China, COVID-19, Research, security, Writing

India’s security choices during the COVID-19 pandemic

At the start of the 2020s, India has been confronted with a massive viral spread and a relentless People’s Liberation Army (PLA) on its borders. Last year, even as India was responding to the pandemic that originated in Wuhan, it had to mobilise its forces to counter Beijing’s invasion on the Himalayan heights. Both resulted in loss of lives and both show no signs of going away. While the virus is threatening to rise again in a ‘third wave,’ China has literally dug in at high altitudes in its quest to secure real estate and territory that it believes is crucial for its Belt and Road Initiative (BRI), that provides access to a warm water port in the Arabian Sea, and that is critical to a larger project that seeks to reshape the geopolitical map of Asia. While the two nations have taken modest steps to disengage, military and diplomatic negotiations have not yielded substantive results.

In June 2021, reports emerged that China had been ramping up infrastructure along the Tibetan border. Following this, around 200,000 Indian soldiers have been deployed on the frontier, an increase of over 40 percent from 2020. For India, China poses a clear and present danger. To respond to an expansive and belligerent northern neighbour, it has to reorient its conception of its security as well as deployment of its political and diplomatic resources. This was not the case until very recently.

For India, China poses a clear and present danger. To respond to an expansive and belligerent northern neighbour, it has to reorient its conception of its security as well as deployment of its political and diplomatic resources.

Pakistan had been the major preoccupation since Independence in 1947. Its occupation of parts of the Indian state of Jammu and Kashmir, its export of terror to India as a means of waging an asymmetric war, and its nuclear proliferation had positioned it as the main threat to India’s national security. For long, China had escaped critical scrutiny despite provocative actions. The Indian security establishment was not very vocal when China tested an atomic device during President R. Venkataraman’s state visit in May 1992 — clearly intended to send a message to India. Indian Defence Minister George Fernandes’ prophetic assertion at the turn of the century that China, not Pakistan, was India’s “potential threat No. 1” was not universally shared in the strategic community in New Delhi.

In their public speeches, Chinese leaders declared their preoccupation with the welfare of their people. They took great pains to position China as a responsible power that avoided international confrontation. In hindsight, they clearly succeeded. From the ‘returns seeking’ investors in the United States to the political leaders in Europe and Asia who wanted a piece of the Chinese economic pie, all bought into this masterly conduct of statecraft. For India, the urge to keep China in good humour was also implicated by the border conflict of 1962. Relations had thawed only a quarter-century later. Prime Minister Rajiv Gandhi’s visit to Beijing in 1988 paved the way for the Sino-Indian Bilateral Peace and Tranquility Accords inked in 1993 and 1996 to stabilise the Line of Actual Control (LAC).

From the ‘returns seeking’ investors in the United States to the political leaders in Europe and Asia who wanted a piece of the Chinese economic pie, all bought into this masterly conduct of statecraft.

With stability along the boundary, trade and cultural ties between the two nations began to flourish. The boundary pacts mandated that large numbers of troops would not be amassed along the border, and that there would be no attempts to alter the status quo unilaterally. The Indian establishment believed that the border accords would be “peace for our time.” This search for fool’s gold would lead to India curtailing its multilateral naval exercises and slowing down infrastructure development in critical sectors of the India-China border. Influential voices in the Manmohan Singh government (2004-2014) believed India’s security interests would be served if it did not upset China.

Pushback came only in 2013, when transgressions by Chinese forces in Depsang were diplomatically and militarily countered. Yet, here too there was much discussion and debate in the upper echelons of government. Greater clarity was to emerge in 2014 when India, under the newly elected Prime Minister Narendra Modi, was at the receiving end of Chinese incursions in Ladakh even as a summit was under way with the visiting Xi Jinping. With two episodes in close succession, it would be fair to say that a change in India’s approach to its northern neighbour was thrust upon it.

The Indian establishment believed that the border accords would be “peace for our time.” This search for fool’s gold would lead to India curtailing its multilateral naval exercises and slowing down infrastructure development in critical sectors of the India-China border.

In recent years, India has been able to recalibrate its approach towards the Middle Kingdom even as the world order is changing. The US-India partnership has evolved rapidly. Washington has helped thwart moves by China to internationalise the issue of Jammu and Kashmir, enabled India’s entry into the international nuclear order and brought pressure on Pakistan to crack down on terrorism. The Quad grouping, where Japan and Australia join the duo to keep the Indo-Pacific region inclusive and open to all, is working on providing alternatives to the BRI and is seeking a number of resilient arrangements, including on technology supply chains. A Quad vaccine for all is on the anvil and other countries are looking to partner with the Quad on important global issues.

The ‘La Pérouse’ maritime exercises in the Bay of Bengal, with France joining the Quad members, and the Australia-France-India ministerial dialogue demonstrate that the idea and the ideals of ‘Quad Plus’ are gathering steam. The UK has floated the ‘Democracy 10,’ which includes the Quad countries, to tackle issues related to 5G and emerging technologies that may have a bearing on collective security. Whitehall’s recent assessment of its economic, security and diplomatic interests may see it engage more deeply with India in the Indo-Pacific. Old Europe is certainly finding a place at the core of India’s security calculations.

A testament to India’s recalibration is NATO Secretary General Jens Stoltenberg’s pitch, at the Raisina Dialogue 2021, to broaden cooperation. NATO views the rise of China as having huge security implications and assesses India as its partner. PM Modi’s historic Porto Summit with leaders of the EU and 27 EU member-states helped boost cooperation on terrorism and maritime security. The ‘connectivity partnership’ between the EU and India seeks to finance projects in other nations, offering an alternative to China’s BRI.

NATO views the rise of China as having huge security implications and assesses India as its partner.

Even as India strengthens and redirects its relationship with the old world, Russia remains the X factor. New Delhi’s strategic ties with Washington have become a sore point for the Kremlin. If two new poles emerge — the US and its partners and allies, and the Beijing-Moscow ‘axis ’ — India’s room for manoeuvre may be affected. India is alive to this possibility and is redoubling its efforts to work with Russia, its largest weapons supplier over the past decades. India has to convince President Putin that the bilateral relationship allows him greater latitude while dealing with his southern neighbour. Through back channels, India also has to work towards a reset between the US and Russia and to convince the EU that pushing Putin into Xi’s corner is dangerous and counterproductive. The recent Biden-Putin summit may have gone some way in making this a possibility.

A resurgent China, with its plan to establish regional hegemony in Asia even as it tries to split and dominate Europe, is Delhi’s biggest security challenge. The Indo-Pacific will define the future of the Asian Century. India has been astute in ensuring that its partners and fellow stakeholders from the Atlantic order work closely with it to navigate the choppy waters of the Indo-Pacific.


An abridged version of the above was published for the Lennart Meri Conference.

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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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Research, Writing

‘Global Britain’: G7, COP26, Indo-Pacific and the Commonwealth

This commentary originally appeared in Journal of Governance Security & Development.

The rise of the European Union (EU) witnessed continental Europe’s gradual disengagement from the non-Atlantic world. A post-colonial ‘Little England’ struggled to maintain its relevance even while retreating from lands across oceans and seas. Pax Britannica, once global, ceded place to a trans-Atlantic compact in which Britain was one of many voices, often drowned out by the voices of others.

The Maastricht Treaty ensured Britain was just another member-state of the EU whose sovereignty, to some extent, rested not in London but Brussels. Brexit was aimed at reclaiming that bartered sovereignty and regaining the power—within and beyond Europe—Britain had surrendered between 1946 and 2016; it took four years to formalise the separation, and for Prime Minister Boris Johnson to re-hoist the banner of ‘Global Britain’. This coincides with the ongoing post-pandemic rearrangement of the international order, Britain’s stewardship of the G7 and the COP26, and its enduring role as the premier financial centre of the world through all the trials and tribulations.

Admittedly, Mr Johnson’s ‘Global Britain’ faces challenges because Prime Minister Narendra Modi’s ‘Atmanirbhar Bharat’ too faces challenges. If the former’s ‘Global Britain’—leaving the “safe harbour of the EU … at a time of heightened global risk”—is set to sail into previously avoided turbulent seas, so is Mr Modi’s ‘Atmanirbhar Bharat’ negotiating a new passage.

For both Britain and India, it is not about changing partners and allies but stating new purpose and intent in a profoundly changed world where pre-pandemic truisms and certitudes have been rendered meaningless. It is about rationalising international engagement. Furthermore, it is about seizing the moment to emerge as a major player in crafting the new order necessitated, in large measure, by a declining America and a rising China. Britain and India must define their role in refashioning the global landscape in which a new continent, Eurasia, and a new water body, the Indo-Pacific, dominate. India has made its move; Britain, too, must.

The Strategic Rise of the Indo-Pacific  

The possible blueprint for a future whose geo-political, geo-economic and geo-strategic landscape is not dominated by the Middle Kingdom is obvious to all, even to those in Europe discomfited by Beijing’s seemingly inexorable continued rise and yet who are unwilling to stand up and be counted. The prospects for a future unburdened by one overwhelming power would appear brighter if nations were to forge partnerships—bilateral, minilateral, plurilateral—within and across geographies. This is already happening: The Indo-Pacific theatre offers the best and, perhaps, most dramatic example.

The political churn in the Indo-Pacific region began even before the pandemic. It gathered speed and gained purpose after the virus disrupted what were perceived to be settled global arrangements and brought to the fore the unfillable cracks that had, till then, been papered over. This churn has thrown up an indisputable fact: India is pivotal to the Indo-Pacific geography and, along with partners, will be defining the future Quad-centric ecosystem. This need not mean adding more members to the Quad comprising the US, Australia, India and Japan. As in the case of building resilient supply chains, it may only amount to specific conversations and initiatives with specific outreach partners. On issues such as climate finance, the UK is a natural Quad cousin.

Having set sail from the ‘safe harbour’ of the EU, Britain must now navigate its way to this geography where it is neither a stranger nor an intruder. Historically, the UK has been present in the Indo-Pacific region, and Britain has a sense of the nations there. Colonialism waned, but Britain’s partnerships waxed—some of its most important partnerships are in these waters; most notably, Britain has strong partnerships with individual members of the Quad, including India.

Historically, the UK has been present in the Indo-Pacific region, and Britain has a sense of the nations there. Colonialism waned, but Britain’s partnerships waxed—some of its most important partnerships are in these waters; most notably, Britain has strong partnerships with individual members of the Quad, including India

Now is the time for the UK to leverage those partnerships and demonstrate that it did not meander its way out of the EU maze directionless, but did so with firm purpose. The forces that shaped Brexit are a powerful wind in Britain’s sails, no longer constrained by either Brussels or Berlin. Johnson’s ‘Global Britain’ can and must disprove those who believe it has set itself adrift with neither shore in sight nor destination in mind, by navigating towards the Indo-Pacific region, which accounts for 50 percent of global economic growth—a share that can only increase in the coming times.

Refashioning and Reviving Existing Partnerships 

Besides the Quad, Britain and others have a useful and dynamic collective that could be refashioned—the Commonwealth. It is time to reimagine this grouping and give it purpose and new energy. One possibility would be to create a group of eight within the Commonwealth comprising Britain, India, Bangladesh, Kenya, South Africa, Australia, Canada and Singapore. These eight countries have an influence on and are implicated by the developments in the Indo-Pacific. These countries are crucial for the SDG and Climate agenda, and all of these nations are regional trade hubs and technology centers. These eight can put together a vision for growth, sustainability, technology, and global norms and rules for our future and give teeth to a grouping that has been adrift and make it contemporaneous. Global Britain needs new clubs, but, first, it must explore the opportunities that reside in old partnerships.

Indeed, this provides the perfect fit for the central core strengths of ‘Global Britain’ and the legacies of Great Britain: From finance to the green economy, from technology to knowledge, from education to creative urban design—London leads the race by miles. The British economy is structured in such a manner that other economies stand to benefit from it; there is a mutuality of commercial interest and commonality of political purpose. Unlike the EU, ‘Global Britain’ does not need to offshore its economy.

The strategic importance of ‘Global Britain’—for the UK and the world—cannot be overstressed. That importance will gain traction and draw attention as Glasgow prepares to host COP26, perhaps, the most important event on the global calendar in the post-pandemic year. Britain has the capability to finance a rising nation’s transition to a green future; India and South Asia have the capacity to absorb green investments by Britain as it prepares to transit from the old to the new. Climate partnerships will prove to be the most resilient partnerships of the future, and Britain must know this and act accordingly. The City of London is a natural fit for this endeavour, but it is by no means the only candidate. An enlightened approach, including technology and access to it, can work to mutual and planetary benefit. It is for Britain to demonstrate that its approach is strategic rather than tactical. Released earlier this year, the ‘UK Integrated Review of Security, Defence, Development and Foreign Policy’ is an excellent document. It needs to be put into action quickly.

The strategic importance of ‘Global Britain’—for the UK and the world—cannot be overstressed. That importance will gain traction and draw attention as Glasgow prepares to host COP26, perhaps, the most important event on the global calendar in the post-pandemic year

‘Global Britain’ should not mean Britain’s World. It should rather signify Britain with the world. Through effective engagement, backed by its very own Indo-Pacific strategy based on the twin principles of prosperity and security, it can help reinforce a “sustainable rules-based order in the region that is resilient but adaptable to the great power realities of the 21stcentury”. In all this, the centrality of India is beyond debate or doubt, which only serves to underscore that Britain should naturally invest in and with India. Yet, Britain comes into the contemporary Indo-Pacific as a latecomer, its historical role notwithstanding. It has to add value to the Quad template and India’s own evangelising of the Indo-Pacific; it cannot presume to be a leader by default or based on the past.

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With contributions from

Kanti Bajpai, Hoo Tiang Boon, Sujan Chinoy, Bill Emmott, Frédéric Grare, Suhasini Haidar, Quah Say Jye, Tsutomu Kikuchi, Chung Min Lee, Tanvi Madan,  Kishore Mahbubani, Kalpit A. Mankikar, Rana Mitter, C. Raja Mohan, Samir Saran Teresita Schaffer, Ayesha Siddiqa, Peter Varghese, Igor Yurgens

About the Book

In July 1971, US National Security Advisor, Henry Kissinger, made a secret visit to China to meet top Chinese leaders. This inaugurated a new phase not just in US-China relations but in contemporary history. That visit and the subsequent US-China relationship, including the US decision to invest in China’s economic rise and admit it into the World Trade Organisation, combined to firm up the foundations of China’s rise as a world power.

For more than four decades, the leadership of the two countries had a secretive pact, which worked well to each other’s benefit. The US helped power China’s economic growth in the hope that Beijing would turn a new political leaf and adopt Western practices (e.g. democracy). China grew economically and militarily, used its financial prowess to spread its influence across continents, as four generations of Chinese leaders built their nation at the expense of the US.

Half a century after Kissinger’s historic visit, the US and China are today engaged in a trade war bordering on a new Cold War. Washington is not openly talking about “de-coupling” from China, which has begun to challenge its global dominance, but it might very well be. China has already established itself as a dominant power across Eurasia. More worryingly, China is militarily and economically threatening its neighbours, including Japan, Korea, Vietnam, Taiwan, Australia, Philippines, Indonesia and India.

This collection of critical essays examines the impact, consequences and legacy of Kissinger’s first, door-opening visit to China and how it has shaped world order.

Books, China, Writing

A New Cold War: Henry Kissinger and the Rise of China

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Research, Writing

Big Tech and the State: The necessity of regulating tech giants

The scramble for gold on the Internet has transferred control of vast swathes of cyberspace to a very small and select group: Big Tech. This has made ‘significant social media intermediaries’ highly profitable ad businesses that have grown amid non-existent privacy and weak intermediary liability laws. They make the market, grow the market, and shape market rules. No ad business, or any business in history—not even Big Oil or Big Tobacco—has held so much power over consumers and the economy. This perverse power is, perhaps, the single biggest challenge that nations and peoples will have to grapple with. Accountable Tech must be India’s leitmotif in 2023 as it presides over the G-20, and a robust digital republic its sovereign mission as its turns 75 next year. This will need sensible politics, sophisticated policies, and a return to first principles.

Concentration of wealth is a competition issue and an economic policy question. Left unregulated, it brings about inequality in income and opportunity. But concentration of power when it comes to discourse—what is promoted, shared or suppressed—should be more worrying. Safe-harbour provisions in the United States along with self-regulation principles have allowed Big Tech to cherry pick what is to be acted on and what is to be ignored, effectively making it the arbiter of permissible speech. For example, anti-vaccine Twitter users have thrived during the pandemic, while, sometimes, less dangerous actors have had their posts labelled. In January, Angela Merkel, Chancellor of Germany, denounced the de-platforming of then US President Donald Trump by Twitter. “The right to freedom of opinion is of fundamental importance,” Merkel’s Chief Spokesperson, Steffen Seibert said, “Given that, the Chancellor considers it problematic that the President’s accounts have been permanently suspended.”

The issue here is not whether Merkel agreed or disagreed with Trump’s tweets. The question is—who censors him, how, and with what process and level of transparency? For the Chancellor and for many, Twitter cannot choose for itself when it seeks to be a provider of public goods, and when it is a private messenger eligible for intermediary protections. When governments around the world describe digital connectivity as a ‘utility’, information lines cannot be disrupted by religious, cultural or ideological filters. Like water, electricity and roads, significant social media will have to serve all, even those its management and owners disapprove of.

[Platforms] cannot choose for [themselves] when they seek to be a provider of public goods, and when they are a private messenger eligible for intermediary protections.

The instances when utilities (say electricity and water) are denied or disconnected are specific, rare and regulated. Even in the information age, only the state and its three pillars have this right. Global Big Tech is not part of this constitutional arrangement. There are checks and balances in place, with legal recourse available for all within the state and for external actors as well. Any alternative to this constitutional setup would be akin to legitimising foreign influence operations in domestic affairs. In an extreme, for a country that is almost perpetually in election mode, it would be tantamount to election interference. This may seem like hyperbole, but it is closer to the truth than we suspect. For instance, if an electoral candidate makes an incendiary speech on a physical stage, the Election Commission, law enforcement agencies and the judiciary act against him—not the private company that has set up the stage or the power utility that has provided an electricity connection to the mike. Is the online equivalent being honoured by Big Tech?

Regulation of Big Tech across democratic setups

Australia gets this. In February, it passed the News Media Bargaining Code. The code encourages intermediary tech firms to negotiate deals with media outlets, effectively mandating that Facebook and Google pay news firms for content. The law was passed after a protracted battle between the Australian government and social media firms. It escalated when Facebook removed content of certain Australian news agencies, several official government handles, emergency services, and civil society organisations from its platform. Prime Minister Scott Morrison held firm: “These actions will only confirm the concerns … about the behaviour of Big Tech companies who think they are bigger than governments and that the rules should not apply to them.”

Canada, too, is making moves to curtail the wealth and discourse monopoly currently enjoyed by Big Tech. Just this week, Canadian lawmakers passed Bill C-10, which seeks to regulate the kind of content media streaming services prioritise on their platforms. The Bill, which is yet to be passed by the Senate, aims to make digital streaming platforms at par with traditional broadcasting services; the latter are obligated to increase the visibility and “discoverability” of Canadian content, and to set aside part of their profits to support a fund that promotes original Canadian productions.

Across the pond from the Americas, the European Union is also actively working towards mitigating the risks posed by the monopoly of Big Tech. Margrethe Vestager, Vice President of the European Commission for A Europe Fit for the Digital Age, has stated that tech giants, “have the power to guide our political debates, and to protect—or undermine—our democracy.” In December 2020, Vestager and her office tabled the Digital Services Act (DSA), which seeks a systemic assessment of the varied social, economic and constitutional risks posed by the services provided by Big Tech.

The most decisive move yet has come from Poland, which has proposed a law to ‘limit’ the censorship tendencies of the tech giants. Soon after the deplatforming of Donald Trump by Twitter, Prime Minister Mateusz Morawiecki wrote on Facebook: “Algorithms or the owners of corporate giants should not decide which views are right and which are not. There can be no consent to censorship.” The new proposed law provides for a special mechanism for those whose content or profiles have been blocked/deleted by social media platforms, where they can complain directly to the platform, which is obligated to respond within 24 hours. After a review by a specially constituted “Freedom of Speech Council”, deleted content can be restored by order. If platforms do not comply, they can face a heavy fine of up to 50 million zloty (US $ 13.4 million).

Regulatory Frameworks in India

India, too, must take some tough calls. The vision of Digital India has advanced—from only four unicorn companies in 2014, India had 12 in just 2020 alone. Regulation must keep pace with this economic and social reality. It is absolutely critical that the Privacy and Data Protection (PDP) Bill, currently being examined by a Parliamentary Joint Committee be brought forth and enacted as law. Without the umbrella framework of the PDP bill, India’s regulation of Big Tech will be ad hoc, and may be misconstrued as a political instrument.

The vision of Digital India has advanced—from only four unicorn companies in 2014, India had 12 in just 2020 alone. Regulation must keep pace with this economic and social reality.

With respect to regulating intermediaries, the Indian government initiated a public consultation process in December 2018 and invited submissions from the public to the Ministry of Electronics and Information Technology. A spectrum of civic, industry and academic actors participated. The rules were notified in February 2021, specifying clear compliance requirements within three months. Yet, the reaction of Big Tech platforms has been to delay, stall and obfuscate compliance.

It is high time that the actions of these companies were subject to systematic and rigorous Parliamentary oversight; but for that to happen, legislation is needed. Indian law and policy are rooted in our Constitutional principles. Indian policies on digital governance are no different, but they now need the imprimatur of Parliament to truly be effective. And should there be questions and grievances regarding the scope and constitutionality of the law, the courts of India will be the ultimate judge.

The objective of regulatory frameworks is to safeguard public interest, even (or perhaps especially) if it involves eroding the bottomlines of powerful vested interests. To once again quote the EU Commission’s Magrethe Vestager (in an intervention at a technology policy panel at the Raisina Dialogue earlier this year), regulating Big Tech, “Is a job, not a popularity contest”.

Perhaps, the real limitation is one of our imagination. In our minds, Silicon Valley is forever a happy, sunshine place, led by geeky, long-haired wunderkinds in t-shirts and flip-flops. The reality is Big Tech’s instincts today are driven by a single-minded sense of territoriality and collective impatience for different governance systems. For them, their ‘code is law’ and it is universal. That is at the crux of it.

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Research, Writing

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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China, Research, security, Writing

Communist Inc: The Pandemic and China’s World

Co-authored with Akhil Deo

The Communist Party of China will celebrate the 100th anniversary of its founding this July. This marks the first significant milestone in Chairman Xi’s “China Dream”, a project that will ostensibly culminate in 2049, the 100th anniversary of the founding of the People’s Republic, with associated aspirations of China cementing its position as a global power. In our book, Pax Sinica, we had detailed three instruments that are crucial to these ambitions: Leadership over global institutions and processes, a conducive environment for achieving “discourse power”, and the construction of new international coalitions. China seeks to control global institutions and rule-making processes, grease and dominate the media and public sphere into a favourable disposition, and enter into perverse partnerships with other nations, described as a “loan for sovereignty” arrangement in one of its avatars.

The onset of the pandemic has made many of these strategies more visible, even as it highlighted the opportunities and challenges that lie ahead for China.

China’s global dominance strategies

For the past decade or more, China has pursued a dual strategy of co-opting post-war institutions while simultaneously pursuing its own brand of multilateralism through the Belt and Road Initiative (BRI) and an assortment of formal and informal fora, such as the Shanghai Cooperation Organisation. Three approaches guide China’s strategy: Building global influence and prestige; shaping and/or altering key norms, standards, and processes; and creating the capacity to withstand pressure for selectively disregarding international rules.

The fruits of these efforts were visible amid the pandemic, most controversially at the WHO, which struggled to balance its commitment towards transparency and accountability, and its operational reliance on and systematic infiltration by China. Under cover of the pandemic, China has made more significant inroads as well. In April 2020, China was appointed to the influential United Nations Human Rights Council (HNRC) consultative group, which plays a crucial role in selecting global monitors for free speech, arbitrary detention and forced disappearances—the very rights that Beijing crushed in Hong Kong and Xinjiang.

One aspect of this ploy of the Communist Party of China (that effectively and absolutely owns the country) that often goes unnoticed in India is China’s leadership in technology standard-setting organisations. Over the past decade, Beijing has improved its representation in, and submissions to, the technical committees and sub-committees of organisations like the International Organisation for Standardisation and the International Electrotechnical Commission. In March 2020, China’s Standardisation Administration published an innocuous document outlining the elements of a more ambitious strategy known as China Standards 2035. The 15-year blueprint will chart a pathway for China to dominate standards in emerging industries, giving it the ability to set the terms of international trade and even define the relationship between technology and society globally.

Augmenting China’s influence in international organisations and standard-setting bodies is its global media and narrative management strategy—an essential facet of “discourse power”

Augmenting China’s influence in international organisations and standard-setting bodies is its global media and narrative management strategy—an essential facet of “discourse power”. Chairman Xi alluded to this in a recent speech, calling for China’s media to develop an “international voice”. The research in our book highlighted what scholars called China’s policy of “borrowing a boat to go out into the ocean”. In other words, China’s use of paid inserts and large advertisements in newspapers allows it to propagate its narratives. Two recent reports provide insight into how significantly these efforts have evolved and intensified.

The first, by the Associated Press and the Oxford Internet Institute, describes China’s use of bots and fake social media accounts to amplify its “wolf warrior” diplomats and their proxies online. While China has previously used these tactics in Taiwan and Hong Kong, such operations have taken on a global scope amid the pandemic. Beijing’s appetite for misinformation, exemplified famously by Zhao Lijian’s claim that the coronavirus originated outside China, only exacerbated the challenge. The second, from the International Federation of Journalists, posits that Beijing’s strategy of syndication appears to be paying off. Over the year, its inserts into local media, increasingly in vernacular, along with a more engaged diplomatic community, have bolstered its visibility in the developing world.

Beyond its media strategy, China continues to fund educational institutions through opaque means, sometimes with attached costs to academic freedom. The Communist Party also increasingly hosts foreign diplomats and security officials for training programmes on “information management” and sponsors ruling party politicians around the world to attend training sessions on party building and governance. In 2020, under pressure from Western scrutiny, Beijing rebranded its infamous Confucius Institutes and handed over operations to a ‘non government organisation’ defined by the party. However, the US and Europe aren’t necessarily the targets of its educational and cultural investments. A report from Aid Data in 2018 revealed that countries that are more aligned with China’s foreign policy receive the bulk of its largesse. While it is unclear yet what gains have accrued to Beijing from such initiatives, they represent a formidable institutionalised apparatus to export its ideology and political practices.

The Communist Party also increasingly hosts foreign diplomats and security officials for training programmes on “information management” and sponsors ruling party politicians around the world to attend training sessions on party building and governance

Backdoor entry into the EU

Finally, we had highlighted China’s strategy of building new coalitions and undermining existing ones. Nowhere was this more apparent than Europe, where Beijing’s 17 + 1 platform for engaging with Central and East European (CEE) nations had triggered concern about its “divide and rule” tactics. To some extent, China’s investments in the region have paid off— with countries like Greece and Hungary scuttling the EU’s efforts to criticise China’s violations of international law in the South China Sea and the passing of the national security law abuses in Hong Kong.

2020 dampened this momentum for China—and demonstrated that large powers can still secure their peripheries. Several East and Central European leaders expressed dissatisfaction with the pace of investments and many were no-shows at the China-led forum. Many have also signed onto the US’s Clean Network Initiative, intended to prevent the entry of China’s 5G companies into key markets. The Baltic states, meanwhile, were more apprehensive about Russia than they were keen on Chinese investments.

Nevertheless, the 17 + 1 platform is but one instrument in China’s more global “perverse diplomacy” toolkit, and writing it off is premature. It marks a permanent presence that China now enjoys at the EU’s doorstep, one that the CEE can always leverage for better terms from Brussels. At the very least, China is now a voice in domestic EU debates.

China also hosts a web of high-level forums and summits in nearly every part of the world, including the Arab states, Africa, Latin America, and the ASEAN. Beijing’s vaccine diplomacy has won it praise in most of these geographies—especially in the face of Western absence and selfish acts of the past year. These forums augment and bolster various initiatives, ranging from China’s infrastructure investments to promoting its technology propositions. And its economic presence and investments are buying it diplomatic support as well. For instance, the support of African states has been crucial for China when its record in Xinjiang and Hong Kong was questioned in the UN in 2020 and 2019.

When looking at the pandemic in retrospect, Chinese leaders will likely see parallels to the 2008 financial crisis—one more milestone in the long decline of the West, and China’s rise. Beijing robustly managed the pandemic at home and stepped up to provide global public goods. To be sure, it faces new headwinds: Public opinion of China has plummeted in the West, the Biden administration is gearing up for great power competition, the EU has ‘frozen’ its latest investment deal with China, and institutions like the G7 are stepping up to offer alternatives to the BRI.

Public opinion of China has plummeted in the West, the Biden administration is gearing up for great power competition, the EU has ‘frozen’ its latest investment deal with China, and institutions like the G7 are stepping up to offer alternatives to the BRI

Elsewhere, the message from China over the past year is resilience and continuity. It remains committed to an alternative form of globalisation via the BRI. Its influence over international institutions will only grow, proportional to its wealth and power. Beijing’s media is increasingly savvy in projecting and protecting its core interests. Further, contrary to the perception that China is “friendless”, it can call upon nations to support it when it matters. And even when there is pushback, it is often haphazard. The recently announced “Build Back Better World”, while grand in intent, struggles with the contradictions within the group on their assessment of the Middle Kingdom. Key countries have chosen trade over security and valuations over values in their engagement with China.

The future of the Indo-China relationship 

Where does this leave India? Our book warned that Doklam was unlikely to be the last border confrontation between the two Asian powers. We argued that it opened a new tense period between India and China—an Asian Cold War. The Galwan Valley Clash confirmed the advent of a new era of high altitude faceoffs with possible ramifications in the oceans as well. This rift has only grown wider amid the pandemic. China’s belligerence in the Himalayas, and India’s restriction on Chinese technology platforms as well as its alignment with coalitions competing with China have all but cemented contestation. This will drive engagement in the years ahead.

New Delhi will confront a more fundamental dilemma: On the one hand, political tensions with China will remain high. But on the other, it is dependent on trade with China for its economic objectives—a dependence that will likely remain given the adverse economic consequences of the pandemic. Indeed, data published by Chinese customs officials revealed that trade with India boomed in 2021, even as Beijing appears to be consolidating its position in the Himalayas. How India resolves this contradiction and builds a security posture that accounts for this will indeed define the relationship.

New Delhi needs clarity of thought and a national consensus on China. In the coming days, it will have to take a leaf out of the Chinese playbook and engage in trade with the one that seeks to do it harm. Its economic engagement must be alive to this and its security considerations immune from these entanglements. It must realise that it cannot trade or talk its way into a better relationship with Beijing. These are important but essentially sideshows to the principal theatre of engagement. Deceit and political muscularity is the new grammar of the bilateral that China has proffered. With limited recourse available, the time for India’s legendary ambiguity is long past.


PAX SINICA: Implications for the Indian Dawn, by Samir Saran and Akhil Deo, is available here.

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Research, Writing

Just deserts? Western reportage of the second wave in India exposes deep schisms in relations with the East

Co-authored with Mr. Jaibal Naduvath

This article is a continuation of a previous article written by the authors, Revisiting Orientalism: Pandemic, politics, and the perceptions industry

In Lord Byron’s poemChilde Harold’s Pilgrimage (1812), the protagonist Harold, contemplating the grandness of the Colosseum, imagines the condemned gladiator, dignified yet forlorn, butchered for the entertainment of a boisterous, blood lusty Roman crowd out on a holiday.

Public spectacles of suffering are integral to the discourse of power. The perverse imagery and messaging surrounding the suffering seeks to intimidate and suppress the subaltern’s agency to perpetuate ethnic dominance and social control. It pivots around an elevated moral sense of the ‘self’. In his seminal work, When Bad Things Happen to Other People, John Portmann argues that it is not unusual to derive gratification over the suffering of the ‘other’, particularly when the native feels that the suffering or humiliation of the ‘other’ is deserved. The suffering then becomes fair recompense for transgressions real and imagined, and the accompanying sense of justice and closure brings forth feelings of gratification.

India is reeling in the aftermath of the second wave of COVID-19. As death reaps rich dividends cutting across class and covenant, the country is engaged in a determined fightback. The developments have made global headlines, and, in equal measure, triggered global concern. Apocalyptic images of mass pyres and victims in their death throes, replete with tales of ineptitudeprofiteering and callous attitudes, have made front page news and have become television primetime in much of the trans-Atlantic press, conforming to reductive stereotypes that have informed three centuries of relations with the Orient. The ‘self-inflicted’ suffering is then ‘fair recompense’.

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Research, Writing

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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Research, Writing

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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