The Past Present and Future of Indian Foreign Policy

I chat with Samir Saran from the Observer Research Foundation (ORF), one of Asia’s most influential think tanks about the journey of Indian Foreign Policy. We touch upon the era of Non-Alignment and the current India-China conflict and its repercussions on the future of our foreign policy. We also touch upon some of the philosophical foundations that enable the formulation of a nation’s Foreign Policy. Can India have its own unique Drishti/Gaze when it comes to Foreign Policy?

China and the World: India’s Perspective, with Tanvi Madan, Samir Saran and Shashi Tharoor

While China’s largest neighbor India is expected to overtake China by population within only a few years, it is struggling in most other areas to compete with the other giant emerging country. The recent border clashes only led the already complicated relations to deteriorate. As for most countries, India will have to balance furthering its economic potential – that it will not achieve without China – and opposing a China led region by offering other countries opportunities to collaborate.

Your host: Nico Luchsinger, Executive Director, Asia Society Switzerland
Moderator: Nico Luchsinger
Speakers:
Tanvi Madan, Director and Senior Fellow, Brookings Institution
Samir Saran, President, Observer Research Foundation (ORF)
Shashi Tharoor, Member of Parliament for Thiruvananthapuram and author
Production: Serena Jung, Program and Communications Director, Asia Society Switzerland
Editing: Denise Staubli, Program Manager, Asia Society Switzerland

Original post published here: https://asiasociety.org/switzerland/china-and-world-indias-perspective-tanvi-madan-samir-saran-and-shashi-tharoor

The Director’s Chair: Dr Samir Saran on India’s COVID crisis and the future of globalisation

In this episode of The Director’s Chair, Michael Fullilove speaks with Dr Samir Saran, President of the Observer Research Foundation (ORF), a leading Indian think tank.

Michael and Samir talk about India’s devastating second wave of COVID, the time it will take for India to recover from the crisis, and what the pandemic means for US-China relations. Samir speaks about his own experiences with the virus and analyses how the crisis may affect India’s position in the world.

Original post published here: https://www.lowyinstitute.org/publications/director-s-chair-dr-samir-saran-india-s-covid-crisis-and-future-globalisation

Raisina Files 2021

  • APR 13 2021

Raisina Files 2021

Raisina Files 2021 aims to engage with the leitmotifs of this past pandemic year, mirroring the theme of the Raisina Dialogue 2021, “#ViralWorld: Outbreaks, Outliers and Out of Control”. Within this overarching theme, we have identified five pillars and areas of discussion to critically engage with—WHOse Multilateralism? Reconstructing the UN and Beyond; Securing and Diversifying Supply Chains; Global ‘Public Bads’: Holding Actors and Nations to Account; Infodemic: Navigating a ‘No-Truth’ World in the Age of Big Brother; and, finally, the Green Stimulus: Investing in Gender, Growth and Development. Together, these five pillars of the Raisina Dialogue capture the multitude of conversations and anxieties countries are engaging and grappling with.

Raisina Files is an annual ORF publication that brings together emerging and established voices in a collection of essays on key, contemporary questions that are implicating the world and India.

In this volume

Editors: Samir Saran, Preeti Lourdes John

  • Emerging Narratives and the Future of Multilateralism | Amrita Narlikar
  • Diplomacy in a Divided World | Melissa Conley Tyler
  • Is A Cold War 2.0 Inevitable? | Velina Tchakarova
  • Trust But Verify: A Narrative Analysis Of “Trusted” Tech Supply Chains | Trisha Ray
  • Can The World Collaborate Amid Vaccine Nationalism | Shamika Ravi
  • A Nuclear Insecurity: How Can We Tame The Proliferators | Rajeswari Pillai Rajagopalan
  • De Facto Shared Sovereignty And The Rise Of Non-State Statecraft: Imperatives For Nation-States | Lydia Kostopoulus
  • Digital Biases: The Chimera Of Equality And Access | Nanjira Sambuli
  • The Infodemic: Regulating The New Public Square | Kara Frederick
  • How Finance Can Deliver Real Environmental And Climate Impact | Geraldine Ang
  • Unlocking Capital For Climate Response In The Emerging World | Kanika Chawla
  • Putting Women Front And Centre Of India’s Green Recovery Process | Shloka Nath, Isha Chawla, Shailja Mehta
  • Investing In Material Innovation Is Investing In India’s Future | Nisha Holla

ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.

Enough Sermons on Climate, It’s Time for ‘Just’ Action

Enough Sermons on Climate, It’s Time for ‘Just’ Action

Climate Change, Climate Justice, Guterres, COP26, Net Zero, Glasgow

File photo of people riding on a boat through flood water in the subcontinentGetty

As Britain readies to host the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow in November this year, there is a concerted effort to push countries towards publicly endorsing and adopting ‘Net Zero’—a carbon neutral emission norm—as policy. This is a demand for an inflexible, near-impossible, time-bound agenda to achieve what is no doubt a noble goal. And, as is often the case with climate-related issues, the nobility of intent is at risk of being overwhelmed by sanctimonious hectoring that raises hackles instead of ensuring meaningful participation.

On 3rd March, UN Secretary-General Antonio Guterres took to Twitter to call on governments, private companies and local authorities to immediately initiate three measures to mitigate climate change: Cancel all coal projects in the pipeline; end coal plant financing and invest only in renewable energy; and, jumpstart a global effort to a ‘just transition’ from carbon to non-carbon energy sources.

On the face of it, this was an unexceptionable call from the high priest of the UN to the global laity to rise in support of an important cause. But if we were to scratch the surface of the Secretary-General’s words, we would see that his call was little more than virtue-signalling.

For, there is nothing ‘just’ about the transition that he has sought without delay. Implicit in his call is the immoral proposition to disregard poverty, despair and the yawning development deficit between nations as he places them all on the same plane. Inherent in this approach is the unedifying complicity of global institutions in foisting an arrangement founded in the belief that the poor in the developing world should underwrite the climate mitigation strategy of the developed world. The climate high priests need to realise that depriving the world’s poorest of their aspirations can never be ‘just’ climate action. It can be convenient and, hence, it has much appeal in many quarters.

The climate high priests need to realise that depriving the world’s poorest of their aspirations can never be ‘just’ climate action. It can be convenient and, hence, it has much appeal in many quarters

An Alternative Script

A waffle-free alternative script for those given to sermonising to the world would focus on three other aspects that may actually lead to faster transitions and more justice. First, an impassioned call to those who control capital—managers of pension, insurance and other funds—to ensure larger amounts of money leave the country of origin and flow to countries of deficit for building sustainable, climate resilient infrastructure of the future. The Climate Policy Initiative has calculated that less than a quarter of climate finance flows across national boundaries; in other words, the overwhelming majority of climate finance is raised for domestic projects. The states expected to disproportionately do more to battle climate change are located in Asia, Africa and Latin America. Yet, they are inadequately funded and financed and cost of capital in these places dampens the scope of action. It would be stressing the obvious to say that the frontline states cannot be expected to engage in this battle without adequate inflow of climate capital at the right price for climate action.

Second, the assessors of risk—the intractable credit rating agencies, the cash-rich central banks and the big boys of New York, London and Paris—who decide how much capital should flow in which direction, should be called upon to recalibrate their risk assessment mechanism. Let it be said, and said bluntly, that objective ‘climate risk’ outweighs subjective ‘political risk’ which prevents the flow of capital to key climate action geographies. Risk must be reassessed objectively. Till then, the highfalutin sermons of the Pontiffs of Climate would be mere lip service, which none among the Climate Laity would bother to take seriously.

Third, and, perhaps, the most ‘just’ proposition the Secretary-General could make, would be a moral directive to all Western nations to shut down coal plants and fossil fuel- based enterprises immediately and entirely abandon carbon-fuelled energy for any purpose. After all, green energy sources need room to grow and space to mature and the OECD nations must allow this at warp speed. It is farcical to deny coal plants to countries that are still struggling to claw their way up the development ladder and demand that they turn carbon neutral while thousands of units and homes belch and blow climate emissions every day in rich economies. What is good for the rich cannot be bad for the poor.

Rich countries have failed to reduce their share of fossil fuel emissions. CSEP’s Rahul Tongia has calculated that the top emitting countries in terms of per capita emissions (nations above the global average emissions) still account for about 80 per cent of global Fossil CO2.  He further explains that the absolute emissions of these countries are rising even when measured in 2019. The rich took more than their fair share historically, and are still doing so. Any ‘Just Transition’ must involve evicting the squatters occupying carbon space to the detriment of others. Buying this space from the poorer is not ‘just’; it is another perverse business model based on extraction and mercantilism of centuries past.

Any ‘Just Transition’ must involve evicting the squatters occupying carbon space to the detriment of others. Buying this space from the poorer is not ‘just’; it is another perverse business model based on extraction and mercantilism of centuries past

In the run-up to COP26 at Glasgow, we are witnessing a new passion play of countries making a dramatic show of embracing the idea of Net Zero economies in the coming decades. The script of this passion play draws on starkly evocative narratives that seek to catalyse action through theatrical terms such as ‘climate emergency’. From appropriating the voice of the powerless to acquire legitimacy and crafting compelling narratives through a new cohort of well-funded ambassadors to push the envelope on climate change policy approaches, we are seeing varied actors engaging with climate issues in different ways. These different efforts have a common design, the economic objective of socialising the cost of climate action and making the poor carry the can for the rich.

That said, some facts are irrefutable. The last decade has been the warmest in recorded human history and its effects are visible to all. In February this year, an iceberg larger than New York City broke off the frozen Antarctic  and my just be a prelude to what lies ahead. Indeed, the possibility of the Arctic turning into a benign waterway in the near future can no longer be ruled out. It would require extraordinary un-intelligence to argue that global warming and its fallout can be mitigated by business-as-usual decision-making. But even as there is trans-world consensus on climate change and its impact, many would and must disagree on the proposed burden-sharing and distribution of responsibilities as we respond as a collective.

The India Imperative

India will be significantly affected by climate change in the coming decades. It is already feeling the heat and is combatting challenges from its mountains to its coasts due to shifting weather cycles and changing climate. It needs clearheaded policies, backed by political will, on this single most important issue that will impact its growth, its stability and the very integrity of its geography comprising a multitude of topographies.

This is happening at a moment when India is poised to exit the low-income orbit and take off on a trajectory towards becoming a middle-income country. Its journey from a US $3 trillion economy to a US $10 trillion economy coincides with ongoing climate action, polarising climate debate and climate-impacted economics. India can neither isolate itself from this reality, nor can it be reticent or timid in making its choices known to the world. India cannot be a receiver of decisions made elsewhere; it has to be on the high table, co-authoring decisions implicating its future.

For India, the moment offers three opportunities in these challenging times. First, India has to prepare itself through its policies, politics and internal rearrangements to seize and realise the single biggest global opportunity of leading a global effort to mitigate emissions of the future. The IEA, in its India Energy Outlook 2021 Report, estimates that India’s emissions could rise as much as 50 percent by 2040—the largest of any country, in which case India would trail behind only China in terms carbon dioxide emissions. This need not happen and is an opportunity for India and the World.

India must grab this chance to lower its future emissions through the right investments, technologies and global partnerships. The developed world, too, must make a matching response: Just like the Marshall Plan invested billions to rebuild post-War Europe with Germany at its heart, a new age Climate Marshall Plan must see India at its core. India must prepare and offer itself as the single biggest climate mitigation opportunity for the world and the most important green investment destination.

The developed world, too, must make a matching response: Just like the Marshall Plan invested billions to rebuild post-War Europe with Germany at its heart, a new age Climate Marshall Plan must see India at its core

Second, neither the world nor India should forget the dictum that on climate, India solves for the world. The solutions that India experiments with and implements successfully will be fit to be repurposed for other developing countries with similar geo-topographical conditions and economic sensitivities. Many of them are frontline countries in the climate battle.

India can and must become the hub of climate action for this decade and beyond, offering services, technology and infrastructure through climate supply chains that span the developing world. The International Solar Alliance is just a modest beginning. The future holds multiple opportunities. The country must lead the charge through building financial institutions that will support and sustain green transitions and helping create green workforces fit for purpose for the coming decades, amongst others.

Third, as India celebrates 75 years of its independence in 2022 and leads the G20 in 2023, it has the chance to make its most significant identity shift. India moved from being a British colonial state to a free nation in 1947, and then moved from being perceived as a land of snake-charmers to becoming an internationally acknowledged technology hub at the turn of the century. This decade offers the chance for it to emerge first as aUS $5 trillion and then as aUS $10 trillion economy that will be green and low carbon in its evolution – the first large green economy of the fourth industrial revolution.

India’s expectations from Glasgow COP26 should be uncluttered—its single purpose must be to catalyse global flows and investments to India and other emerging economies. If India fails to attract investments, the markets will clearly have not signed on to the climate agenda. In this effort, India needs a leg-up from the Climate Pontiffs.

Perpetuation of global poverty and low incomes cannot be the rich world’s climate mitigation strategy. ‘Net Zero’ should not seek this end state. On the contrary, investing in the emerging world’s green transition is the only way to build a ‘just’ world. The UN Secretary-General could help ensure that the largest pool of new money flows to where the climate battle will be fought—in India and in the emerging world. That would be a just transition and an efficient one.

Enough Sermons on Climate, It’s Time for ‘Just’ Action

Enough Sermons on Climate, It’s Time for ‘Just’ Action

Climate Change, Climate Justice, Guterres, COP26, Net Zero, Glasgow

File photo of people riding on a boat through flood water in the subcontinentGetty

As Britain readies to host the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow in November this year, there is a concerted effort to push countries towards publicly endorsing and adopting ‘Net Zero’—a carbon neutral emission norm—as policy. This is a demand for an inflexible, near-impossible, time-bound agenda to achieve what is no doubt a noble goal. And, as is often the case with climate-related issues, the nobility of intent is at risk of being overwhelmed by sanctimonious hectoring that raises hackles instead of ensuring meaningful participation.

On 3rd March, UN Secretary-General Antonio Guterres took to Twitter to call on governments, private companies and local authorities to immediately initiate three measures to mitigate climate change: Cancel all coal projects in the pipeline; end coal plant financing and invest only in renewable energy; and, jumpstart a global effort to a ‘just transition’ from carbon to non-carbon energy sources.

On the face of it, this was an unexceptionable call from the high priest of the UN to the global laity to rise in support of an important cause. But if we were to scratch the surface of the Secretary-General’s words, we would see that his call was little more than virtue-signalling.

For, there is nothing ‘just’ about the transition that he has sought without delay. Implicit in his call is the immoral proposition to disregard poverty, despair and the yawning development deficit between nations as he places them all on the same plane. Inherent in this approach is the unedifying complicity of global institutions in foisting an arrangement founded in the belief that the poor in the developing world should underwrite the climate mitigation strategy of the developed world. The climate high priests need to realise that depriving the world’s poorest of their aspirations can never be ‘just’ climate action. It can be convenient and, hence, it has much appeal in many quarters.

The climate high priests need to realise that depriving the world’s poorest of their aspirations can never be ‘just’ climate action. It can be convenient and, hence, it has much appeal in many quarters

An Alternative Script

A waffle-free alternative script for those given to sermonising to the world would focus on three other aspects that may actually lead to faster transitions and more justice. First, an impassioned call to those who control capital—managers of pension, insurance and other funds—to ensure larger amounts of money leave the country of origin and flow to countries of deficit for building sustainable, climate resilient infrastructure of the future. The Climate Policy Initiative has calculated that less than a quarter of climate finance flows across national boundaries; in other words, the overwhelming majority of climate finance is raised for domestic projects. The states expected to disproportionately do more to battle climate change are located in Asia, Africa and Latin America. Yet, they are inadequately funded and financed and cost of capital in these places dampens the scope of action. It would be stressing the obvious to say that the frontline states cannot be expected to engage in this battle without adequate inflow of climate capital at the right price for climate action.

Second, the assessors of risk—the intractable credit rating agencies, the cash-rich central banks and the big boys of New York, London and Paris—who decide how much capital should flow in which direction, should be called upon to recalibrate their risk assessment mechanism. Let it be said, and said bluntly, that objective ‘climate risk’ outweighs subjective ‘political risk’ which prevents the flow of capital to key climate action geographies. Risk must be reassessed objectively. Till then, the highfalutin sermons of the Pontiffs of Climate would be mere lip service, which none among the Climate Laity would bother to take seriously.

Third, and, perhaps, the most ‘just’ proposition the Secretary-General could make, would be a moral directive to all Western nations to shut down coal plants and fossil fuel- based enterprises immediately and entirely abandon carbon-fuelled energy for any purpose. After all, green energy sources need room to grow and space to mature and the OECD nations must allow this at warp speed. It is farcical to deny coal plants to countries that are still struggling to claw their way up the development ladder and demand that they turn carbon neutral while thousands of units and homes belch and blow climate emissions every day in rich economies. What is good for the rich cannot be bad for the poor.

Rich countries have failed to reduce their share of fossil fuel emissions. CSEP’s Rahul Tongia has calculated that the top emitting countries in terms of per capita emissions (nations above the global average emissions) still account for about 80 per cent of global Fossil CO2.  He further explains that the absolute emissions of these countries are rising even when measured in 2019. The rich took more than their fair share historically, and are still doing so. Any ‘Just Transition’ must involve evicting the squatters occupying carbon space to the detriment of others. Buying this space from the poorer is not ‘just’; it is another perverse business model based on extraction and mercantilism of centuries past.

Any ‘Just Transition’ must involve evicting the squatters occupying carbon space to the detriment of others. Buying this space from the poorer is not ‘just’; it is another perverse business model based on extraction and mercantilism of centuries past

In the run-up to COP26 at Glasgow, we are witnessing a new passion play of countries making a dramatic show of embracing the idea of Net Zero economies in the coming decades. The script of this passion play draws on starkly evocative narratives that seek to catalyse action through theatrical terms such as ‘climate emergency’. From appropriating the voice of the powerless to acquire legitimacy and crafting compelling narratives through a new cohort of well-funded ambassadors to push the envelope on climate change policy approaches, we are seeing varied actors engaging with climate issues in different ways. These different efforts have a common design, the economic objective of socialising the cost of climate action and making the poor carry the can for the rich.

That said, some facts are irrefutable. The last decade has been the warmest in recorded human history and its effects are visible to all. In February this year, an iceberg larger than New York City broke off the frozen Antarctic  and my just be a prelude to what lies ahead. Indeed, the possibility of the Arctic turning into a benign waterway in the near future can no longer be ruled out. It would require extraordinary un-intelligence to argue that global warming and its fallout can be mitigated by business-as-usual decision-making. But even as there is trans-world consensus on climate change and its impact, many would and must disagree on the proposed burden-sharing and distribution of responsibilities as we respond as a collective.

The India Imperative

India will be significantly affected by climate change in the coming decades. It is already feeling the heat and is combatting challenges from its mountains to its coasts due to shifting weather cycles and changing climate. It needs clearheaded policies, backed by political will, on this single most important issue that will impact its growth, its stability and the very integrity of its geography comprising a multitude of topographies.

This is happening at a moment when India is poised to exit the low-income orbit and take off on a trajectory towards becoming a middle-income country. Its journey from a US $3 trillion economy to a US $10 trillion economy coincides with ongoing climate action, polarising climate debate and climate-impacted economics. India can neither isolate itself from this reality, nor can it be reticent or timid in making its choices known to the world. India cannot be a receiver of decisions made elsewhere; it has to be on the high table, co-authoring decisions implicating its future.

For India, the moment offers three opportunities in these challenging times. First, India has to prepare itself through its policies, politics and internal rearrangements to seize and realise the single biggest global opportunity of leading a global effort to mitigate emissions of the future. The IEA, in its India Energy Outlook 2021 Report, estimates that India’s emissions could rise as much as 50 percent by 2040—the largest of any country, in which case India would trail behind only China in terms carbon dioxide emissions. This need not happen and is an opportunity for India and the World.

India must grab this chance to lower its future emissions through the right investments, technologies and global partnerships. The developed world, too, must make a matching response: Just like the Marshall Plan invested billions to rebuild post-War Europe with Germany at its heart, a new age Climate Marshall Plan must see India at its core. India must prepare and offer itself as the single biggest climate mitigation opportunity for the world and the most important green investment destination.

The developed world, too, must make a matching response: Just like the Marshall Plan invested billions to rebuild post-War Europe with Germany at its heart, a new age Climate Marshall Plan must see India at its core

Second, neither the world nor India should forget the dictum that on climate, India solves for the world. The solutions that India experiments with and implements successfully will be fit to be repurposed for other developing countries with similar geo-topographical conditions and economic sensitivities. Many of them are frontline countries in the climate battle.

India can and must become the hub of climate action for this decade and beyond, offering services, technology and infrastructure through climate supply chains that span the developing world. The International Solar Alliance is just a modest beginning. The future holds multiple opportunities. The country must lead the charge through building financial institutions that will support and sustain green transitions and helping create green workforces fit for purpose for the coming decades, amongst others.

Third, as India celebrates 75 years of its independence in 2022 and leads the G20 in 2023, it has the chance to make its most significant identity shift. India moved from being a British colonial state to a free nation in 1947, and then moved from being perceived as a land of snake-charmers to becoming an internationally acknowledged technology hub at the turn of the century. This decade offers the chance for it to emerge first as aUS $5 trillion and then as aUS $10 trillion economy that will be green and low carbon in its evolution – the first large green economy of the fourth industrial revolution.

India’s expectations from Glasgow COP26 should be uncluttered—its single purpose must be to catalyse global flows and investments to India and other emerging economies. If India fails to attract investments, the markets will clearly have not signed on to the climate agenda. In this effort, India needs a leg-up from the Climate Pontiffs.

Perpetuation of global poverty and low incomes cannot be the rich world’s climate mitigation strategy. ‘Net Zero’ should not seek this end state. On the contrary, investing in the emerging world’s green transition is the only way to build a ‘just’ world. The UN Secretary-General could help ensure that the largest pool of new money flows to where the climate battle will be fought—in India and in the emerging world. That would be a just transition and an efficient one.

From Xi with love: A New Year greeting to the new POTUS

From Xi with love: A New Year greeting to the new POTUS

As a new American President prepares to assume office, China has sent him a greeting card with three messages conveying the terms of Beijing’s engagement with Washington and other world capitals.

global constituency, pandemic, year of the pandemic, COVID-19, pandemic, strategic autonomy, norms, prophetic prediction, US, turbulent change, political strains, information disorder, Biden White House

Joe Biden leaves The Queen Theater —10 January 2021, Wilmington, Delaware. Photo: Chip Somodevilla — Getty

Among the more memorable lines from Albert Camus’ haunting novel, The Plague, possibly the most read and quoted book in the Year of the Pandemic, is a starkly stated fact: “Stupidity has a knack of getting its way.”

If “You are on mute” was the most common interjection during COVID-19-enforced digital conversations in the conference circuit, a close second would be the assertion, “We have to work with a rising China to make it a responsible actor.” You could voice this assertion, or a similar variant, at a think-tank discussion or official consultation in Western Europe or America and be appreciated for possessing a wise and rational mind. If you were to say it many times over with panache and flair, you could bag a serious policy job in that part of the world. Money talks; the profundity of banal wordsmiths runs marathons.

The Old World cannot ‘make’ China act in any way it tells it to.

For there are two fatal flaws in this line of thought. The first flaw has to do with “the rise of China.” This is the last decade’s conversation; outdated and irrelevant. China has already risen, and it is everything many did not wish it to be, even as they were investing in its emergence. Deal with it now by accepting this reality. The second flaw pertains to the rather misplaced assessment of Western power embedded in these seemingly highfalutin but inane assertions. The Old World cannot ‘make’ China act in any way it tells it to. In fact, the West does not even know what it wants from China besides trade and investment. A popular refrain of yesteryears was that while all countries have an army, in Pakistan, the army has a country. Today’s refrain is reflected in what someone recently said, without exaggerating: In Germany the auto industry has its own union, the European Union.

2020 was a crucial year for China. Its claim to global leadership was severely tested by its role in, and early mismanagement of, the COVID-19 pandemic. It faced pushback, including from unexpected quarters, on its deluge of misinformation and its subversion of international institutions to divert attention from its malfeasance. The pandemic was to be the moment of reckoning, when the old and new powers would come together and hold Beijing to account. Predictions that the pandemic would prove to be China’s ‘Chernobyl moment,’ however, have turned out to be hollow. China was among the few countries that weathered the public health crisis with a modicum of control. A year later, it is leveraging trade, technology and international development to capitalise on this and further consolidate its influence and power. As a new American President prepares to assume office, China has sent him a greeting card with three messages conveying the terms of Beijing’s engagement with Washington and other world capitals.

What else could explain why the EU enthusiastically rushed to conclude the EU-China Comprehensive Agreement on Investment?

The first message is that China is too big to be ignored and too wealthy to displease. This is the obvious subtext of the EU-China Comprehensive Agreement on Investment (CAI). What else could explain why the EU enthusiastically rushed to conclude this agreement? Brussels ignored the Biden transition team’s pleas to delay the agreement. It ignored China’s rogue behaviour in 2020 — a massive human rights crackdown in Hong Kong and Xinjiang, a destabilising escalation of tensions in the Himalayas, its aggressive ‘wolf warrior’ diplomacy, and the economic coercion of Australia, among others. The EU even ignored its own evolving assessments of China, with expressions like “European values,” “systematic rival,” and “strategic autonomy” proving to be meaningless phrases that are no more than an anodyne dressing for a toxic salad. The EU has not only handed Beijing a victory ahead of the transition in Washington, but it has also bolstered China’s belief that its centrality to global value chains provides it with clout beyond its own imagination.

year of the pandemic, COVID-19, pandemic, prophetic prediction, US, turbulent change, political strains, irrationality
Among the more memorable lines from Albert Camus’ haunting novel, The Plague, possibly the most read and quoted book in the Year of the Pandemic, is a starkly stated fact: “Stupidity has a knack of getting its way.” Photo illustration: Anton Petrus — Getty

The second message is that China is too big to punish. Under President Donald Trump, the US attempted to systematically choke China’s access to global technology supply chains through sanctions, export controls, and coercive diplomacy. While those efforts have had some success, China has doubled down on its efforts to indigenise the development of breakthrough technologies — an effort that has seen remarkable success during the past two decades. Now it plans to return the favour. In early January, China’s Ministry of Commerce published rules encouraging firms incorporated in China to defy sanctions and export controls, and threatened to punish those that do not. When, and not if, these rules are implemented, technology and financial firms in particular will find themselves caught between a rock and a hard place. These rules are a clear warning to the Biden Administration and to its supporters and funders from Wall Street and Silicon Valley. The Chinese Communist Party (CCP) is betting that America Inc. will prefer to devote resources to lobby Washington for a rapprochement with Beijing rather than contend with fragmentation and the attendant loss of profits.

The pandemic has accorded China the chance to offer developing nations not just infrastructure finance, but a multifaceted development opportunity — one that further entrenches China’s norms, standards and preferences.

The final message is that China is simply too big to fail. Media pundits are reading a slowdown in Belt and Road (BRI) investments as a sign that China is reconsidering the project’s utility. This is way off the mark. The institutions and mechanisms of the BRI are rapidly turning into conduits for China to deliver global public goods and will remain so even as project-funding is rationalised. State Councillor Wang Yi made three priorities explicit for 2021 in his speech at December’s Belt and Road Forum: The Heath Silk Route, the Digital Silk Route and the Green Silk Route. Each plays to China’s strengths and are crucial components of its 2021 white paper on international development cooperation. The pandemic has accorded China the chance to offer developing nations not just infrastructure finance, but a multifaceted development opportunity — one that further entrenches China’s norms, standards and preferences.

These messages should not come as a surprise to those who track Beijing. As we argued in our book Pax Sinicathese recent developments represent China’s continuing efforts to recast globalisation and international governance in its own image. The year 2021 is an important milestone for the CCP and for Chairman Xi Jinping. It marks the 100th anniversary of the founding of the CCP, the first of two centenaries central to the realisation of the ‘China Dream.’ Leading up to this point, ‘Core Leader’ Xi has consolidated his hold over the CCP, and the party has, in turn, consolidated its control over society, industry, military and every aspect of policy. Xi has already acknowledged that the path towards global leadership by 2049 — the centenary of the founding of the People’s Republic of China — will be defined by “turbulent change.” While he did not explicitly say so, external risk fuelled by geopolitical rivalry with the US and a more wary international community were likely on his mind.

China’s messages should not be interpreted as a prophetic prediction of its continued and unchallenged rise or that it is immune from political strains and irrationality.

These three messages to the world in early-2021 indicate how China is anticipating and responding to emerging realities. Yet, China’s messages should not be interpreted as a prophetic prediction of its continued and unchallenged rise or that it is immune from political strains and irrationality.

The pandemic has bookended an international order living out its last days, much like King Lear. Contrary to popular expectation, a Biden White House will not — or, cannot, if you prefer — reverse this trend. The world will still be driven by populism and fragmentation. Communities across geographies are anxious about change. Information disorder, technological and industrial developments, and ecological crises are demanding new ideas and leadership. China is the first power to have a dark but coherent proposition — one defined by techno-authoritarianism and state control.

Is there any other alternative on the table? Or will the decline of the incumbents be scripted by Beijing and its growing global constituency of cheerleaders?

The views expressed above belong to the author(s).

ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.

The European Union, CAI, and the abyss

The European Union, CAI, and the abyss

The CAI — despite Ursula von der Leyen’s claim that it will help the EU defend multilateralism — is not multilateral at all. It is a bilateral deal with an authoritarian power that seems to have a very different understanding of multilateralism.

European Union, CAI, Ursula von der Leyen, EU-China Comprehensive Agreement on Investments, Biden administration, Zaubertrank, Realpolitik, middle kingdom, international trade, investment, European Union

Dursun Aydemir — Anadolu Agency via Getty

On 30 December 2020, an EU Press Release proudly declared “Leaders concluded in principle the negotiations on the EU-China Comprehensive Agreement on Investment (CAI).” The conclusion — at least of this stage of the negotiations (the agreement will still have to withstand the scrutiny of the European Parliament) — has already spawned a cottage industry of commentaries.

The great and the good, particularly from the fields of Economics and Law, are having quite a time pondering and speculating over the (rather limited) detail that is available. Academic chatter is bubbling away on a range of issues: On what the agreement could mean for issues of Level Playing Field; how the terms that the EU has secured for itself compare with the US-China Phase 1 agreement (note that even though the EU-China deal is on investment while the US-China was on trade, there are some overlaps on issues like Forced Technology Transfer); how enforceable would social and environmental clauses turn out to be that the EU is touting as a major win; and so on and so forth? But much of this punditry, while tantalisingly delicious in the technocratic safety bubble that it lives in, reminds us of Nero fiddling as Rome burns. This is not the time to be bean-counting economic gains and losses. The abyss, which the EU has been gazing so greedily into, is staring back its Medusa stare.

The abyss

There is much that is wrong with the deal, which we could point to, in both process and implications.

We could look askance upon the remarkable haste with which the European Union — normally a lumbering, complicated, and bureaucratic machine — has pushed this deal through. Or we could suggest that the Zaubertrank at work now be made the official beverage for the bureaucracy in Brussels.

We could raise an eyebrow at the fact that the final negotiations took place at what is usually expected to be the quietest time of the year: Holiday closures, understaffed newspaper offices, and tired citizens desperately trying to catch a breath or two in the period that is so sweetly described in German as “zwischen den Jahren” (the quiet time in between the years). Our raised eyebrows could perhaps rise further still if we turned our attention to the fact that people across Europe are caught in a surging second wave of the coronavirus pandemic (on the day that the deal was signed, Germany reached a new and depressing record of daily deaths due to COVID-19). And we could applaud that neither the pandemic nor the holiday despair could prevent this ‘systemic rivalry’ from being recast.

We could question not only the timing of the EU-China party, but also the choice of protagonists: In what capacity was President Macron present at this meeting? The impression that screenshots of the meeting give is that the two largest economies of Europe — Germany and France — are in the driver’s seat; all the attention that the union claims to give to representation and accountability for its remaining 25 members (to be reduced to 24 with Britain exiting on 31 December) is little more than lip-service.

We could even — if we were thus inclined — point out politely that we are not convinced by the European Commission President, Ursula von der Leyen’s, claim that the “Agreement will uphold our interests and promotes our core values. It provides us a lever to eradicate forced labour.” The clauses, at least as they are reported in the EU’s Press release, are weak. They are, in fact, so weak, that one might almost want to graffiti LOLOL (Laugh Out Loud On Labour standards) all over it, were it not for the tragic and horrendous human rights violations that are reported in Xinjiang.

We could raise all these issues, and more along such lines. But they still would not get us to the crux of a matter that is deeply political.

The abyss stares back

International trade and investment — for all the conceits that many economists and lawyers seem to have about these issues — are inherently political. And they have become even more political in the context of China’s rise: Not only because of the use and abuse of multilateral rules by non-market economies (which is what defenders of CAI tend to focus on), but also because of the fundamental difference in values that should define the goals of multilateral cooperation. Contra the inclination of technocrats to reduce values to labour and environmental standards, values include first-order principles of democracy, liberalism, pluralism, and more. And international trade and investment, especially in a world where interdependence can be weaponised, have become just too important to be left in disciplinary silos or technocratic bubbles. CAI is not “just” a matter of investment, or even standards; it is a matter that has potentially serious security implications. It begins to dramatically alter who we are as a society, community and people.

China has, perhaps, more than ever in 2020, given Europe ample evidence of these differences. It has threatened and bullied democratic Australia for having the gumption to push for an enquiry on the origins of the pandemic. Its new security law has all but abolished the promise of “one country two systems” for Hong Kong. Its adventurism in the neighbouring seas has increased. Its border conflict with India has escalated to a new level. Its increasing use of “wolf-warrior diplomacy” has even given up the pretence of sweet talk on many issues that most democracies hold dear.

Despite all these clear provocations, the EU has done little to update its strategy. It has — almost religiously — continued to repeat its mantra of 2019: It sees China as its partner, competitor, and rival. This, in fact, was nothing but fence-setting — and with the conclusion of the CAI negotiation, the EU has signalled to its own people, its allies, and indeed to China, which side of the fence it prefers.

The CAI — despite von der Leyen’s claim that it will help the EU defend multilateralism — is not multilateral at all. It is a bilateral deal with an authoritarian power that seems to have a very different understanding of multilateralism. It comes at an especially ill-opportune time. It signals to China that the EU now, not only turns a blind eye to, but actually rewards its increasingly aggressive behaviour. It suggests that the EU has scarce regard for its closest ally — the United States — which, under the incoming Biden administration, had clearly revealed that it would like to work together on China. It does not reassure other democracies — such as Australia, Japan, and India — and it also undermines the potential for alliances with like-minded players. And the deal is a slap in the face of multilateralism: It shows how, for all its talk in favour of reforming multilateralism, the EU actually attaches greater worth to a bilateral deal with a country that has contributed significantly to the breaking of the system.

In the 1990s, many were determined to embrace the “middle kingdom” and integrate it with the multilateral trading arrangement. The argument was that this would make China more like ‘us’. Tragically, many in the EU today are more like China instead. This agreement marks the move of the Union from ‘values’ to “valuations” and from ideals to trade.

Importantly, these are all choices that the EU has made. They cannot be fobbed off on China. China has simply gamed a round of Realpolitik rather effectively. Europe, in contrast, has weakened its own hand, given short shrift to its own values, and undermined the position of its friends and allies.

Amid changing post-pandemic realities, India needs to be swift in identifying partners whom it can trust

Amid changing post-pandemic realities, India needs to be swift in identifying partners whom it can trust

We will see the rise of a New World Order driven by national interest, reliability of partners, and of course, economic factors. India has to use a “Gated Globalisation” framework to negotiate this change.

 Gated Globalisation, GDPR, Integrity, Partners, Pandemic, Big Tech, Regulations

Getty

The COVID-19 vaccines are coming. And along with this sanjivani comes a new age of geopolitics. The vaccines are varied, with different pricing points and affordability. Nations have secured their vaccine supplies from countries and companies they trust, often by forging new alliances. The scepticism over the vaccines from China and Russia shows that trust is the operating word in the post-pandemic era — and it is not limited to the choice of vaccines.

As we enter the third decade of the 21st century, a multipolar world awaits us. The US and China — rivals for the top slot till the pandemic hit the world — will now have to contend with traditional and rising powers like the UK, France, India and Brazil. Each country will engage with others selectively, not in every arena. We will see the rise of a New World Order driven by national interest, reliability of partners, and of course, economic factors. India has to use a “Gated Globalisation” framework to negotiate this change.

The security landscape will continue to drive partnerships, but these will no longer be omnibus alliances. India is locked in a confrontation with China in the Himalayas. The US and its traditional allies are ramping up their presence in the Western Pacific. A new Great Game is underway in the Indo-Pacific where the Quad is emerging. The Middle East is in a deep churn as Israel and Arabs discover Abrahamic commonalities. Europe is caught in a struggle to retain its values amid the diversity it has acquired over the years.

The Gated Globalisation framework requires that India should protect its interests in these unsettled times. Strong fences are necessary, but so is the creation of new partnerships (like the Quad) based on trust and common interests. Gated Globalisation has no place for parlour games like “non-alignment”; it will test the tensile strength of “strategic autonomy”. The need for a new coalition was felt after Doklam and has become a necessity post-Ladakh: India needs friends in deed.

The Gated Globalisation framework requires that India should protect its interests in these unsettled times. Strong fences are necessary, but so is the creation of new partnerships (like the Quad) based on trust and common interests

Beyond security, like everybody else, India has to make partnership choices on trade, capital flows and the movement of labour. The WTO’s multilateral trading arrangements have frayed beyond repair. Whether it is RCEP in the Indo-Pacific, the new version of NAFTA called USMCA, or the reconfigured EU, countries will have to decide whether they belong inside these gated trading arrangements. India has chosen to stay out of RCEP and the UK has left the EU.

By imposing restrictions on trade with China, India faces restrictions on capital flows. But this does not preclude enhanced capital flows from new partners. To prevent inflow of illicit funds, India has barred capital from poorly-regulated jurisdictions. India’s capital account for investment is largely open while its current account is carefully managed. Similarly, while restricting debt flows, India is open for equity flows from friendly countries. Other nations have similar policies. By managing capital flows in this manner, countries have enabled tighter financial relationships within their gated communities while shutting out those who are inimical to their interests.

India’s global diaspora is now over 30 million and sends more through remittances ($80 billion per year) than foreign capital inflows. The pandemic-enforced work-from-home may see the creation of new pools of skilled workers, living in virtual gated communities, further enhancing income from jobs physically located elsewhere. Moreover, the Indian diaspora is now increasingly impacting policy in countries like the US, UK and Australia where it has contributed politicians and technocrats, innovators and influencers, billionaires and cricket captains.

The pandemic-enforced work-from-home may see the creation of new pools of skilled workers, living in virtual gated communities, further enhancing income from jobs physically located elsewhere

Finally, technology flows and standards will also define gated communities. The internet is already split between China and everyone else. The Great Firewall of China has shut out many of the big tech players like GoogleFacebook and Netflix. Instead, China has its Baidu, Alibaba and Tencent. With the advent of 5G technology, this split will get deeper and wider over issues of trust and integrity.

The EU-crafted General Data Protection Regulation (GDPR) is an excellent example of Gated Globalisation. The EU has set the terms of engagement; those who do not comply will be kept out. The Indian law on data protection that is currently being discussed follows a similar sovereign route. However, it remains to be seen whether these norms can checkmate China’s massive digital surveillance apparatus.

There are other emerging arenas that will likely become the focus of big power competition. China has moved in all possible directions to develop its global strategies. It has linked its national security interests with its Belt-and-Road Initiative and its debt programmes. It is offering a package deal of 5G technology with new telecom networks. China has learnt well from the US.

Amid these rapidly changing post-pandemic realities, India has to be swift in identifying partners whom it can trust and who will help protect and further its national interests. Ambiguity, lethargy and posturing will not do.


This commentary originally appeared in The Indian Express.

The views expressed above belong to the author(s).

ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.