Category Archives: USA and Canada

Commentaries, Diplomacy, G 20, Global Economy, India, India-Russia, international affairs, Narendra Modi, USA and Canada

India leads: Two to Tango with in 2023

It is a busy season on Raisina Hill as India assumes stewardship of the Shanghai Cooperation Organisation (SCO) and takes charge of the Group of Twenty (G20) in December. Leading these two plurilateral groups will be complex and challenging. The groupings have divergent goals, purposes, and memberships even as they grapple with Covid-19’s disruptive impact on the global economy and conflicts during and after the pandemic. India will need to ensure that the concerns of developing countries are not relegated to the margins by the European conflict.

At the heart of the endeavour lies the challenge of dialogue and conversations with all, even as a subset of like-minded countries invest in frameworks that respond to decadal objectives. “Talk to all and work more with some” will have to be India’s mantra for 2023 as it has a rare opportunity to make two distinct agendas align with its own.

At SCO, China’s dominant position is inescapable, and it overwhelms the preferences and perspectives of others. Here, India and Russia may share a common imperative to balance China and make SCO focus on a broader policy and development agenda. As Prime Minister (PM) Narendra Modi pointed out during the SCO summit last month, this is not the time for war. Moving away from conflict to attend to the frailties of the economy may be beneficial for SCO and less contentious too. Many in the group are uncomfortable with the Russia-Ukraine conflict and would rather see this group focus on the development and human challenges the region is saddled with. India will have to reset the playing board skillfully. If China is playing “go”, and Russia is playing “roulette”, New Delhi will need to play smart chess.

Many in the group are uncomfortable with the Russia-Ukraine conflict and would rather see this group focus on the development and human challenges the region is saddled with.

However, the nature of SCO and its purpose will ensure that politics takes centre-stage. In Samarkand, the Indian PM showed the way. Niceties need to be dropped, and hard questions must be posed, including on sovereignty, the expansionist tendencies of some countries, including China, and terrorism emanating from Pakistan.

Simultaneously, India must inject its growth imperative around technology, sustainability and green transitions into discussions and state its concerns over cyber security, online malfeasance, and white elephant infrastructure projects, among others. At SCO, India would do well to initiate debates on these issues, irrespective of the outcomes, and create space for discussions that may not have Beijing’s blessings.

Diplomacy sometimes misconstrues the role of the host country to imply benign or agnostic participation. India, however, must maintain its determination to have an assertive foreign policy that seeks to shape and steer conversations towards the outcomes it desires.

All of this cannot be starkly divergent from India’s G20 agenda. There needs to be a bridge linking what we aim to achieve through SCO and G20, although the methods and formulations used in each forum may differ. G20 requires a different type and style of hosting. India can leverage its experience to communicate with all actors involved and curate conversations that cater to diverse constituencies. “Sabka Saath, Sabka Vikas, Sabka Vishwas and Sabka Prayas” (inclusive development for all, everyone’s trust and efforts) is an all-encompassing Indian approach that fits G20.

India can leverage its experience to communicate with all actors involved and curate conversations that cater to diverse constituencies.

Here, India will need to ensure that the clouds of war that loom over Europe do not pour down on its presidency. India must make it clear to its western partners that it will view any attempt to reduce the impact of its G20 presidency seriously. At the same time, New Delhi must make clear to Moscow that steps towards de-escalation are essential from its end.

External factors will inevitably distract the grouping from anything that is discussed within it. The agenda that is engaged with and outcomes delivered at G20 may be bold (unlikely) or sub-optimal (more probable). However, thanks to G20’s structure, global action will always be evolutionary. India’s efforts must draw from Indonesia and deliver to Brazil and then South Africa.

PM Modi’s reiteration of the importance of “democracy, diplomacy, and dialogue” at the SCO Summit is a message that the G20 leaders should also remember as they prepare to engage at the upcoming G20 Summit in Indonesia and beyond. G20’s ability to navigate through economic and social crises should not become hostage to regional or bilateral politics.

India must make a clear and robust case to address larger goals in the spirit of cooperation. It must focus precisely on what it wants to achieve from each working group at G20 and aim to create a legacy and a futureoriented architecture, which will lend continuity to what it incubates.

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big tech, Cyber and Internet Governance, Cyber and Technology, Cyber Space, India, media and internet, Tech Regulations, U.S., USA and Canada

Accountable Tech: Will the US take a leaf out of the Indian Playbook?

2024 is a decisive year for democracy and the liberal order. 1.8 billion citizens in India and the United States, who together constitute nearly 1/4th of the world’s population, are going to elect their governments in the very same year. This will be the first such instance in a world increasingly mediated and intermediated by platforms, who will be crucial actors shaping individual choices, voter preferences, and indeed, outcomes at these hustings. It is therefore, important to recognise these platforms as actors and not just benign intermediaries.

Prime Minister Modi’s government, especially in its second term, has approached digital regulation with the objective of establishing openness, trust and safety, and accountability. In June this year, Union Minister of State for Electronics & Technology, Rajeev Chandrasekhar, invited public inputs on the draft amendments to the IT Rules 2021 with an ‘open, safe and trusted, accountable internet’ as the central area of focus.

Runaway platforms and cowboy capitalism are the big dangers to the sanctity of our elections and to the citizens’ acceptance of political outcomes.

This Indian aspiration for Accountable Tech must be an imperative for all liberal and open societies if we are to enrich the public sphere, promote innovation and inclusive participation, and indeed, defend democracy itself. If we fail to act now and act in unison, we could end up perverting the outcomes in 2024. Runaway platforms and cowboy capitalism are the big dangers to the sanctity of our elections and to the citizens’ acceptance of political outcomes. India has clearly seen the need for it and is striving to make large tech companies accountable to the geographies they serve. The latest comer who seems to have understood the importance of this is the United States of America.

On 8 September 2022, the White House convened a Listening Session on Tech Platform Accountability ‘with experts and practitioners on the harms that tech platforms cause and the need for greater accountability’. The session ‘identified concerns in six key areas: competition; privacy; youth mental health; misinformation and disinformation; illegal and abusive conduct, including sexual exploitation; and algorithmic discrimination and lack of transparency.’ Hopefully, this session will lead to a more contemporary regulatory and accountability framework that aligns with what is underway in India.

From private censorship and unaccountable conversations hosted by intermediaries to propagation of polarised views, all of them constitute a clear and present danger to democracies, and certainly to India and the US, who are among the most plural, open, and loud digital societies. Digital India is indeed going to be ground zero of how heterogenous, diverse, and open societies co-exist online and in the real world. The efforts of the Indian government to put together sensible regulation may actually benefit many more geographies and communities. If India can create a model that works in the complex human terrain of India, variants of it would be applicable across the world.

The efforts of the Indian government to put together sensible regulation may actually benefit many more geographies and communities.

It must also be understood that there is no single approach to manage platforms, even though there could be a wider and shared urge to promote openness, trust and safety, and accountability. The regulations that flow from this ambition are necessarily going to be contextual and country specific.

Hence, it is important that India, the US, and other large digital hubs coordinate and collaborate with each other to defend these universal principles even as they institute their own and region-specific regulations. For instance, policy architecture in the US will focus on managing platforms and technology companies operating under American law and consistent with their constitutional ethos. India, on the other hand, has the onerous task of ensuring that these same corporations adhere to Indian law and India’s own constitutional ethic.

India and the US lead the free world in terms of global social media users. As of January 2022, India had 329.65 million Facebook, 23.6 million Twitter, and 487.5 million WhatsApp (June 2021) users, while the US had 179.65 million Facebook, 76.9 million Twitter, and 79.6 million WhatsApp (June 2021) users. The online world is no longer a negligible part of society. Most people online see the medium as an agency additive and are keen to use it to further their views and influence others’ thinking. Of these, many are also influencers in their own localities. What transpires online now has a population scale impact. The mainstream media reads from it, social media trends define the next day’s headline and the debates on primetime television.

Policy architecture in the US will focus on managing platforms and technology companies operating under American law and consistent with their constitutional ethos.

Thus, the idea that one can be casual in managing content on these platforms is no longer feasible and will have deleterious consequences as recent developments have shown. Intermediary liability, that sought to insulate platforms from societal expectations, needs to be transformed to a notion of intermediary responsibility. It must now become a positive and a proactive accountability agenda where the platforms become a part of responsible governance and responsible citizenship.

Predictable regulation is also good for business and policy arbitrage harms corporate planning; so, platforms too have a stake in making their board rooms and leadership accountable. They must make their codes and designs contextual and stop hiding behind algorithmic decision-making that threatens to harm everyone, including their own future growth prospects. And this must be the ambition as we head into 2024–the year when technology could decide the fate of the free world.

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Cyber and Internet Governance, Cyber and Technology, European Union, tech and media, USA and Canada

Digital democracies and virtual frontiers: How do we safeguard democracy in the 4IR?

Thank you Tom, and thank you Amb. Power for inviting me to speak on this important issue. Let me congratulate her and the US government for really beginning to respond to the challenges of intrusive tech. That has to be one of the issues that global civic actors, thinkers, and even political leaders must devote time and energy on. I think intrusive tech will take away the gains of the past.

Let me start with something Amb. Power mentioned. The Arab Spring powered by social media levelled the divide—even if briefly—between the palace and the street. The ‘Age of Digital Democracy’ possibly began then. Technology has become the mainstay of civic activism since. Not only are more voices heard in our parts of the world, even elected governments are also more responsive to them. Intrusive tech can undo the gains and I think Amb. Power was absolutely right in stressing on some of the issues that need to be addressed.

The past year also has made us aware of the threats and weaknesses to digital democracies. First, the very platforms that have fuelled calls for accountability often see themselves as above scrutiny, bound not by democratic norms but by bottom-lines. However, acquisition metrics and market valuations don’t sustain democracy too well. The contradiction between short-term returns on investment and the long-term health of a digital society is stark. Hate, violence, and falsehoods drive engagement, and therefore, profits for companies and platforms, our societies are indeed on shaky ground, and this is one area where we must intervene.

We must also ask: Are digital infrastructure and services proprietary products or are they public goods? The answer is obvious. To make technology serve democracy, tech regulations must be rethought. I think this debate needs to be joined. Big Tech boardrooms must be held to standards of responsible behaviour that match their power to persuade and influence. The framework must be geography neutral. Rules that govern Big Tech in the North can’t be dismissed with a wink and a nudge in the South and this is again something civic actors must emphasise  on.

Second – and this is important, much of Big Tech is designed and anchored in the US. Understandably, it pushes American—or perhaps Californian—free speech absolutism. This is in conflict with laws in most democracies—including in the US after the 6 January Capitol attack. While protecting free speech, societies seek safeguards to prevent undesirable consequences, especially violence. If American Big Tech wishes to emerge as global Tech, it must adhere to democratic norms globally. Its normative culture must assimilate and reconcile, not prescribe and mandate. Absent such understanding, a clash of norms is visible and already upon us. It is going to erode our gains.

Finally, a key threat emanates from authoritarian regimes with technological capabilities. They seek to perversely influence open societies by weaponising the very freedoms they deny their own people. In their virtual world, Peng Shuai is free and happy; in their real world, she is under house arrest—a new meaning to the term ‘virtual reality’. Confronted by wolf warriors, the rest of us can’t be lambs to the slaughter.

Open societies have always defended their borders stoutly and they must also safeguard the new digital frontlines. In 2024, the two most vibrant democracies will go to elections in the same year, the first time in our digital age, we must not allow authoritarian states or their agents to manipulate public participation at the hustings.

As I conclude let me leave you with a thought: It’s not darkness alone that kills democracy; runaway technology, steeped in nihilism, could strangulate it. Just scroll down your social media feed this evening…

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Commentaries, foreign policy, Great Power Dynamics, international affairs, Strategic Studies, USA and Canada, Writing

The unravelling of Pax Americana

The “war on terror”, launched two decades ago, epitomised the peak of America’s unipolar moment. The jets crashing into the twin towers were seen by most as an attack on the soul of globalisation, a project promoted and designed by the United States (US) and its partners in Europe. The near-universal commitment to this war, within the P-5 and outside, was a demonstration of America’s real power. That was a different time and a different world.

Since then, the US has been implicated in the global financial crisis of 2008. Its flawed domestic landscape and divided democracy have been a public spectacle for global audiences since 2016, from the swearing-in of President Donald Trump to that of President Joe Biden. Both individuals were and are legitimate leaders for only half their nation. America’s botched and self-serving response to the Covid-19 pandemic only hastened the decline of its ethical and moral positioning. Hot on the trail of these events, the hasty and bungled exit from Afghanistan is not just a political event, but part of a continuum, one that points to the momentous unravelling of Pax Americana.

The jets crashing into the twin towers were seen by most as an attack on the soul of globalisation, a project promoted and designed by the United States (US) and its partners in Europe.

It is not the US’s material power alone that has suffered; the institutions undergirding the liberal order are on shaky ground as well. The partisanship of its media and academia are visible to all. It is a nation where trolling as a way of life has replaced a broad national consensus. Morally tinged lectures about the international liberal order are likely to fall on deaf ears for those who witnessed the West’s callous indifference to billions in the developing world still in need of vaccines, or towards the thousands of Afghan interpreters who risked their lives to fight America’s war.

Those watching from capitals in Asia, gearing up for a new era of conflict and competition in the Indo-Pacific, will be even more sceptical. Some among them will be the first victims of the Taliban’s willingness to shelter and nurture terrorist groups. More importantly, the fall of Kabul will serve as a dire reminder of the fate that may befall them if they get mired in great power competition.

For instance, if one lived in Japan, going nuclear may be a sensible option. If you were a resident of an Association of Southeast Asian Nations (Asean) country, your neighbourhood bully would seem a more predictable and acceptable proposition. No spin can change this. America today is less attractive to many. This is a heavily mediated exit from a partnership and the damage is far greater than any of its other follies.

As these geographies rediscover one another, everything in between becomes a shared problem; refugee surges from countries mired in civil conflict, the climate crisis, and flows of finance, infrastructure and technology.

One could even argue that the US’s Indo-Pacific project has already faced its first significant setback. The idea that the US will now focus on China with greater intensity is naïve and suggests a poor understanding of politics. Land frontiers still matter and the US has ceded South and South-West Asia to Beijing. Chinese State media have lampooned and mocked the US’s withdrawal all week.

What role China will eventually play in Afghanistan is uncertain, but it has plans to fill the void that exists. The Chinese model is different and is based on the extraction of value from resources in the host country and providing lucre to the rulers who facilitate this. Tribes and feudal societies tend to work with this model better than the alternatives that seek to turn them into liberal nations and free markets. In the short term at least, China could well emerge as a powerful shaper of the economic and military arrangements in Af-Pak and West Asia.

This episode will have repercussions for the Quad, an ostensibly “counter-China” alliance in the Indo-Pacific. It is time to face up to some home truths.

First, for too long, policymakers in DC have relied on maps that mark the East Indian Ocean as the Indo-Pacific boundary. India’s perspective on Afghanistan, Pakistan, and West Asia has been dismissed time and again. This must change, or India will work with other arrangements to manage the threats that abound. The US must realise that dealing with the influence of China in Afghanistan and Pakistan are a core Indo-Pacific challenge. Ceding these to China defeats the Western Pacific project as well.

Countries have learnt to assess the US by what it does, not by what it says. Efforts to shape and design regions to suit their own narrow interests are likely to be resisted.

Second, even as DC learns to re-imagine the expanse of the Indo-Pacific, it must internalise that Europe and Asia are merging through the efforts of Beijing. As these geographies rediscover one another, everything in between becomes a shared problem; refugee surges from countries mired in civil conflict, the climate crisis, and flows of finance, infrastructure and technology. The US cannot afford to ignore this region if it is to remain relevant at the end of the 2020s.

Third, India will continue to assess the US as its most important partner. A declining superpower is easier to do business with. The Countering America’s Adversaries Through Sanctions Act (CATSAA) sanctions and sermons on “values” could be shrugged off more quickly. Countries have learnt to assess the US by what it does, not by what it says. Efforts to shape and design regions to suit their own narrow interests are likely to be resisted. Its reliability and trustworthiness will be measured as per its capacity to contain China’s rise without disrupting the determination of states in the region to seek growth and development on their own terms. A transactional America will now encounter transactional friends.

This commentary originally appeared in Hindustan Times.

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Commentaries, foreign policy, Great Power Dynamics, India, India-Russia, international affairs, Strategic Studies, USA and Canada

Modern Geopolitics: A Race Through Chaos to Stability

Originally published in The Valdai Club. Co-authored with Aarshi Tirkey.

The third decade of the twenty-first century has compelled the world to face its most intractable challenge yet—offering a coherent, collective and equitable response to the COVID-19 pandemic. This has tested the faith of the most ardent internationalists, and is part of a deeper churn in the global order that was underway even before the first COVID-19 case was reported in Wuhan in 2019.

US hegemony has all but come to an end and the rise of a multipolar world has effected a redistribution of power at the global stage. American leadership, that would have been essential to catalysing collective action against the pandemic, bordered on wanting to island itself from the rest of the world much before former US President Trump launched the “America First” campaign. The utopian vision of interdependence and global cooperation had already taken a beating in Europe when Brexit demolished the ideological and institutional underpinnings of the European Union. And China, the other great power, was engaged in its project ‘Pax Sinica’, determined to make globalisation beneficial for its Communist party.

Global institutions had weakened, and the benefits of investing political will into their mechanisms had greatly receded. The coronavirus further exacerbated this: While nations scrambled to respond to this fast-spreading disease, their immediate reaction was to look inwards, go at it alone or with trusted partners, and engage with the international community only for self-serving purposes. At the end of the day, all were ‘Darwinian’ and privileged their own survival without consideration and care for others. This is typified by the perverse ‘Vaccine Access’ world map.

Global institutions had weakened, and the benefits of investing political will into their mechanisms had greatly receded. The coronavirus further exacerbated this: While nations scrambled to respond to this fast-spreading disease, their immediate reaction was to look inwards, go at it alone or with trusted partners, and engage with the international community only for self-serving purposes. At the end of the day, all were ‘Darwinian’ and privileged their own survival without consideration and care for others. This is typified by the perverse ‘Vaccine Access’ world map.

As such, the postwar liberal international order—underwritten by the West under US leadership—had been facing an existential crisis since the turn of the century, with wars in South and West Asia and the Financial Crisis all challenging the old arrangements and aiding the rise of `China as a new revisionist power. And then the Virus from Wuhan exploded on the world stage, accelerating the processes that were already influencing modern geopolitics, a few of which are discussed here.

The 3 R’s of Modern Geopolitics

The first is readjustment, as countries are grappling with the impact of the rise of new regional and global actors. The American century has waned, and the rise of the Asian century—home to the growing economies in the world—is well on its way. The biggest challenge to the global balance of power comes from China, which is set to be the first major economy to rebound after the pandemic With the launch of the Belt and Road Initiative (BRI), China’s close integration with global supply chains, and its advancements in civilian and military technologies—Beijing’s rise appears to be an inevitable reality, howsoever much its international behaviour instills distrust among many, particularly the US and some of its allies.

A contest is, therefore, inevitable. In President Biden’s interim National Security Strategy Guidance, the rise of both China and Russia is treated as a challenge to a stable and open international system. President Xi Jinping—for his part—recently declared that Beijing will never allow any foreign forces to bully, oppress or enslave China and the focus of the party would be “the great rejuvenation of the Chinese nation”. Will the two global powers head for a confrontation or choose to opt for a peaceful coexistence with limited and contained disagreements? The outcome of the US-China rivalry remains to be seen, and countries caught at the intersection of this evolving dynamic must take into account how they readjust their approach to this new age of geopolitics. Russia too will be asked some tough questions and will have to make some difficult choices. Can a positive Biden-Putin engagement play a stabilising role in the 21st Century? Or is a China-Russia nexus inevitable?

The outcome of the US-China rivalry remains to be seen, and countries caught at the intersection of this evolving dynamic must take into account how they readjust their approach to this new age of geopolitics. Russia too will be asked some tough questions and will have to make some difficult choices

Second, the hard-won consensus on the frameworks underpinning multilateralism and globalisation is undergoing a dramatic restructuring. The 2008 global financial crisis, followed by the COVID-19 pandemic, have exposed the fragility of global economic interdependence. The growth of hyper-nationalism and populist politics assess globalisation and multilateralism as arrangements that impinge on the sovereign choices of a state. As such, there is potential for the creation of a ‘gated globalisation’—a globalisation that is less free and less open than before. Economic policies are no longer solely dictated by economic principles; they are now guided by strategic considerations, political trust, climate, health and technological threats. Countries, such as the UK, US and India have introduced trade restrictions, investment screening mechanisms, sanctions and monetary policies to reflect these new considerations. China had already perfected their own model of perverse global integration.

The disillusionment with multilateralism can be directly attributed to institutional inertia, lack of reforms and capture by vested interests, which continue to hamper decision making before these organisations. Countries are, therefore, leaning towards smaller groupings to forge fluid, issue-specific partnerships, which can expedite cooperation between like-minded countries. While this can be one way to overcome the malaise of multilaterals, they may hamper the development of broader and cohesive international strategies for ‘global bads’—from COVID-19 to climate change—which require the participation and commitment of all. The pandemic is not over till all are vaccinated and secured and the threat of climate change is not going to recede by unilateral actions of any single state. The ongoing restructuring calls for the need for new arrangements that can redress the inefficiencies of multilateralism and globalisation, without diminishing their larger benefits. Can a ‘consortium of plurilaterals groupings’ agree to a common minimum framework to address the challenges that confront us all even as they engage within their own clubs to maximise their economy and security?

In the midst of this churn, geopolitics has been reoriented to accommodate new actors, and emerging factors and considerations. Modern geopolitics is increasingly influenced by geoeconomics and geo-technology. Important works, such as War by Other Means, talk of the systemic use of economic instruments to achieve geopolitical objectives—a form of statecraft that was present during the Marshall plan, and is present today as well through China’s ‘chequebook diplomacy’ and more generally the BRI.

Modern geopolitics is increasingly influenced by geoeconomics and geo-technology. Important works, such as War by Other Means, talk of the systemic use of economic instruments to achieve geopolitical objectives—a form of statecraft that was present during the Marshall plan, and is present today as well through China’s ‘chequebook diplomacy’ and more generally the BRI

If the medium is the message, then technology is the future of our politics. The advent of the Fourth Industrial Revolution (4IR) has resulted in the development of technologies that can be both a boon and a bane for humankind. While America was at the forefront of technological leadership in the recent past, this is being challenged by China as it invests heavily in emerging and dual-use technologies such as Artificial Intelligence, Quantum Computing, and biotechnology. First movers may not only take the mantle of technological leadership, but will also become the providers for other countries, creating asymmetric dependencies. ‘GeoTech’ opens a new realm of interstate competition, where concerns of national security and strategic autonomy implicate technology choices and arrangements. In an increasingly digital world, the capture of data—and not territory—and the compromise of critical information infrastructure—and not state borders—are the new security challenges for nations. As an individual’s attention, eyeballs and personal data become the coveted political prize, will the next domain of conflict be the human form and how we will protect it?

New Actors, New Geographies

While the above factors remain at the heart of this churn, new actors and geographies are influencing the conduct of geopolitics. Though the coronavirus hearkened the return of the ‘nation-state’, communities across borders represent a robust challenge to this primary unit of Westphalian sovereignty. The concentration of economic resources and power in global technology companies, from Twitter to Tencent, has driven home the fact that states are no longer the primary actors in the world. Hate, tribalism and irrational ideologies have returned with new vigour, riding on the reach and amplification of digital technologies. Technology giants are now the arbiters of economic and political choices and are challenging the writ of the older political systems.

The emergence of new geographies, such as the Indo-Pacific, Eurasia and the Arctic—in which all regional and global powers have stakes—demand the genesis of new norms, institutions and partnerships. In a universally parochial world, there is limited appetite or leadership to shape and create these. In sum, the pandemic confirmed the decline of the US as a superpower and sharpened questions on Beijing’s moral and political capability to step into the void. Even with its attendant equity and efficiency losses, the importance of‘multi-polarity’—first ideated by Primakov through the Russia, India and China trilateral mechanism—received a resolute confirmation. It has urged that we appreciate this shifting nature of global and domestic affairs to be able to adapt to an increasingly complex world, that is no longer tethered to a conventional understanding of geopolitics.

While the ability to project power globally resides with the US, the world is steadily moving towards political, economic, technological and normative multipolarity. The evolving contours of modern geopolitics is still in a state of flux, and there is wisdom in accepting the notion that the end result is perhaps indeterminable. The age of disruption is here, countries that thrive on disorder may do well in the short term, while nations who invest in stability may well define the future of globalisation and, indeed, the new world order.

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India, Indian Economy, international affairs, Strategic Studies, USA and Canada

Diplomacy and Resilience: Betting on India is a Good Wager

Co-authored with Prof. Harsh V Pant

At the India-EU summit in early May, French President Emmanuel Macron declared, “India does not need to listen to lectures from anyone about vaccine supplies. India has exported a lot for humanity to many countries.” The sentiment was shared by most of the European leaders who took part in the extraordinary summit that saw Prime Minister Narendra Modi interacting with all 27 EU national leaders as well as presidents of the European Council and the European Commission. The EU leaders expressed their full solidarity with India at a time when the country is battling a treacherous second wave of the COVID-19 pandemic. Ahead of the summit, EU member states had mobilised more than €100 million worth of emergency medical equipment in support of India’s battle.

It may be difficult to comprehend at this moment of distress, but if not for India’s earnest global engagement over the past few years—and, its proactive assistance to many nations  during the first wave of COVID-19—it would not have been possible to swiftly mobilise such remarkable amounts of global resources for India’s battle with the pandemic. From western nations to India’s partners in the Middle East and the Indo-Pacific, so many nations have rallied behind India.

If not for India’s earnest global engagement over the past few years—and, its proactive assistance to many nations  during the first wave of COVID-19—it would not have been possible to swiftly mobilise such remarkable amounts of global resources for India’s battle with the pandemic

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Commentaries, economy, Healthcare, Indian Economy, international affairs, USA and Canada

Global trade after COVID-19: From fixed capital to human capital

Co-authored with Dr. Alexis Crow

Some commentators have trumpeted the “end” of globalization in the wake of rising protectionism over the last half decade, the sudden economic stops wrought by COVID-19, and the corollary disruptions of supply chain activity around the world.

The truth, though, is that for companies and investors involved in the exchange, transmission, and sale of goods, services, technology and finance, globalization is anything but dead. Granted, the landscape has dramatically shifted since the 1990s, and executives will need to be nimble and agile in navigating the new environment, which is currently in a state of flux.

Indeed, more recent developments in the global trade environment including green frameworks, digital protocols and regional partnerships offer a glimpse not of the demise of globalization, but rather, of what global trade may look like in the post-COVID-19 era.

Globalization and its “discontents”

Globalization is defined as the process by which technology and the information and communication technology (ICT) revolution of the 1990s enabled faster transaction times and processes for exchanges of currency, capital, information, innovation, goods and people around the world.

These transmissions of commerce have been facilitated by norms, laws, regimes and treaties governing trade, such as the World Trade Organization at the global level and agreements such as ASEAN at the regional level. At a national level, the creation of free-trade zones further facilitated the ease of trade: for example, a shipping container can move through a seamless logistics corridor in the United Arab Emirates from the Port of Jebel Ali to the Dubai International Airport within four hours.

In financial services, hubs such as the City of London and latterly Singapore have attracted leading talent from across the globe to investment banking, trading, fintech and asset and wealth management, with executives and their teams using these hubs to penetrate the “spokes” of business in the EMEA (Europe, Middle East, Africa) and south/southeast Asian regions.

Unfortunately, the very same global interconnectedness that facilitated wealth creation and economic opportunities also had a dark side that manifested throughout the 1990s and 2000s. Global and transnational risks such as international terrorism (such as the attacks of 9/11), environmental degradation, cyber-attacks, pandemics, human trafficking and financial instability and financial crises ricocheted across the globe. Such risks might pop up in one jurisdiction and by the very same conduits that fostered the “bright side” of globalization easily spread across geographies.

Today, we might say we are dealing with a different shade of discontent within societies— particularly pronounced within advanced economies—for which the process of globalization is often blamed: rising domestic income inequality. While global trade has lifted billions of people out of poverty and sharply reduced inequality at a global level (such as that between China and the West, and southeast Asia and the West), income, wealth and opportunity inequality have been steadily rising within countries such as the United States, the United Kingdom and Italy. Clearly, the benefits of globalization have not been shared by all. Yet, the globalization of labour markets is but one of a number of contributing factor to rising inequality within these societies since the 1980s.

Value of world services exports by category (USD Billions)
Value of world services exports by category (USD Billions) (Image: World Trade Organisation)

Nevertheless, some leaders have found it both palatable as well as politically convenient to point the finger of blame at other countries. Rising income generation and economic advancement in Japan, for example, became a target of ire within certain circles in the United States during the late 1980s and early 1990s. More recently, some activist politicians and commentators have pointed to the economic gains made by certain groups (such as immigrant workers) as a clear causal factor for the erosion of the domestic middle class.

Rising economic nativism has taken various forms within the last few years and has in some cases been accelerated in the wake of the COVID-19 pandemic. Regardless of the underlying causes of domestic inequality and social anxiety, politicians have acted out against trade in the following ways:

  • Ructions against goods. In recent years, some countries have focused on the balance of trade in goods (or the imbalance) as a way to reduce imports or to onshore production. Tariffs became the policy tool of choice as a way of addressing such imbalances, but when implemented, have had mixed results. Data shows that efforts to boost domestic production of goods and services comes at a cost: quite literally, for the governments, companies and consumers.
  • Restrictions on mobility. Responses to the angst felt against global trade have not been limited to goods or volume of merchandise. States have also moved to restrict immigration, vowing to protect domestic workers from a perceived disadvantage. It is important to note that curtailing mobility also comes at a cost—during COVID-19 restrictions, a sharp reduction in migrant agricultural workers within OECD countries has contributed to a sharp rise in food prices, which have reached a six year high.
  • Tech bifurcation. Although countries, companies and individuals are importing and exporting more services than ever before, a bifurcation has developed between the United States and China regarding certain aspects of trade in technology. Indeed, the situation has been referred to this as a “technological Cold War” between the “two greatest powers” in the world.

While some European countries have also passed legislation to restrict inbound investment in specific targets or sectors, the EU-China Comprehensive Agreement on Investment (CAI)—signed at the end of 2020—was designed to improve laws and practices for mutual investment between China and the EU, at a federal level. Although currently on hold, the negotiations did demonstrate a willingness for both sides to convene in order to potentially step up the level of investments within their respective economies.

Three emerging paths forward

Within a turbulent geopolitical context, the shape of a post-COVID-19 trade landscape is becoming clearer, particularly regarding the digital, green and regional spaces.

  1. The digital realm

A multilateral framework is… the need of the hour to avoid any more trade wars that the pandemic-stricken world economy cannot bear.

Data protection and securing user privacy in the digitized world has been a major issue of cross-border friction. But here we are seeing concrete efforts being made. To this end, the EU General Data Protection has offered a common template that has even inspired the California Consumer Privacy Act.

This is not to say that all contentious issues have been resolved. One complicated issue has been the taxation of digital services. Although there has been an attempt by the OECD to devise a framework for digital taxation, a multilateral solution has not evolved so far. Against this backdrop, the United Kingdom, France, India and Italy among other countries have started levying taxation on digital services, with the United States taking subsequent action under Section 301 of its trade law. A multilateral framework is, therefore, the need of the hour to avoid any more trade wars that the pandemic-stricken world economy cannot bear.

The fact that there is some early convergence on contentious issues is a positive dynamic and suggests that even though an overarching framework governing the digital realm is elusive so far, consumer interest will be the guiding force in determining the nature of regulation.

  1. The green space

Increasingly, at least in the developed world, “going green” is the new industrial and growth strategy.

Climate action is the base on which economic policies of the twenty-first century are likely to be formulated—increasingly, at least in the developed world, “going green” is the new industrial and growth strategy.

To be sure, there are challenges. Recent discussions on the EU’s carbon border adjustment mechanism, essentially an emissions-related import tariff, are the first sign of movement towards a global “carbon club”, shutting out exports from countries that may not comply. But the current moment presents a historical opportunity for cooperation. As climate commitments strengthen across the globe, economies of scale have led to rapidly falling costs for green energy and technology.

  1. A region-based approach

As efforts are underway at reforming the global trading system, regional or bilateral agreements are helpful in providing building blocks for greater cohesion.

While many Western countries have been contending with populist movements in the years leading up to COVID-19, and then resurgent strokes of economic nativism in the wake the pandemic, countries in Asia signed the largest trade agreement in history—the Regional Comprehensive Economic Partnership (RCEP) in November 2020.

Effectively, RCEP incorporates some rich income Asian countries within the ASEAN community; and in a historic step, it is the first framework to include China, Japan and South Korea together within a trade agreement. While some commentators argue that RCEP is less comprehensive than other deals such as the Trans-Pacific Partnership agreement, the convening of RCEP signatories signals Asia’s continued commitment to connect “multiple factory floors” at a regional as well as a global level.

The cementing of RCEP—with the participation of some of the fastest growing economies in the world—raises the question: do regional trade agreements help or hinder the global trading landscape? With variegated standards on data privacy, green and carbon, and with countries at various stages of economic growth and employment, a global architecture might be elusive. It can therefore be argued that as efforts are underway at reforming the global trading system, regional or bilateral agreements are helpful in providing building blocks for greater cohesion.

Reaping the benefits of a global division of labour and capital

Even though the global trading architecture has taken severe knocks from both populism and the pandemic, nearly one-third of the world’s population and one-third of global GDP have recently been incorporated in a historic trade agreement.

And even amidst the “great lockdown” of 2020, the contraction of global trade in goods was less than half of that of the trough of 2009, in the wake of the global financial crisis. Moreover, an asynchronous regional recovery from COVID-19 has meant that many companies have been able to make up for the loss demand in one region (such as Europe) by the growth in demand in another region (such as China). And uneven sectoral activity, such as the working-from-home dynamic, is propelling demand for critical goods such as semiconductor chips, which is propping up export markets for countries such as South Korea. The growth of the electric vehicle industry and the commitments by governments to “build back greener” are also contributing to cross-border flows of metals and materials.

Nevertheless, as policy-makers set their priorities on rebuilding their societies, the lure—or mystique—of self-sufficiency remains strong. Indeed, the COVID-19 pandemic has caused severe losses to income for both advanced as well as emerging economies—the former experiencing a loss of 11% of income of 2019 levels, and the latter nearly double, at 20%. Yet, the way out of economic desolation is not via isolation, or constructing a fortress nation.

The way out of economic desolation is not via isolation, or constructing a fortress nation.

The way out of economic desolation is not via isolation, or constructing a fortress nation.

Laudably, within some advanced economies, COVID-19 relief measures have catalyzed the implementation of policies, including those designed to address housing affordability and access to childcare, that are meant to combat systemic income inequality. As countries transition from relief to recovery, and policy-makers weigh up prospects for bolstering domestic employment, it goes without saying that demand for many jobs within tradeable services is implicitly connected with the viability of export markets.

Thus, the ability to underpin and renew export ties with dialogue—such as that recently conducted between the US and the EU—is integral to sustainable domestic growth. Additionally, in the realm of non-tradable services, creative policies to incentivize corporate and private investment in reskilling, upskilling and learning for working are absolutely critical – in essence, segueing from investing in fixed capital to human capital. Amplifying competitiveness and improving productivity in both tradable and non-tradable sectors can also be enhanced by infrastructure spending and investment, in hard and soft sectors.

In the realm of non-tradable services, creative policies to incentivize corporate and private investment in reskilling, upskilling and learning for working are absolutely critical – in essence, segueing from investing in fixed capital to human capital.

In the realm of non-tradable services, creative policies to incentivize corporate and private investment in reskilling, upskilling and learning for working are absolutely critical – in essence, segueing from investing in fixed capital to human capital.

As countries increase investment in non-defense related R&D in sectors such as biotech and electric transport, it is important to consider that innovation is implicitly tied to immigration. In the United States, this has been the case throughout the 19th and 20th centuries, and with immigration as one causal factor of the blossoming of cutting-edge technology businesses and the growth of entrepreneurship in the country. Thus, data shows that the vitality of human capital is inherently cross-border and reliant on immigration. Recognizing this is a requisite component of any industrial, or rather, post-industrial policy, for advanced economies and for emerging and developing economies that are shifting from old to new economic growth.

Originally published https://www.weforum.org/agenda/2021/05/the-global-trade-map-after-covid-19-from-fixed-capital-to-human-capital/

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China, Great Power Dynamics, Strategic Studies, USA and Canada

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

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 Sinica, these 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

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China, foreign policy, Great Power Dynamics, India, Sustainable Development, USA and Canada

If the EU fails, we can say goodbye to the liberal order

Eastern Focus: To what extent is Europe important for the future of the world order? Europeans feel like they count less and less on the world scene.

Samir Saran: Europe is, paradoxically, the single most important geography that will define the future trajectory of the global order. If Europe remains rooted in its fundamental principles – of being democratic, open, liberal, plural, supporting a transparent and open market economy, defending rule of law, the rights of individuals, freedom of speech – the world will have a chance of being liberal. If the European Union is split between the north and south, east and west and we see a large part of it deciding to give up on the Atlantic project and align with more authoritarian regimes – which is quite tempting, due to the material side attached to the choice – that will be the end of the Atlantic project. An EU that is not united in its ethics is an EU that will eventually write its own demise. How will Europe swing? Will it be an actor, or will it be acted upon?

I have the belief that post-pandemic EU, as a political actor, will see a new lease of life. A new political EU may be born as the pandemic ends. Unless that happens, I believe this is the end of the European Union itself. It is a do it or lose it moment. Unless Europe becomes strategically far more aggressive, far more expansive, aware of its role, obligations and destiny you will see an EU that fades. For me, the most important known unknown is the future of Europe. Will the EU hold? Will the 17+1 become more powerful than the EU 27? Which way will the wind blow on the continent? Will it really be the bastion of the liberal order or will the liberal order be buried in Europe?

The Indo-Pacific is the frontline for European safety

EF: We’ve been used to only existing as part of the transatlantic relationship. In the past few decades, Europe has never really seen itself as an individual actor, but rather in coordination with the US. That is something that is starting to shake now. Do you see Europe acting on its own terms, as a global actor, in the positive case in which the member states do get their act together? Are we rather going to continue to act together with the US? Or find some other partners?

SS: I suspect that with Brexit, you might see a far more cohesive EU, organised around the French military doctrine and French military posture. With an absent UK, I have the feeling that the political cohesion of the EU will increase and that the EU will be far more coordinated in its approach to the geostrategic and geopolitical questions. France realises that by itself, without the size of the EU, it might not be a significant actor. A French military presence will be compelling only if it acts on behalf of the EU.

Europe believed that it could change China by engaging with them, however I suspect China will change the EU before the EU changes China.

In terms of other partners, Europe has made one error. Europe believed that it could change China by engaging with them, however I suspect China will change the EU before the EU changes China. The mistake that the EU makes is that it imagines that an economic and trading partnership will create a degree of political consensus in Beijing. Nevertheless, Beijing is not interested in politics, but in controlling European markets.

What Europe should do is to consider the importance of India. If the European continent needs to retain its plural characteristics, South Asia is the frontline. What is happening today between India and China is actually a frontline debate on the future of the world order. The Himalayan standoff is just the first of the many that are likely to happen unless this one is responded to. If China is able to change the shape of Asia and recreate the hierarchical Confucian order, don’t be surprised if the fate of Europe will follow the same path. If Europe needs to feel secure in its own existence it needs to create new strong local partnerships – with India, Australia, Indonesia, Japan. The EU needs to see itself as an Indo-Pacific power. The Indo-Pacific is the frontline for European safety. If the Indo-Pacific was to go the other way, the mainland is not going to be safe.

EF: What do you think about the CEE’s role in the new emerging order? We see an increased competition for hearts and minds here. How could India help, in an environment of increased competition and active engagement of China in this space?

SS: The Central Europeans are going to be the centre of attention for many actors. China will buy their love, America will give military assurances and so on. In the near future, many actors will realise the importance of the CEE, simply because it is these countries that will decide which way Europe finally turns. In some ways they are the swing countries, the swing nations that are going to decide whether Europe remains loyal to the ideals of its past or decides to have a new path. CEE countries are in many ways the decisive countries.

CEE has two important options and two important pressures. The options: will they be able to create a consensus (between the Chinese, the Russians, the Old Europe and the new countries like India) or will they be an arena for conflict? Can we create a ‘Bucharest consensus’, where the East and the West, North and the South build a new world order and the new rules for the next 7 decades? If you play it wrong you might become the place where the powers contest, compete and create a mess.

There are also two pressures. Firstly, there is an economic divide in Europe. You are at a lower per capita income, you need to find investment funds for the infrastructure, employment, livelihoods and growth, which results in an economic pressure that needs to be tackled. Therefore, Europe will have to decide if the provenence of the money matters. Does it matter if it is red or green? Does it matter if they come from the West or the East? That is one pressure that needs consideration. How do you meet your own aspirations, while being political about it?

The other pressure is the road you want to take. How do you envisage the future? Is it going to be a future built on cheap manufacturing? Being an advanced technological society, are you going to be the rule-maker of theFourth Industrial Revolution or its rule-taker? Secondly, the nature of the economic growth that you are investing in becomes another pressure. This is the second choice that the CEE will have to make. In that sense, I believe that India becomes an actor. As we have experienced this in the past 20 years, we are one of the swing nations that could decide the nature of the world order, thus we may share this experience with you. We have also decided that we don’t want to be a low-cost manufacturing economy like China, but rather a value-creating economy, building platforms. Even if we have a small economic size, we have a billion-people digital platforms, digital cash system, AI laboratories and solutions.

What is happening today between India and China is actually a frontline debate on the future of the world order. If China is able to change the shape of Asia and recreate the hierarchical Confucian order, don’t be surprised if the fate of Europe will follow the same path.

As we move into theFourth Industrial Revolution, the tyranny of distance between Europe and India disappears. We don’t have to worry about trade links, land routes and shipping lines. Bits and bites can flow quite rapidly. As we move to the age of 3D printing, to the age of quantum computing, of big data and autonomous systems, the arena where we can cooperate becomes huge.

India gives Europe room to manoeuvre, room to choose. When it comes to choosing, besides the traditional American and Chinese propositions, there is also a third one – India, a billion-people market.

EF: Do you expect that there is going to be a shift in the EU toward reshoring and ensuring that manufacturing is not captive to Chinese interests or to Chinese belligerence?

SS: I think that we are going to see a degree of reshoring everywhere. It is not going to be only a European phenomenon. Political trust is going to become important. Political trust and value-chains are going to affect one another. Countries are going to be more comfortable with partners who are like-minded. They don’t have to agree on everything, but they should be on the same ideological and political spectrum.

There are two reasons for this. One is the pandemic that we are currently facing and in a way it exposed the fragility of globalisation as we know it. The hippie and gypsy styles of globalisation are over. I think that people are going to make far more political decisions. The second is that as we start becoming more digitalised societies, individual data and individual space are going to be essential, thus you don’t want those data sets to be shared with countries whose systems you don’t trust. Value is going to increasingly emerge through intimate industrial growth, far more intimate in character – it is going to be about the organs inside your body, it is going to be about the personal experiences, about how we live, transact, date or elect. They are all intimate value chains. The intimate value-chains will require far greater degree of thought than the mass production factories that created value in the XXth century.

The EU may be setting the format for managing our contested globalisation

EF: You mention the rising value of trust, as a currency even. In Europe, we often point out that we are an alliance based on values. But even our closest partner, the US seems to be moving in a much more transactional direction, let alone China and others. You are describing a worldview that is relying increasingly on shared values, at least some capacity to negotiate some common ground, on predictability, whereas in many ways it seems that things are moving in the opposite direction, a much more Realpolitik one. Is this something that is going to last?

SS: The pandemic has brought this trend to the fore. People are going to appreciate trust and value systems more than ever. But I think this was inevitable. If you would recall, India used to be quite dismissive of the EU, calling it “an Empire of gnomes”, with no strategic clout. But if you look at the last two years, India has started to absorb, and in a sense to propose solutions that the EU itself has implemented in the past. India came up with an investment infrastructure framework in the Indo-Pacific that should not create debt trap diplomacy, should create livelihoods, respect the environment and recognise the rights and sovereignty of the people. India came up with this when it saw that the Chinese were breaking all rules and all morality to capture industrial infrastructure spaces. The Americans under Donald Trump also came up with the Blue Dot American project for the Indo-Pacific – a framework that was based on values. Whenever you have to deal with a powerful political opponent you throw the rule book in there. If you don’t want to go to war with them, you will have to manage them through a framework of laws, rules and regulations. The value systems are a very political choice. They are practices and choices enshrined in our constitutions and foundational documents. Therefore, dismissing values and norms as being less political or less muscular is wrong. The EU, “the empire of gnomes” that was much criticised for the first two decades as weak and not geopolitical enough, may well become an example for other countries. If it remains solvent, a vibrant union, and if it is not salami-sliced by the Chinese in the next decade, the EU may well be setting the format for managing our contested globalisation.

This pandemic is the first global crisis where Captain America is missing

EF: How does India see the future of the Quad? Usually the Quad is associated with a certain vision of the Indo – Pacific, free from coercion and open to unhindered navigation and overflight. Are we going to see the emergence of a more formal geopolitical alignment or even an alliance to support a certain vision about Asia?

SS: The Quad is going to acquire greater importance in the coming years. It is going to expand beyond its original 4 members. We’ve already seen South Korea and the Philippines joining the discussion recently. We are going to see greater emphasis by all members doing a number of manoeuvres, projects and initiatives together. The next 5 years will be the age of the Quad. The pandemic started this process. I see three areas where the Quad can be absolutely essential.

One is in delivering global public goods, keeping the sea lines open and uncontested so that trade, energy and people can move with a degree of safety and stability. In a sense, I see the Quad replacing the Pax Americana that was underwriting stability in certain parts of the world.

The second area is going to be around infrastructure and investments in certain parts of the world. I see the Quad grouping many initiatives that will allow for big investments in countries which currently have only one option – China. The Quad will be able to spawn a whole new area of financial, infrastructure and technology instruments closer to the needs of Asians, South Asian, East African, West Asians including the Pacific Islands. The Quad will be the basis of this kind of relationships in the upcoming years.

Thirdly and most importantly, the role of the Quad will be to ensure that we won’t reach a stage where we have to reject the Chinese. None of us wants a ‘No China’ world, because all of us benefit from China’s growth and economic activities. Many of us have concluded that the only way to keep the Chinese honest in their engagements, economical or political, is to be able to put together a collective front in front of them, not negotiate individually. The EU has done that longer than anyone else and that’s why the Chinese don’t like the EU and apply a ‘divide and conquer’ methodology to get more favourable deals. The Quad is in many ways an expression of that reality, as well of that the middle powers in Asia and Pacific (Indonesia, Australia and Japan) will have to work together, sometimes without the Americans, to negotiate new terms of trade and new energy, or technological arrangements. The Quad in many ways is also the ‘make China responsible’ arrangement, an accountability framework which will keep the Chinese honest and responsible actors in the global system.

The next 5 years will be the age of the Quad. The Quad in many ways is also the ‘make China responsible’ arrangement, an accountability framework which will keep the Chinese honest and responsible actors in the global system.

EF: Do you also see this trend extending into the political sphere in a kind of collective endeavour both in Asia (through the Quad) and in the West (starting with Europe perhaps) to build a new kind of world order? Do you feel that this ‘middle powers concert’ is one possible way to go? Or do you believe that we are going to be disappointed, as we were by the BRICs, when some of the members drowned in their own domestic problems? 

SS: We are part of a world that doesn’t have any superpowers. The last superpower was America, and that ended with the financial crisis ten years ago. Ever since, we have been literally in a world which had quasi-superpowers like the US, to some extent Russia, the Chinese, but there was no real hegemon that could punish people for bad behaviour and reward people for good behaviour.

Some of the most interested actors in the Indo-Pacific in the last two to three years happened to be the UK and France. A few years ago, they sensed that if they want to be relevant in the future world order, as it is built and as it emerges, they need to be present in the debates that are unfolding in this part of the world. Both partnered with India – to do military manoeuvres, to create maritime domain awareness stations, to invest in infrastructure and to create clearly the beginnings of a new order that might emerge from here. We will have to create these coalitions to be able to get things done.

The pandemic tells us something which is also quite tragic. Ever since I was born I have never witnessed a global crisis that did not have America as a response leader. This pandemic is the first global crisis where Captain America is missing. What makes it even more complicated is that the successor to Captain America has caused the crisis. Hence, you have the old power, which is absent and engrossed in its own domestic realities, and the new power that has been irresponsible and has put us in this position. Both the previous incumbent and the new contender don’t have the capacity to take action in this world by themselves. This tells us that building a coalition of middle powers is absolutely essential. It is not a luxury, it is not a choice. This is something concerning our own existential reasons that we must invest in.

EF: Do you see this coalition of middle powers as some sort of a ’league of democracies’? It is a concept that was previously advanced by John McCain and now Joe Biden is embracing as his overarching framework for foreign policy. Do you see the potential for creating this league of democracies as some sort of manager and defender of the liberal international order?

SS: I think it is inevitable. Technology is so intimate that we are not going to trust our data with folks we have a suspicion about. Thus, it is this reality that makes this coalition of democracies and like-minded countries inevitable. Even if we may never call it that, it is going to become that. We are going to notice countries engaging in these intimate industries with others who are similar, who are like-minded, who have similar worldviews. Still, this process may take longer than we have. We do not have the luxury of time, because we are going to be destroyed, divided, decimated and sliced in the meantime.

A few countries will have to take leadership – either the French, the UK, the EU itself, or India, or all of them. Until there is an agreement on a big vision for the new world order we must agree to an interim arrangement and have to create a bridging mechanism that takes us from the turmoil of the first two decades of this century to a more stable second half of the century. We don’t want to go through two world wars in order to achieve this unity, as we did in the past century. We need to have some other mechanisms that will prevent conflict, but preserve ethics.

In this context the EU-India and the CEE-India projects are essential. It is us who have the most at stake, because our future is on the line. The more the world is in turmoil, the less we will be able to grow sustainably. It is our interest to create and invest in institutions and informal institutions that could preserve a degree of values and allow for stability.

Such a coalition reuniting countries from Central Europe, Western Europe and from Asia (such as India, Australia, Japan) will normalise the behaviour of both America and China. I do not think that they behaved responsibly in the last few years – one because of its democratic insanity, and the second because of its absolutist medieval mindset. Along these lines, you have democratic failure at one end and a despotic emergence at the other end. We need to ensure that democracy will survive and that the middle powers will be able to normalise this moment.

EF: What is Russia’s role in all this? Is Russia going to be on our side? Or is it going to be on China’s – considering that sometimes they seem to, although their agendas perhaps align only when it is opportune for both of them?

SS: Russia has an odd reality. It is a country that has a very modest GDP (the second smallest within the BRICs) but it is also a country that is possibly the second most powerful military force in the world. A big military actor with a very small economic size. This is creates a policy asymmetry in Moscow. It has very little stakes in global economic stability or global economic progress, but it has huge clout in the political consequences of developments around the world. The Russians have somehow to be mainstreamed into our economic future. Unless Russia is going to have an active role in the Fourth Industrial Revolution or have real benefits, their economy will stay in the 20th century and therefore their politics is going to reflect a 20th century mindset. If they are included in the economic policies of the future, their politics will evolve too. It is not an easy transition. Nevertheless I would argue that the Russians have to be given more room in European thinking so that they don’t feel boxed into the Chinese corner. The last thing that we should be thinking of is giving Russia no option but to partner with the Chinese. Perhaps the immediate neighbours (the CEE) will not be open to a partnership, taking into account their political history. But countries like India would be able to offer space for manoeuvre. In that sense, India could be a market, a consumer, an investor in the Russian economic future and the CEE-India partnership could become important. Can we together play a role in normalising that relationship? Can we give the Russians an option other than China? If Russia’s economic future is linked to ours, it doesn’t have to be in the Chinese corner. The Russians are not the Chinese. The Chinese take hegemony to a whole new level; the Russians have this odd asymmetry that defines their place in the world. This asymmetry should be addressed with new economic possibilities and incentives.

The rise of the Middle Kingdom

EF: We’ve been discussing how to react to a world that is increasingly defined by China. But what are China’s plans? What does China want? 

SS: I do not know their plans, but I can tell you how I see China’s emergence, from New Delhi. I define it through what I call the 3M framework.

Firstly, I see them increasingly becoming the Middle Kingdom. Chinese exceptionalism is defined in those terms. They believe they have a special place in the world – between heaven and earth. They will continue to defy the global rules and they will not allow the global pressures to alter their national behaviour or domestic choices.  So we will see the first M, the Middle Kingdom, emerge more strongly in the years ahead.

This pandemic is the first global crisis where Captain America is missing. What makes it even more complicated is that the successor to Captain America has caused the crisis.

Secondly, this Middle Kingdom will make use of modern tools. They see Modernity as a tool, not as an experience. In that sense they use it to strengthen the Middle Kingdom, not to reform and evolve. Such tools include digital platforms, the control of media and a modern army with modern weapons to control and dominate.

Thirdly, the final M deals with a Medieval mindset. They are a Middle Kingdom with Modern tools and a Medieval mindset that believes in a hierarchical world. We are a world which has moved away from the hierarchies of the past. The world is more flat, people have equal relationships. The Chinese don’t see it like that. They see a hierarchical world, where countries must pay tribute to them. They sometimes use the Belt and Road Initiative to create the tribute system or the debt trap diplomacy to buy sovereignty. Likewise, they use other tools to ensure the subordination of the countries they deal with.

These three Ms are defining the China of today.

This interview appeared in The Eastern Focus

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climate change, foreign policy, India, Strategic Studies, Sustainable Development, USA and Canada

US-India Partnership for a Green Future

Climate change is one of the most formidable challenges for this young century. As the World Economic Forum’s The Global Risks Report 2020 makes clear, failure to mitigate and adapt to climate change is the single most impactful and second-most likely risk facing the international community over the next 10 years. How effectively governments, businesses and societies can work together to make a tangible impact on this global challenge will determine the future of our planet.

As shown in Figure 1, the United States (US) and India contribute almost 20 percent of global greenhouse gas (GHG) emissions. Although the two countries differ markedly in both per capita emissions and incomes, India and the US must take concrete action according to their capabilities to develop solutions that can boost economic growth and mitigate the catastrophic consequences of climate change. The best way to achieve these twin goals is to invest in infrastructure for a resilient and low-carbon future; cooperate in key areas that produce relevant knowledge; foster innovation exchange; strengthen technical assistance bilaterally and for others; and catalyse capital investments for energy access, energy efficiecy, and renewable technologies.

Source: 2019 Emissions Gap Report, United Nations Environment Programme

Both the US and India have taken important strides together to advance their strategic partnership in the domain of climate action and policy. However, existing efforts continue to rely mainly on an incremental approach to tackling climate change. Such measures are welcome but insufficient. As the world grapples with the COVID-19 pandemic, we are reminded of the human and economic costs associated with weak international cooperation, delayed action, and the lack of investments in important infrastructure and capabilities. Climate-induced disasters may make the current pandemic look meek, and the world could ignore this risk at its own peril. Thus, it is vital for India and the US to double down on efforts to drive structural change, hurdle institutional barriers, and overcome the inertia inhibiting green growth and development.

In line with these goals, the Observer Research Foundation (ORF) and The Asia Group (TAG) convened a joint roundtable in October 2019 to advance recommendations to strengthen the US–India partnership for a green future with a special focus on climate mitigation, renewable energy, and climate financing. Across these topics, it is clear that both countries face a number of complex and overlapping challenges and opportunities. Even as recent policy efforts have strengthened each country’s capacity to tackle these challenges, this report seeks to identify policy recommendations to support this progress.

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