Welcome to the age of the platform nation

Industrial Revolution, Efficiency, production, GDP, 4IR, inequality, digital societies, ownership, mass services, sharing economy, McKinsey, replacement, progress, productivity, labour, consumption, innovation, feasibility, IPR, onboarding
Source: Concordia

Since the First Industrial Revolution, growth and welfare have depended upon increasing the efficiency of production. Specialization, manufacturing, electricity and the computer all increased productivity, GDP – and thereby wages and national welfare. Higher wages did not just spur consumption of more goods and services, but also meant bigger national budgets through tax collection. A virtuous circle of prosperity was created. Some gained more than others, creating persistent inter-generational inequality; but, in absolute terms, economic means were enhanced across all major population segments. (Except, of course, for those places that were colonized and subject to deliberate exclusion from such gains.)

This relationship – between productive efficiency and economic growth and wages – is now breaking down in the Fourth Industrial Revolution (4IR). Digital technology is creating digital societies; mass services are replacing mass manufacturing as the source of welfare enhancement; and shared assets are supplanting exclusive asset ownership.

Providing the same final utility to a consumer requires the production of fewer manufactured goods. The sharing economy, meanwhile, means previously under-utilized assets are being more productive. When India’s economy hits $5 trillion (perhaps five-to-seven years from now), it will at most have about 50 cars per 1,000 private individuals (it is 22 cars today). Japan, which is a $5 trillion economy today, has close to 600 cars for 1,000 people. McKinsey has forecast that India will overtake Japan in total car demand in 2021. But this figure does not reveal demand for new vehicles in per capita terms. In spite of the large gap in private car ownership, private ride sharing and other mobility service options will narrow the transport experience between the residents of Japan and India.

Divergence in the automotive sector is particularly telling. In the 20th century, mass assembly-line production created efficient producers with consequently higher incomes – a feature of what came to be called “Fordism”. In the 21st century, individuals and economies are reaping welfare gains from being more efficient consumers. Consumption efficiency is replacing production efficiency – a trend we can call “Uberism”.

In the 21st century, individuals and economies are reaping welfare gains from being more efficient consumers. Consumption efficiency is replacing production efficiency – a trend we can call “Uberism”.

The changes accompanying this shift from “Fordism” to “Uberism” are difficult to see in economic metrics. The more efficient use of assets, the shift from traditional manufacturing to innovative mass services, or the provision of greater utility through fewer goods and less physical activity, may appear on the national accounts as value destruction or stagnation rather than as GDP growth. Yet welfare gains in the future are likely to do just that: appear, when observed through the economic frameworks of the past, like slower and lower growth.

This implies that three major trends need to be theorized and engaged with by economists and political scientists:

First, a replacement is needed for GDP (as we define it now) as a measure for economic progress. Governments and policy-makers chasing GDP growth in an age where welfare enhancement may not be reflected in GDP will not be serving their citizens well. Their policy emphasis will be on objectives that are irrelevant to the 4IR. Barring a few sectors (food production is remarkably resilient to the shared economy, but certainly subject to efficiency gains) and finished goods (personal communications devices being one of the exceptions), a consumption basket biased towards the drivers of production-led growth is now an incorrect marker for proper economic assessments.

Second, a new theory of productivity, labor and consumption is needed. Earlier economic strength came from creating per-unit value; but increasingly what matters is overall valuation. The strength of corporations or enterprises is already being negotiated in these newer terms, but national balance sheets continue to plod along old paths. Compare, for example, ExxonMobil and Apple. In 2007, boosted by then-unprecedented increases in the price of oil, ExxonMobil first breached a market valuation of $500 billion. That year, its revenue was $400 billion. In other words, the revenue generated by Exxon at those levels was much higher than the revenue of Apple at a $1 trillion market capitalization. But investors believe in the future of platforms, and have come to a consensus about the importance of placing value on factors external to a network itself. Platform economies are validated by the number of persons on the platform and not through plain vanilla per-unit production and sales processes of the past. The intrinsic value attached to the on-boarding of an individual or a billion of them onto a platform, or more broadly a “service ecosystem” (say a Facebook, Google or even Aadhaar) is captured by stock markets, but not by GDP assessments.

An inevitable consequence of this process will be a re-evaluation of the economic and political feasibility of current intellectual property rights (IPR) regimes. Today “onboarding” (getting users to sign on to platforms, services, operating software etc.) prevails over “gatekeeping” (charging IPR fees for use/user access). So are today’s IPRs useful when it comes to creating value for countries and citizens in Industry 4.0? This means the nature, definition and pricing of “innovation” itself might have to change: the happenings around Android and iOS are already offering some pointers to the future.

Finally, this discussion would be incomplete without delving briefly into the need for a new theory of social organization. Political and social arrangements that revolve around citizens’ identities as workers are unfit for today’s digital societies of today. The reconfiguration of the workplace (from factory floor to handheld device, for example) and of the nature of work itself, as discussed earlier implies deep changes to political structures and social support networks. Can trade unions stay relevant in this new era? What is the relevance today of party politics that developed out of First Industrial Revolution class conflict, deriving their raison d’etre from the working classes on the one hand and business owners on the other?

This article originally appeared in The World Economic Forum

Our ‘in’secure futures

emerging Technology, Sean kanuck, CyFy, Digital, Debates, Samir Saram, Insecurity, disinforamtion, globalisation, enlightenment, GDP, Aditi Kumar, Social Contract

The following is the introductory note from the upcoming publication Digital Debates 2019 — The CyFy Journal.

2019 will sputter to an end with unresolved anxieties about the future of emerging technologies, and their relationship with our societies. Sean Kanuck, our distinguished colleague and fellow chair of CyFy, identifies four trends that appear to be reinforcing these anxieties: “insecurity, disinformation, anti-globalisation, and un-enlightenment.” As is wont for these times, Sean contributes a new phrase to define the zeitgeist: “indisantiun”. They represent drivers of change that, by themselves, have little to do with the digital domain. Like their Biblical counterparts, these horsemen of the digital apocalypse represent malaises residual in 20th century global governance: economic and social exclusion, lack of transparency in the business of government, pervasive xenophobia, and a profoundly anti-elite, anti-intellectual tendency that is on the rise. These problems may have been seeded in the previous century, but attempts to resolve them using 20th century institutions, regimes and coalitions have come a cropper.

Kanuck’s contribution to the Digital Debates is one amongst fifteen essays for this edition of Digital Debates that are divided equally between five animating themes: Individual, Livelihood, Society, Governance and Conflict. We chose these themes to allow authors to explore comprehensively, the implications of digital technologies from their own unique vantage points as scholars and practitioners. Many of our contributors shared Sean’s assessment of a more insecure and anxious world. In fact, “Indisantiun” may well capture the inability of current global governance arrangements to respond to broader, technology-fuelled disruptions and their disquieting consequences.

We attempt here to tie these themes together, and to present (what we hope is) a coherent picture of the virtual world in 2019. As the most granular, and perhaps most consequential, unit of this world, it is fitting that the first set of essays address the anxieties haunting the individual. The platformisation of the public sphere may have democratised expression — or atleast deepened it through encrypted communications — its by-product has been the creation of new infrastructure designed to extract data and expand surveillance. This has created a paradoxical situation for individuals: the more they interact with digital spaces, ostensibly to exercise their freedoms, the more vulnerable they are to rights abuses — by private actors, their own sovereign, or even a foreign one. This has created a new type of insecurity, one where individuals are “simultaneously under attack and being weaponised” –as Nikhil Pahwa argues–by the influence of digital technologies on their social lives. Tanuj Bhojwani offers a provocative rebuttal to Pahwa, suggesting the notion of unfettered individual agency over digital networks is nothing but a “techno-utopia”. However, he agrees that the framing of platforms as “mere marketplaces” is problematic.

Concurrently, digital technologies have also altered the relationship between labour, capital and productivity. For much of the past century, a nation’s Gross Domestic Product — the sum total of goods and services produced — was considered an accurate picture of its economic, indeed political, health. This will not be a reliable metric for the digital economy, which will likely be characterised by incremental or marginal innovation, diffused supply chains and the “gig” economy that runs on shared resources — all, in turn, fuelled by the aggregation of data. There is great uncertainty about how to quantify the relationship between these independent variables, how they will affect development outcomes and what this implies for livelihoods in advanced and emerging markets. The essays under the theme of ‘Livelihood’ capture perfectly the nuances of this debate. While Winston Ma’s piece speaks to the potential of digital technologies in bridging 20th century development divides, Aditi Kumar responds by clinically dissecting the inequities inherent in digital workforces of the 21st century. Astha Kapoor and Sarayu Natarajan argue India in particular is becoming a “hot bed for micro-tasks” in the digital economy — especially in areas like data labelling — which could ‘invisibilise’ labour and further exclude those at the margin. They too emphasise a shift away from “static notions” of productivity and a more rounded view of “well-being”.

Whatever be the causal pathways, personal, political and economic insecurity has created a backlash against established forms of governance in domestic regimes. The dynamic between the individual, private platforms and the state is constantly in flux, prompting institutions of government to play catch-up. The social contract between the citizen and state is being usurped by private, digital platforms, who through their privacy policies confer on the individual rights that governments are reluctant to endorse. Conversely, they have begun to exercise “eminent domain” over the property of the individual in the digital age: data. In short, there is wide overlap between the functions of a platform and the state — of regulating speech, providing social protections, creating employment opportunities and ensuring national security. Rules and norms to govern these interactions are yet to fully mature, leading to uncertainty in the social contract and, as James Lewis points out, a crisis in the legitimacy of domestic norms and institutions.

The flux in domestic regimes is reflective of the churn in the international order. Connectivity between nations and mutual gains from trade, according to conventional wisdom, was expected to heighten the stakes for war or even limited conflict. Digital connectivity, however has created a new set of tensions.

The flux in domestic regimes is reflective of the churn in the international order. Connectivity between nations and mutual gains from trade, according to conventional wisdom, was expected to heighten the stakes for war or even limited conflict. Digital connectivity, however has created a new set of tensions. Digital spaces are effectively a “system of systems”, from cell towers and routers, to platforms and applications. Taken together, they reflect the digital interactions of entire nations, sans the neat segregation of boundaries which has been the edifice of 20th century politics. This infrastructure is not neutral; instead, as Arindrajit Basu argues, it is political. Cyberspace is not merely a reflection of geopolitics in the “offline” world, but has rendered it even more chaotic by adding vectors of political contest: 5G, influence operations, the Dark Net…the list is long. Isolation is no longer a feasible strategy. Dennis Broeders refers to our times as an era of “unpeace” — a time of both messy interdependence, and of friction and conflict. To be sure, history offers precedents — think of continental Europe before the first World War — but the arena is different this time, and poses a new set of challenges. Anushka Kaushik’s lucid exposition of the attribution dilemma in cyberspace exemplifies the problem: without actors to blame, who is responsible for the malaises of the digital age?

Our authors seem secularly skeptical of prospects to navigate these problems. Nevertheless, we remain optimists. The faultlines emerging today across communities and states are not a factor of digital technologies, but of problems that predate their global popularity. As Philip Reiner notes, “insecurity always has, and always will persist, in varying degrees of flux.” Disruptions exacerbated by digital technologies are an opportunity to re-conceive and adopt templates for domestic and international governance that are responsive and agile — but also rooted in ideas that were paid lip service in the last century: equity and sustainable development.

‘Digital Debates’ is an attempt to do just this — to highlight perspectives, diagnoses and solutions for the future of our digital world that are not necessarily rooted in technology. We are grateful to our authors for having fulfilled their mandates splendidly. By design or sheer circumstance, contributors to Digital Debates this year have not only dwelled on the many tensions agitating cyberspace, they have also argued that the political, social or economic realignments triggered by this medium may ultimately settle into a new normal.

Perhaps the most important of these realignments is the coming to terms of democracies with the introduction of digital technologies in our public sphere. We have, in a manner of speaking, entered a post-internet world. Previous evolutions in media and production technologies(such as the radio or the steam engine) dramatically altered the demands and methods of governance. It is not unexpected that a similar moment is upon us today. Despite present concerns around polarisation and inequality, it was comforting for us to see that each of our pieces on the theme ‘society’ were unanimous in their belief that our democracies possessed the ability to self-correct. Mihir S. Sharma argues that the problems plaguing digital governance has to be treated on its own merit. Whether the management of digital spaces is democratic is, he writes, a separate question from whether they promote democracy. Terri Chapman responds to that poser, calling for greater “explainability” in algorithmic decision-making.

Perhaps the most important of these realignments is the coming to terms of democracies with the introduction of digital technologies in our public sphere. We have, in a manner of speaking, entered a post-internet world.

A course correction is indeed being embraced by, or forced upon technology platforms. Whether it is protests against military contracts with governments, allegations of bias and partisanship, or disquiet at their sheer monopolistic power, the governance and ethics of technology platforms are being questioned more severely than ever before. Paula Kift recognises that this new backlash stems from an “internal rift” (irreconcilable, perhaps?) between ideals and business practices. Consequently, we see boardrooms responding to popular concerns. New ethics and oversight practices, institutional cooperation with the state, and new user controls are all evolving to create — or atleast, attempt to — accountable and transparent regimes for the technology industry.

Processes and conduits of globalisation are also under pressure to respond more effectively to local communities or interests. In the 20th century, economic connectivity was a process moulded by a small set of state and private actors. Digital spaces have undermined this monopoly, allowing individuals and communities to agitate for representative global economic decision making. Civil society coalitions that challenged the provisions of the Trans-Pacific Partnership, and its negotiation in secrecy, were lent a fillip by the internet, lending them instant access to allies and like-minded partners in distant lands. Most crucially, we see such digital disruption playing out in the development sector — where innovations from Asia and Africa are creating platform-based solutions for the next six billion. Their technological pathways to development and policy frameworks will be digital-first by design, and perhaps capable of providing the templates the world so desperately needs.

And finally, our contributors also recognised the character of our international community has changed in the digital world. Lydia Kostopoulous reminds us of the complexity of this new moment: where digital spaces are pervasive, but also interact with and operate within sovereign boundaries, each with their own political contexts. Resolving this contradiction will require efforts that are capable of bridging the disconnect between 19th century Westphalian understandings and the realities of a 21st century digital world. It is our hope that CyFy will be a platform to discover such solutions. We express our sincere thanks to contributors to this volume for setting the stage for the two days of debates and discussions that follow.

CyFy 2019: Chair’s note

The real world is now complemented and implicated by the virtual world. This is a new domain altogether, and its governance is not bound by traditional rules and constraints.

CyFy, CyFy 2019, Samir Saran, Arab Spring, dataveillance, emancipatory

We meet for the 9th edition of CyFy in interesting times. The assumptions that have underpinned digital technologies since the inception of CyFy in 2013 have changed dramatically. There were two competing narratives then about the future of cyberspace and its relationship with society: the emancipatory potential of digital technology, as witnessed by episodes such as the Arab Spring, and the worrying implications of government abuse of internet platforms for surveillance, evidenced in the Snowden revelations. Eight editions later, six in New Delhi and two in Morocco, it is clear which way the pendulum has swung.

The democratic ideal of cyberspace has given way to concerns around privacy, concentration of wealth, and national security. The very platforms that enabled new forms of expression and supported new social coalitions have inadvertently created a sprawling apparatus for surveillance and exploitative control. The ubiquitous availability of data has allowed a plethora of actors to generate granular information about behavioural preferences—making the fickle human mind ever more vulnerable to influence and polarised thinking.

This is now the new normal. Two decades ago, the refrain — eloquently phrased by Prof Larry Lessig — was “code is law.” Today, it is more appropriate to say that code is life. Opaque algorithms, fuelled by what the Indian Supreme Court calls ‘dataveillance’, define the interactions of individuals and communities and their relationship with industry and the state. The boardrooms that develop these algorithms, meanwhile, remain answerable only to their shareholders (if at all), often at the expense of their customers and users. Frameworks for accountability in the digital age — whether from sovereigns or technology companies — have yet to emerge.

States have also taken note of these new tensions. Given the vast social and strategic implications of digital technologies, their evolution in the coming decade will undeniably be shaped by the strong arm and long reach of the state. Governments have instinctively spiralled themselves into a zero-sum race to lead in the development and deployment of these technologies. As a consequence, the internet is less global, less secure and less free than it has ever been at any time since its widespread adoption.

Taken together, these new realities have produced disorder in technological and social systems globally. Malicious actors have aggregated on social media to produce a fractured information environment, malicious actors have weaponised data and algorithms, while states are intent on erasing private spaces and exerting sovereign control over global flows of information. Two decades into the 21st century, the structural forces being driven by digital technologies appear to be leading us into a more polarized and fractured world.

All consequential evolutions in technologies have required societies to create new arrangements. In this, the past cannot help us. The velocity of change and disruption underway today is unprecedented. The real world is now complemented and implicated by the virtual world. This is a new domain altogether, and its governance is not bound by traditional rules and constraints. The 25 conversations we have curated at CyFy 2019 are designed to acknowledge this new reality and to outline pragmatic solutions for this networked world.

Over 130 speakers and delegates from nearly 40 countries, including 10 cyber-ambassadors and government representatives, will spend the next three days in New Delhi to join us for this crucial effort.  As always, we strive to create new coalitions and norms that can address comprehensively the problems of our digital world. We are grateful to our partners, speakers and delegates for joining us to debate these important issues. I am confident that the ideas we hear at CyFy 2019 will inevitably lead to a new consensus for our tech futures.


Oil, gold or more : The big data debate

Data,GATS,OPEC,Silicon Valley

The 1970s saw heated debates in the international community with regard to the ownership of natural resources, centered on the methods and institutions that would manage their price and supply, and the strategic routes and chokepoints that determined access to these resources. Oil was the most important such resource—simultaneously a fuel for 20th century industrialization and a source of geopolitical instability and risk.

In time, the international order did create a new set of arrangements – although not always efficiently. The UN adopted a resolution guaranteeing states’ sovereignty over their national resources — remember the New International Economic Order (NIEO)? — and while cartels like the Organization of Petroleum Exporting Countries (OPEC) became critical to negotiating prices, the sea lanes were protected by mandates under international maritime law. In fact, it would be the US, which opposed the NIEO, that stayed out of the UN Convention on the Law of the Sea for fear it would impede commercial exploitation of the deep seabed.

It is not hard to see why the management of oil was a contentious affair. Like data today, oil was a crucial input for economic, military and strategic advancement. And as such was a perennial cause for tensions in international politics, which is why the comparison continues to enjoy relevance. Similar concerns animate data governance: ownership, economic growth and national security.

Nevertheless, this characterization of data does not always present an accurate template for policymaking. As negotiations on cross-border data flows continue to exacerbate multilateral and bilateral tensions, it is essential for India to appreciate why the ‘data is oil’ analogy is important, and where it falls short. Delhi must prioritise three considerations in this debate.

The first relates to national security. Unlike oil, the flow of data creates a wealth of information that provides granular insights into the preferences, habits and behaviours of individuals and large communities. For centuries, such information was considered essential to intelligence gathering and statecraft. Even today, it is a force multiplier for national power.

The proliferation of data and digital systems has created a very wide catchment area for the application of state interests. Protecting natural resources was a function of a states’ military power; securing cyberspace, however, will require strong cooperation between governments, platforms and academia. In the US, technology platforms are increasingly frontline actors in national security decision-making. How should net-data exporters like India that are dependent on foreign technology systems manage these risks? So far, no reliable templates have emerged.

The second is economic. Unlike physical commodities, the value of data does not necessarily accrue to those who exercise jurisdiction over it. The largest oil companies, whether owned privately or by the state, belong to those nations with easy access to the resource. In many cases, businesses are offered very long-term leases over a resource whose ownership by the state is not disputed. However, while India is home to 600 million active internet users, North America hosts 13 of the world’s 15-largest technology companies by market capitalization, with China hosting the remaining two.

Therefore, the value of data is captured not at the point of extraction but in transit — when it flows, and supports new products, business methods and industries. Indeed, data flows already generate more value in the global economy than goods and services. This may be an obvious point, but its implications are not. The regimes managing the globalization of goods, services and capital were written to privilege Western economic interests. And while developing states enjoyed economic gains from the outsourcing of manufacturing industries, the value addition from investments, royalties and taxes were almost entirely captured by the West.

There is a real risk that digital globalization will lead to the same outcomes. Restricting the flow of data alone will not remedy the challenges for India. However, Delhi should use this moment to renegotiate the commercial, financial and intellectual property regimes that will govern the flow not only of data, but that of wealth and people. The flow of Indian data and personal information cannot be freely bartered. It must be conditional on an architecture that prioritizes equitable development and economic outcomes.

The final consideration is political. Many argue that data should not be thought of as a resource or commodity at all; rather, it should be regarded as the sole and exclusive property of the individual. Data cannot, after all, be mined in isolation – it is the digital interactions of humans and technologies that produce an infinite supply of raw data. In this, data is entirely dissimilar to natural resources. (That said, some analogies can be drawn: what is the point of conferring property rights to underprivileged Indians if their social and cultural status prevents them from exercising this right?) The human rights implications of data generation and flows certainly necessitate the creation of a new set of legislative and institutional protections for individuals.

Nevertheless, it is hard to imagine that this responsibility belongs to actors other than the state. Silicon Valley cannot wear the mantle of a guarantor of rights, because technology companies are exactly what they are: companies. When these platforms are unresponsive to the concerns of their own sovereigns, the probability that they will devote resources to developing states is low.

Moreover, even if data is thought of as inherent to individuals, the Westphalian order continues to privilege the authority of the state in determining the mobility of individuals and their property.

During the Doha round of WTO negotiations at the turn of the century, there was intense debate about the modalities for labour mobility. Under the proposed GATS regime, fast-track pathways would facilitate the mobility of highly skilled labour, while low and medium-skill workers were left out of the bargain – despite the fact that most developing countries enjoyed a comparative advantage in these categories. As it was then, it is hypocritical for the developed world to pick and choose which individuals, and which ‘parts’ of the individual (read: data) can flow freely.

Despite what the thrust of this piece might suggest, data should flow freely. This is the most optimal outcome for the international community. However, this process cannot occur in isolation. This piece is a provocation to address some of the regulatory impulses that have driven the push for localization. Cross-border data flows are compelling structural changes in the global economy. Unless complimentary and ancillary rules and institutions mature, the benefits of these flows will be distributed unequally, creating new digital divides and national security risks. It would be against India’s national interest to uncritically accede to regimes that mandate free flows of data without accommodating its political, development and security concerns.

This article originally appeared in World Economic Forum

Macron, Brussels and Washington

Because of geopolitical changes, we are living the end of Western hegemony, and the West needs to cooperate with Russia in order to create a new system of confidence and security in Europe, French President Emmanuel Macron said at the meeting with the ambassadors. Macron is not necessarily dissenting with the official positions of Brussels or Washington — he is merely acknowledging a reality that both capitals are aware of. The global balance of power has irreversibly shifted and the transatlantic alliance must adapt to the realities of a multipolar world.

Macron, Brussels, Washington, multipolar, EU, Trump Era, Ukraine, Iran, Russia

Valdai Club: Why does Macron make such statements that seriously dissent with the official positions of Brussels and Washington?

Samir Saran: Macron is not necessarily dissenting with the official positions of Brussels or Washington—he is merely acknowledging a reality that both capitals are aware of. The global balance of power has irreversibly shifted and the transatlantic alliance must adapt to the realities of a multipolar world. On Russia, Macron was signalling that 20th century frameworks and thinking can no longer form the basis of engagement. He is echoing similar voices from other parts of Europe. Finland, which holds the rotating EU presidency, has made similar statements.

As for why he made this comments now—it is clear that the EU is frustrated with the unpredictability of the Trump administration. Macron, who is styling himself as the EU’s leading political figure, was likely firing a shot across the bow so to speak. The Trump administrations response to a world in flux has manifested through unilateral postures and perhaps Macron and the EU are appealing to their primary partner for a more consultative and inclusive political engagement.

VC: Should we expect the policy of the European countries to be more independent from the US?

SS: Despite the friction in the transatlantic alliance, it would not be accurate to say that the EU will adopt policy postures that are detrimental to the US. Rather, it is likely that the EU’s foreign policy will not ape the US’ as it has in the past. Brussels, and the EU’s member states independently, are more likely to assert their own national and supra-national interests in this alliance. In other words, there will be a reconfiguration of decision making processes for the alliance. The US may no longer be able to dictate the foreign policy priorities of the EU.

There will likely be differences on some issues—such as climate change, Iran and on questions of managing the digital economy.

On Russia and China though, it is more likely that Brussels and Washington will strive for common ground. Ultimately, the alliance is bound by a shared history and common political and economic values. The idea of the ‘West’ is still a potent geopolitical construct that neither Europe nor the US will abandon. The depth of their institutional relationship will overcome the temporary Trump factor.

VC : Is it possible to make the relations between the EU and Russia soften?

SS: It may be difficult to predict the future of the EU-Russia relationship, but it is most certainly an imperative for both to develop and enhance their engagement. The acute differences on certain political issues such as Ukraine, Syria and NATO will be difficult to overcome. The challenge for both will be to manage these differences even as they engage on issues that are not affected by divisive propositions.

The future of this relationship will also depend on Moscow’s evaluation of Brussels. In the past, Russia has often played the role of disruptor. There are plenty of opportunities now for co-operation with the EU. Connectivity between Europe and Asia is one such domain. The EU has already unveiled an ambitious strategy for this region. Not only will such a partnership allow Moscow and Europe to find new areas of cooperation, but it will also allow Moscow to ease its dependence on China. Whether Moscow has the political capital to do this remains to be seen.

This interview originally appeared in The Valdai Club

India and Russia share an evergreen relationship of trust and confidence

Indian envoy to Russia, Ambassador D. Bala Venkatesh Varma, discusses Indo-Russia ties and the recently concluded Modi-Putin Summit in Vladivostok. This conversation with ORF President Samir Saran lays special focus on the status of Jammu and Kashmir — after the abrogation of Article 370 — as well as on the Indo-Pacific region. Here is the edited transcript.

Eastern Economic Forum, Russian Far East, India, Russia, Samir Saran, D. Bala. Venkatesh Varma, LEMOA, Article 370, Kashmir, Greater Eurasian Partnership, Valdai Club, International North-South Transport Corridor, INSTC, ROSCOSMOS, ROSOBORONEXPORT

Amb. D. Bala Venkatesh Varma, Indian ambassador to Russia.

Samir Saran: The Joint India-Russia Statement issued at the end of Prime Minister Narendra Modi’s visit to Vladivostok is an extremely comprehensive one. The 81 paragraph statement looks at virtually every aspect of the relationship and reaffirms the commitment of both sides to strengthening ties. What would you consider the most significant aspect of the trip?

Venkatesh Verma: This was Prime Minister Narendra Modi’s first visit to Vladivostok — at the invitation of President Putin to be the chief guest at the 5th Eastern Economic Forum (EEF). The 20th Annual Summit was also held a day prior to the EEF meeting. Since leaders of both countries meet frequently, the most important aspect of the Vladivostok visit was continuation of the conversation between Prime Minister Modi and President Putin on bilateral issues as well as on regional and international affairs. This is a relationship based on trust and confidence and is the guiding spirit of our strategic partnership. The Joint Statement sets out common position for both countries on a range of issues. It also includes key pointers towards an ongoing transformation underway in the India-Russia relationship.

India has historical relations with a number of countries; over time, India has built newer relations with yet more countries. India-Russia relations are unique in terms of a very old relationship, and that is undergoing a fundamental renewal. We are strengthening our roots and at the same time developing new branches. The evergreen nature of India-Russia relations is there for all to see. Prime Minister Modi’s visit to Vladivostok was unlike any other as it combined the strength of history, determined will of our leaders, vision of an economic growth trajectory, and a common determination to grasp emerging geopolitical opportunities. India and Russia are uniquely placed to grasp all these at the same time.

The primary focus of the Eastern Economic Forum, at which Prime Minister Modi was the chief guest, was economic cooperation and opportunities that the Russian Far East offers. Over the last year, both sides have worked towards diversification of this bilateral strategic partnership. PM Modi’s visit to Vladivostok was preceded by the most intensive preparatory phase. In the three months period preceding PM’s visit, two deputy prime ministers from Russia and the Russian Minister of Trade visited New Delhi. So did the director of ROSCOSMOS and the head of ROSOBORONEXPORT. The Indian NSA, External Affairs Minister, Minister of Petroleum & Natural Gas, Minister of State for Defence, Minister of Skill Development visited Russia — joined in by the Chief of Air Staff. Our Commerce & Industry and Railways Minister accompanied by chief ministers of four important States, and 140 strong business delegation, visited Vladivostok in early August to prepare for Prime Minister Modi’s visit in September. It is difficult to find a comparable preparatory exercise in the past.

The primary focus of the Eastern Economic Forum was economic cooperation and opportunities that the Russian Far East offers.

SS: It is repeatedly stressed that the Indo-Russian economic ties are not commensurate with the potentiality of its relationship. The focus of the Joint Statement on economic ties appears to support this contention. How do you think the summit meeting has contributed to giving a qualitative boost to improving the situation?

VV: During the summit, 15 important documents were announced and exchanged at the joint media appearance of Prime Minister Modi and President Putin. In addition, 35 commercial documents were signed by Russian and Indian entities on the sidelines, resulting in 50 documents that are both governmental and commercial in nature. Of these, 12 documents pertain to cooperation in mining, minerals and rare earth, 10 pertain to education, culture, entrepreneurship and innovation and five in the energy sector. We also have cooperation proposals in IT, agriculture, investment funding, timber, healthcare, diamonds, media, chemicals and manpower. If this list is added onto our traditional areas of cooperation with Russia, namely — defence, energy, nuclear and space — the unmistakable emerging picture is one of broad-based diversification.

The Prime Minister announced a credit line of USD 1 billion for Indian businesses to explore and exploit business and commercial opportunities in the Russian Far East. This is a new innovation as per our Lines of Credit policy, as it focuses on one region of a country. In Russia’s case, the Far East, for which this credit line is intended, is two times the size of India. As I mentioned earlier, India has strong historical relationships. We are now evolving new branches that will carry forward our cooperation for the next couple of decades.

SS: An interesting aspect of the Joint Statement is that, for the first time, there is mention of “temporary placement of skilled manpower from India to Far East Russia.” What is the vision behind this? What are the areas in which such a cooperation is likely to take place?

VV: Russia faces a significant manpower shortage. This problem is acute in the Russian Far East. Though Russia generally has a restrictive policy on migration, President Putin responded positively to our Prime Minister’s suggestion that Indian labour, in context of a forward looking migration policy, could contribute positively in developing the Russian Far East, given the excellent examples of how Indian labour has had an impact on other regions of the world. Indian migration will be linked to specific projects of a bilateral nature. There are already good examples with regard to diamond processing in Vladivostok and Yakutia. During EEF, about 10 MoUs were signed in the fields of education and skill development including with India’s National Skill Development Council. Many Indian States are interested in opportunities for skilled youth to find gainful employment in the Russian Far East.

Indian migration will be linked to specific projects of a bilateral nature. There are already good examples with regard to diamond processing in Vladivostok and Yakutia.

SS: The two leaders have devoted considerable time towards cooperation in the energy sector — both hydrocarbon and nuclear. What are the highlights of the agreements in these sectors?

VV: Energy is already a major area of cooperation between India and Russia. Six reactors will be constructed at the Kudankulam nuclear project. Both sides are also in touch with each other regarding a possible second site in the future that will further increase the construction of reactors with Russian assistance. There are other aspects of nuclear fuel cycle, including a ‘third country cooperation’, on which both sides were actively engaged.

In the hydrocarbon sector, there are examples of extremely successful cooperation projects. The 20 year old Sakhalin-1 Investment remains one of the most profitable investments made by India internationally.

During the Vladivostok Summit, there was agreement on a roadmap of cooperation over the next five years in the hydrocarbon sector. It included strengthening LNG exports to India; encouraging Russian companies to participate in gas projects in India; exploring the possibility of Indian companies collaborating in LNG projects, including in Arctic LNG infrastructure projects; cooperation at the university level, among others. Sourcing of coking coal from the Russian Far East is now a major priority.

SS: Connectivity is the new buzzword that carries significant strategic and political significance. How do India and Russia intend to cooperate in this area? For example, how will the two continue with the INSTC in the light of the US sanctions against Iran?

VV: India and Russia remain committed to the International North-South Transport Corridor (INSTC). In March 2019, a coordination meeting held in Tehran agreed on running test run along the corridor to identify bottlenecks between Indian ports and Russian destinations. The next coordination meeting will be held in Azerbaijan in 2020. In terms of connectivity, mention must be made of the Chennai-Vladivostok route which will also be critical to our Act Far East Policy.

Russia plays a very important role with respect to integration processes on the Eurasian landmass in the context of the Greater Eurasian Partnership. We seek integration in the wider region of the Indo-Pacific.

SS: How do these projects contribute to bridging the gap, if any, between Russia’s Eurasian project and India’s Indo-Pacific vision?

VV: We have engaged actively with Russia on our concept of the Indo-Pacific. During his visit to Moscow, External Affairs Minister Dr. Jaishankar spoke at-length at the Valdai Club. Russia plays a very important role with respect to integration processes on the Eurasian landmass in the context of the Greater Eurasian Partnership. We seek integration in the wider region of the Indo-Pacific. As Dr. Jaishankar highlighted, just as India is a strong power in the Indian Ocean with serious interests in the Pacific Ocean, Russia is a strong Pacific power with interests in the Indian Ocean. At the EEF plenary, the Prime Minister highlighted Vladivostok as being the Sangam of Eurasia and the Pacific, opening opportunities for the Arctic and the Northern Sea Route.

If you add the Chennai-Vladivostok route to the overall picture, a natural continuum between Indo-Pacific, the Northern Sea Route and the Eurasian landmass will emerge. Prime Minister’s visit to Vladivostok symbolised India’s determination to be engaged along all points of this geopolitical arch, from Chennai to Yamal, possibly the most significant engagement of this century.

SS: Prior to the summit, there were reports that India and Russia could sign LEMOA type agreement for use of each other’s logistics. But this has not occurred. Is this a sign of some divergence?

VV: Defence ministries of both countries have been discussing a Reciprocal Logistics Agreement, on which considerable progress has been made. We can expect this agreement to be concluded in the near future. It is only a matter of time. This year, the second Tri Service Exercise will be held in India. The IGA on the manufacture of spare parts will be a major boost for the Make in India initiative.

Russia has a policy on Jammu & Kashmir. It views J&K as an integral part of India. It has viewed the abrogation of Article 370 as an integral matter of India — consistent with its constitutional framework.

SS: Have the two leaders been able to bridge the perceived gap in their understandings on Afghanistan?

VV: India and Russia have a long history of consultations on Afghanistan. Both have vital stake for peace and stability of the country. Afghanistan figured in discussions during the visits of the NSA and External Affairs Minister to Moscow, as well as the visit of the Prime Minister to Vladivostok. As in the past, India and Russia are determined to see that their interests are protected with respect to emerging developments in Afghanistan.

SS: Were there discussions on Kashmir and non-state/state sponsored terror?

VV: Russia has a policy on Jammu & Kashmir. It views J&K as an integral part of India. It has viewed the abrogation of Article 370 as an integral matter of India — consistent with its constitutional framework. Russia supports normalisation of relations between India and Pakistan through bilateral dialogue based on the Shimla Agreement and Lahore Declaration. From the visit of EAM to Moscow and the Prime Minister’s visit to Vladivostok, we can say that Russia is beside India on the Kashmir issue.

Kigali Global Dialogue only the beginning of Africa-India engagement

The dialogue was intended to highlight the potential of Africa, especially Rwanda, a country that has made significant socioeconomic and technological improvement, leaving behind a bitter and violent past

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The government of Rwanda, Rwanda Convention Bureau, ORF, and UK-based Centre for New Economic Diplomacy, jointly organized the first Kigali Global Dialogue from July 3 to 5 at a top international hotel in the Rwandan capital.

The ORF played the lead role in holding the first of the dialogues, which will be held in Kigali every year from now on. The dialogue was intended to highlight the potential of Africa, especially Rwanda, a country that has made significant socioeconomic and technological improvement, leaving behind a bitter and violent past.

In an exclusive interview with Dhaka Tribune on the concluding day, ORF President Dr Samir Saran discussed the objectives and achievements of the dialogue.

Now that the dialogue is over, do you think you have achieved what you wanted to achieve? What are the achievements?

Samir Saran: I think this was only the beginning. As I said earlier, the ultimate objective is to create a more sustainable and equitable development architecture—one that is responsive to the interests of emerging economies around the world. This is easier said than done, but I think we have begun to bring together the people and organizations. They can make this happen. We are determined to organise such arenas that give agency to new voices and views around the developing world. It makes conversations richer, plural, and robust.

The agenda of the first ever Kigali Global Dialogue is vast. Could you briefly describe the objectives of the Dialogue?

SS: The agenda was vast because the Kigali Global Dialogue is an ambitious platform that seeks to engage new voices and regions on some of the most important questions of our times. It is an attempt to bring together stakeholders from the developed and developing world, to imagine a new global economic and development architecture shaped by many more stakeholders.

We identified three themes that were central to this: human capital, green energy and sustainability, and technological change and the future of work. These are the processes that will have a disproportionate impact on our development outcomes. We wanted to make sure that our communities are able to shape these trends.

Why did you choose Rwanda to help organize the mega event? What did ORF want to achieve from this dialogue?

SS: Rwanda’s governance propositions are widely hailed as a replicable model for emerging economies around the world. It is recognized as a leader in embracing green energy and technology in its development goals. It has placed people at the core of its political economy, and so it was a natural partner for us. ORF is a curator of conversations—we wanted to provide a platform for new voices, ideas, and solutions, and we are very grateful to our partners in Rwanda, the Government of Rwanda, and the Rwanda Convention Bureau for partnering with us on this important endeavour.

Are India’s engagements and investments in Africa satisfactory? If not, how can things improve? Should India have a long term plan in this regard?

SS: Given the importance of India and Africa to the world, I would say investments are not sufficient. Both need to align actors, investments, and institutions, to strengthen their partnership. More importantly, both should now start seeing each other as natural partners for both economic growth and development of their societies. There needs to be more coordination in shaping economic and development regimes, and the media and think tanks need to engage more deeply with each other. We currently learn of the other from western sources.

There is a perception that India’s growing interest in Africa is to counter China’s formidable presence in the continent. Is there any point to this particular perception?

SS: India and African countries share a history that is as old as modern civilisations. In fact, the first wave of globalisation was sparked by these two regions. More recently, we share solidarity linked to the anti-colonial struggle. China is a new entrant to this old story. I think the Chinese presence in Africa certainly informs the method of India’s engagement, but it is incorrect to think that countering China is the driving factor behind India’s partnership with Africa.

The India-Africa relationship will fundamentally be driven by the search for new economic opportunities and development partnership between their respective communities. It is a unique and privileged partnership.

This interview originally appeared in Dhaka Tribune

Seven plus one: India at the G7

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The latest G7 summit is further evidence that the traditional guarantors of the international liberal order no longer possess the vision or will to sustain it. The divisions among the group’s members runs deep, on issues ranging from trade to climate change to tensions with China, Iran, and Russia. That two successive summits have ended without a joint communiqué suggests that while the G7 remains a gathering of similar, economically consequential states, the group’s politics is deeply fragmented.

“The latest G7 summit is further evidence that the traditional guarantors of the international liberal order no longer possess the vision or will to sustain it.”

While many blame U.S. President Donald J. Trump’s idiosyncrasies for the sorry state of affairs at the G7, he merely represents the new political normal. Consider the surprise invitation by French President Emmanuel Macron to Iranian Foreign Minister Mohammed Javad Zarif, the announcement of a new U.S.-Japanese trade deal , and British Prime Minister Boris Johnson’s statement on his plan to “talk tough” to the European Union. Each underscores the new reality with which the West will have to contend—individual whims now shape the agenda and outcomes. And that reality will outlast the Trump administration.

India’s presence at the G7 as an observer state is an acknowledgement of another dimension of this new reality. There is a growing realization that revamping the post-war order for the twenty-first century requires new torchbearers, especially from Asia and Africa. In this context, there are three salient observations about India’s diplomacy at the G7.

First, while India has traditionally found the European Union a difficult jurisdiction to navigate diplomatically, a better relationship between the two is emerging as a policy priority. Over the past year, Indian officials have visited the region to strengthen strategic ties. This is a new coalition in the making and deserves more attention.

Second, India’s ability to safeguard its core sovereign concerns even as it deepens its partnership with the West is growing. Issues such as trade, Kashmir, and India’s relations with Russia and Iran were all discussed with G7 members. A decade ago, it was more likely that the G7 would have censured India’s policies. That India set the agenda of these conversations, and that these discussions did not result in discordant press releases, suggests that India is leveraging its heft in the international order. Its message on Kashmir was clear: that is a sovereign issue and New Delhi is in control.

Third, Indian Prime Minister Narendra Modi participated in two sessions at the summit, on climate change and digitization, signaling India’s growing willingness to lead on issues that are points of contention for the transatlantic actors.

Ultimately, the G7, like many other steering mechanisms developed in the twentieth century, is struggling to find relevance in a parochial world order marked by so-called “coalitions of convenience.” For now, New Delhi’s presence at the G7 will go down as another milestone in its rise as a “leading power.”

This commentary originally appeared in Council of Councils.

India and major powers: China

To understand India-China relations during the first term of Prime Minister Narendra Modi, it is important to place the bilateral within the larger rubric of rapidly changing political forces at work in Asia. For the past two decades, the so-called “Asian Century” has been defined by the rise of China, and to a lesser extent, India’s economic growth. It was also characterised by cooperation between the two Asian giants in a number of forums, such as the BRICS, and even more recently at the New Development Bank and Asian Infrastructure Investment Bank (AIIB). And even though the border remained a point of friction, China and India were often found defending similar positions in global arenas on issues such as trade and climate change.

Figure 2: AIIB Loans (in USD Millions)

Source: AIIB.

This quasi-camaraderie ended in 2012, when President Xi Jinping proclaimed that the Middle Kingdom was committed to realising the “China Dream”[1]  by mid-century. Since then, Beijing has attempted to globalise its own “internal arrangement” for organising societies based on a mix of political authoritarianism and state-led capitalism. In 2017, President Xi called this “Socialism with Chinese characteristics for a new Era”[2]  and offered it to the world to embrace.

These developments marked an important point of departure for Asia and India. Beijing was now visibly willing to dictate the political, economic and security architecture of the continent—and it had little respect for existing sub-regional groups and balance of power arrangements such as those in South Asia and South East Asia, and extending right up to the European Union. The Belt and Road Initiative (BRI), which seeks to alter extant political geographies and economic models, is China’s most potent tool in this regard.

This expansive geopolitical ambition has naturally given rise to opposition from others. India, as a self-described “leading power,”[3] was the first to vocalise discontent with the BRI—and set the template for the other critics that have emerged since.[4]  From this global pushback against China’s geopolitical ambitions  emerged  a  new  conceptualisation  for  Asia:  “the  Indo-Pacific.” While it was an American construct, India is undoubtedly the lynchpin of this new geography. The framing of this political geography is different from the imagination of the Asian century; this construct is driven not by cooperation, but by contest, conflict and competition.

The past five years of the India-China bilateral have been defined by this one trend: of vacillation between camaraderie in and of the Asian century, to the contest and acrimony in the Indo-Pacific. Consider, for example, the political dynamics of the China-led AIIB. India is the second largest shareholder in this institution that was widely recognised as a juxtaposition between Asia’s rise and America’s diminished influence over the international economic order.[5]

It was also perhaps the strongest indicator of cooperation between India and China. Contrast this with the BRI. China is coopting states in the Indo-Pacific into its broader BRI network to serve its export and national security interests while disregarding the territorial integrity of India and ignoring India’s priorities and vision for Asia.[6]

Similarly, consider India ascension into the Shanghai Cooperation Organization (SCO). The SCO has developed norms that serve as a direct counterpoint to the extant liberal international order. It is an impressive testament  to  how  multipolarity  has  given  rise  to  new  engagements  and propositions. From cyberspace to multilateral trade, the Beijing-led organisation is developing uniquely Asian solutions to political, economic and security imperatives. In 2019, in fact, India joined other members to criticise the US’ aggressive attitude to trade.[7] On the other hand, India is also invested in a revival of the Quadrilateral initiative. A grouping of democracies in the Indo-Pacific, the Quad seeks to preserve a democratic and rules-based order in the region. Like the SCO, the Quad’s cooperation is multifaceted and encompasses infrastructure investment, cyber norms and maritime security cooperation. Only this time, it is China’s mercantilist trade and investment propositions and its maritime coercion that India seeks to respond to.

Figure 3: India-China Trade

Source: WTO

Clearly there are two contradictory forces that drive the bilateral today: the appeal of an Asian Century that seeks to escape the burdens of colonialism, and a contest in the Indo-Pacific to avoid a new form of subjugation. This dynamic was invariably going to produce new friction and ultimately culminated in a skirmish in the Himalayas. The Doklam Standoff in the summer of 2017 marked the nadir in India-China relations and the sharpest decline in bilateral relations between the two powers in over four decades. Fundamentally, the dispute was a struggle to define and then manage Asia.[8]  The stand-off will likely be remembered as a moment when ‘a’ sovereign finally stood up to China’s aggressive attempts to redraw political maps. Beijing is unlikely to either forget or forgive this. It will be naïve to ignore the acrimony, unease, contest and struggle that has defined the relationship between the two countries ever since.

Politically, China has attempted to choke India’s options. Beijing is not being petty when it refuses to allow Masood Azhar’s listing as a global terrorist, or when it objects to the Dalai Lama’s travels in India or refuses to accept India into the Nuclear Suppliers Group (NSG). With these actions, China is being unrelentingly strategic in undermining India’s capacity to influence global and regional political developments.

On the  economic and  trade  front,  the  numbers  tell  an  obvious  story about how China views the relationship with India: as a mere market for its manufactured industrial and consumer goods. China’s mercantilism offers no room for partnership; only dependence. Despite multiple negotiations in which India has indicated its displeasure with the negative balance of trade, the difference has only gotten larger.

On the security front, Beijing has been completely disregarding India’s sovereign concerns in Kashmir by investing in the China Pakistan Economic Corridor. It has also attempted to undermine India’s economic influence around the neighbourhood, most dramatically in the Maldives, Nepal and Sri Lanka even as it sustains its overtures to Bangladesh (See Figure 4).[9] The Middle Kingdom has also been unrelenting with its pressure around Doklam, with satellite imagery suggesting that it maintains a growing security presence in the region.[10]

By exercising diplomatic, economic and military pressure on India within the sub-region, China is positioning itself to unilaterally design the continent’s

Figure 4: India FDI v. China FDI

Sources: Central Bank of Sri Lanka, Bangladesh Bank, and Nepal Rastra Bank

security and political architecture. This vision is at odds with the original conceptualisation of the “Asian Century,” which was fundamentally a story of the rise of a group of countries in the region. Indeed, 21st-century Asia will not be defined by a solidarity of developing countries led by China and India. Instead, it will be defined by Beijing’s attempt to integrate, on its own terms and for its own interests, the Eurasian landmass.

Before India can respond to China with its own propositions, it must acknowledge another set of contradictory forces that drive the relationship: even  while  China  may  apply  tremendous  pressure  on  the  political  and security front, it has also emerged as the largest investor in key areas that are likely to drive India’s economic growth (See Figure 5). As India’s economy moves towards the US$5-trillion mark, both political friction and economic engagement will only increase. In managing this, India will find little help from the North-Atlantic countries—who are themselves struggling to set the terms of engagement with China, both individually and collectively. Italy’s decision to join the BRI and the EU’s inability to decide on the future of 5G infrastructure only drive home the point.[41]

India will have to build its own capacity to resist and counteract China’s political aggression, even as it embraces investments and commercial opportunities. This is certainly easier said than done. However, China in its own emergence has demonstrated the method to do this. For years, it benefited from the American economy and investments even as it pushed back against a US-led world order and its presence in the Western Pacific. This is a template that India must emulate.

Figure 5: Chinese Investments in India (in USD Millions)

Source: China Investment Tracker, American Enterprise Institute.

This will be the government’s most complex task: navigating the disconnect between the opportunities of the Asian Century and the hard realities of the Indo-Pacific. Even as India leverages Chinese investments to fuel its growth, it must offer to Asia and the world an alternative model for development that is based on democracy and a proposition for security based on international rules and institutions. Which conceptualisation eventually characterises Asia will invariably define the contours of the world in the 21st century.

Figure 6: A Timeline of India-China Engagement (2014-’19)

Source: Ministry of External Affairs, India

This article originally appeared in special report Looking Back looking Ahead.

End Notes

[1] “Chinese Dream,” China Daily.

[2] Xiang Bo, “Backgrounder: Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,” Xinhuanet, 17 March 2018.

[3] “IISS Fullerton Lecture by Dr. S. Jaishankar, Foreign Secretary in Singapore,” Ministry of External Affairs, Government of India, 20 July 2015.

[4] “Official Spokesperson’s Response to a Query on Participation of India in OBOR/BRI Forum,” Ministry of External Affairs, Government of India, 13 March 2017.

[5] ANI, “India Is Second Largest Shareholder Of AIIB: Piyush Goyal,” Business- Standard, 24 June 2018.

[6] Samir Saran and Sushant Sareen, “Battle for South Asia 2.0,” ORF, 27 September 2018.

[7] Dipanjan Chaudhury, “India Likely to Join China-Russia Call for New Trading System on SCO Sidelines,” The Economic Times, 10 June 2019.

[8] Samir Saran, “India Sees the Belt and Road Initiative for What It Is: Evidence of China’s Unconcealed Ambition for Hegemony,” ORF, 19 February 2018.

[9] Ashlyn Anderson and Alyssa Ayres, “Economics of Influence: China and India In South Asia,” Council on Foreign Relations, 3 August 2015.

[10] Vinayak Bhat, “Near Doklam, China Is Again Increasing Forces, Building Roads & Even A Possible Heliport,” The Print, 2 April 2019.

[11] Colin Lecher, “Europe Is Worried About 5G Security, But It Isn’t Banning Huawei Yet,” The Verge, 26 March 2019.

The India–US trade dispute and India’s evolving geopolitical role

While the strategic partnership between the United States and India remains robust, some analysts see the relationship as becoming significantly strained if current trade disagreements are not managed properly. To examine the root causes and the potential longer-term consequences of current tensions, and to consider India’s evolving geopolitical strategy, Samir Saran, President, ORF spoke to the World Economic Forum.

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File photo of President Trump And Indian PM Modi at White House

Source: Win McNamee / Getty Images

WEF: How do you see current trade tensions affecting the long-term relationship between the U.S. and India?

Samir Saran: These trade tensions are a manifestation of a bilateral relationship that is maturing in the midst of several interrelated structural transformations in the world order. Two interconnected transformations are particularly relevant to friction in the trade relationship: first, the digitalisation of the global economy and second, the politics of ‘techno-nationalism’.

Around the world, there is disagreement over the governance of data and the role of technology in development and security. Countries are used to conceding sovereign power over the course of decades, through long and hardened negotiations on say, trade and migration.

The explosion of digital platforms has pulled the rug from beneath governments: it has taken away their agency over their populations and businesses overnight

India is no different: one only need look at New Delhi’s gradual embrace of liberal internationalism since 1947. But the explosion of digital platforms has pulled the rug from beneath governments: it has taken away their agency over their populations and businesses overnight.

It would be naive to think that a government of over a billion people will cede the management of its democracy and its all-important services sector to technology companies half way across the world.

This is why data localization, e-commerce, mutual legal assistance, and data protection are the most contested issues between the U.S. and India.

Image: Trade At A Crossroads: A Vision for the US–India Trade Relationship, Atlantic Council

Both countries are routinely termed “natural allies”, but few acknowledge the fact that the maturation of the democratic system in India as well as the expansion of its economy will follow a trajectory different from that of the United States. Rather than viewing ongoing negotiations as part of a process of self-discovery, as it is of self-preservation, the strategic and business communities in the U.S. and India have been talking past each other.

At issue is a fundamental disagreement about how digital technologies will shape our societies. In the United States, there is a firm belief that Silicon Valley can create value in developing economies like India while protecting human rights and cybersecurity.

The Indian perspective is dramatically different. There is a sense that Indian industry and governance propositions must manage the development and deployment of emerging technologies. The assumption that U.S. firms are able to protect the economic rights and civil liberties of Indian users better than its own government has been proven wrong by some recent events and developments.

Image: Trade At A Crossroads: A Vision for the US–India Trade Relationship, Atlantic Council

While both states have done well in keeping these tensions from affecting the broader bilateral relationship, the question of the digital economy will only continue to get larger and more consequential.

It is incumbent on the United States to acknowledge that cross-border data flows cannot be seen as an isolated issue – as they must be discussed in the broader context of national growth and development in the Fourth Industrial Revolution. India, meanwhile, must articulate its policy preferences clearly and quickly – to begin with it must identify sectors and operations in the digital economy where the market can operate without being worried about arbitrary or capricious policies.

There is currently considerable confusion amongst American lawmakers and businesses – as well as stakeholders across the international community – about India’s digital regime. India has dodged the question of data governance at the WTO, at the G20, and at trade negotiations like the Regional Comprehensive Economic Partnership.

The global digital economy will take shape without India if Delhi cannot make up its mind.

WEF: As the United States looks to impose stronger sanctions on Iran, what are the implications for India, Iran’s second-largest consumer of oil?

SS: In failing to exempt India from its sanctions regime, the United States is, unfortunately, pursuing short-term interests over long-term gain. It is essential to understand that energy trade between India and Iran is only one aspect of a far more crucial trend: the gradual merger of the Asian and European continents that is underway and is largely being effected by one player: China. At the moment, Eurasia is being defined primarily by China’s geo-economic thrust through its Belt and Road Initiative and the attendant politics riding on Beijing’s tracks and roads.

The ‘Eurasian’ supercontinent is fast emerging as the second geography influencing the future world order alongside the Indo-Pacific maritime system. Trade, infrastructure, energy, migration and security interests are all at play here and rules and frameworks that emerge will infect the entire global system. India must remain relevant in this emergence and its partnerships with Iran, Russia and others in the region will be crucial.

Different approaches to the digital economy are likely to grow and become more significant.

This interview originally appeared in World Economic Forum