defend, that there is scope for give and take and that at the end of the day, both sides must get something out of a deal . Most Indian economists who comment on economic policy, on both sides of the ideological divide, refuse to recognise this aspect to economic policy or simply shy away from it. Trade and investment liberalisation and globalisation are all too often seen as virtues in themselves rather than as negotiable instruments in a strategic equation with the world.
If commercial concessions are offered in return for similar considerations or in exchange for political concessions, it should be possible to view a more open trade and investment policy in more positive terms than is currently the case in India. The most frequently voiced complaint abroad against Indian politicians and policymakers is that they are not good at deal-making no concept of a bottomline , no courage and imagination to give and take and no long-term strategic view of where they want to go. What is equally lacking is a strategic and holistic political perspective on Indian foreign economic policy that is based on the combined thinking of economists, businessmen, strategic and foreign policy analysts and so on.
While institutions like IDSA and RGF facilitate the meeting of all these groups, such interaction takes place more often outside India than at home!