Tyranny of the timid

Political objectives and strategic realities can provide the impetus to India's economic diplomacy towards ASEAN.

P.S. SURYANARAYANA in Singapore

IT may look odd that politics should be seen as the best means to drive economic diplomacy between India and the Association of South East Asian Nations (ASEAN). Indeed, conventional wisdom in the current post-Cold War politics is that robust economic relations may help create a suitable climate for the resolution of political disputes even between adversarial nations. However, India cannot afford to lose sight of the big picture of politics in the Greater East Asia region. A timely economic pact with ASEAN can help New Delhi stave off the risk of getting marginalised by the major powers in this region.

China is a dominant economic and political player in East Asia, a geopolitical arena of undisputed relevance to the future course of inter-state relations in all aspects across the world. China is currently the largest trading partner of Japan, another key player in the region and a long-time military ally of the U.S., which is among the other main players in East Asia, along with South Korea and Australia. It is in this milieu that ASEAN, which was founded on the principle of unity in diversity in order to co-exist with big powers such as China and Japan, is in a position to set the terms for the collective entity's economic diplomacy towards India.

Efforts are on to reconvene the ASEAN-India Trade Negotiating Committee in order to try and finalise an accord on goods, as different from services and investments, by the July deadline that was set in January by the political leadership on either side. Senior officials have held crisis-busting talks since January and have felt that it is worthwhile to conclude sooner rather than later a free trade agreement (FTA) on goods. India and ASEAN have been in talks on this issue for a few years.

In a sense, the regional bloc has hustled India. ASEAN is known to have always tried to hold its own against the major states, despite its weakness as a collective entity of much diversity and relatively powerless members. The grouping often revels in what can be seen as the tyranny of the timid, knowing full well that the major powers, each an external player in relation to South-East Asia as a sub-region, cannot ignore the collective will of these less powerful countries, which nonetheless occupy a strategic maritime zone of importance to the "global order" or the lack of it at any given time.

For ASEAN, India is not in the same league as China, which was at one time "feared" by some members of this group. In a larger political sense, ASEAN began a purposeful engagement with India after it began its "economic liberalisation" in the early 1990s. While not all the 10 ASEAN members were equally enthused by the prospect of drawing an external player like India to the South-East Asian scene, some among them did calculate that New Delhi could be of geopolitical use to the forum.

It requires no clairvoyance to recognise that some ASEAN members had, in the early 1990s itself, begun to see India as a potential power that might want to checkmate China in the Greater East Asian region. By the time New Delhi and ASEAN decided to launch the FTA negotiations over three years ago, India's stature as an emerging political power with much economic potential as well had only grown in the region's perspective.

In ASEAN's subtle calculus of power play, there is, of course, no demon among the external players. The history of sometimes strained and often unsettled equations among these players - China and the U.S., Japan and China, besides New Delhi and Beijing - has gradually strengthened ASEAN's desire to engage all of them in more or less equal measure over time.

In more recent years, ASEAN has started looking upon Russia, a Eurasian power, too as a potential player of importance. In so seeking to engage these external players, ASEAN does not, of course, concede that it is willingly, or perhaps unwittingly, trying to play off one or more major powers against the other(s) in the Great East Asian theatre. The basic thesis by this regional bloc is that durable peace and stability in Greater East Asia can be ensured only through a balance of interests, as somewhat different from a balance of power, among these major external players.

ASEAN has accordingly positioned itself in "the driver's seat" to form a cluster of fora that could address various issues of direct relevance to the stability and prosperity of the Greater East Asian region. Unsurprisingly, therefore, ASEAN's "outreach" has extended towards not only Japan and China in the early stages of the group's existence, but also the U.S. and India later on, and thereafter towards Australia and Russia, in that order.

Arguably, Australia first figured on ASEAN's political radar at about the time when South-East Asia "re-discovered" India as an ancient cultural force with a new political relevance to Greater East Asia. However, for this very same reason, India is ahead of Australia in ASEAN's informal list of major powers. India's growing profile as a major maritime power of the military kind is of particular importance to ASEAN, whose geopolitical space is defined by sea lanes of critical value to global trade.

Yet, if India has found the going tough in negotiating a trade pact with ASEAN, the reason has much to do with the asymmetry between the two in political and economic terms. Unstated though is the regional bloc's sense of propriety about having offered India a wider geopolitical space for the future.

India is often seen across Greater East Asia as a sophisticated player with the potential to match the best among the major powers over time, but its economic profile is viewed as something far less promising in scope. As seen from the ASEAN standpoint, Japan, the world's second largest economy after the U.S., and China, a byword for phenomenal macro-level economic growth, continue to tower massively over India. For reasons of proximate location and economic vibrancy, South Korea, too, is seen to be more important than India at this stage.

India finds itself swimming along such cross-currents of economic realities of direct interest to ASEAN. ASEAN Secretary-General Ong Keng Yong told Frontline that there is much more to the regional bloc's ties with India than just the proposed FTA. The plus factor in his reading relates to the dynamism of India's services sector and the perceived potential of India to rise to the status of a global power. At the same time, Ong emphasised that ASEAN no longer regarded India as a secondary economy and China as the best economy for the purposes of the group.

While Ong's articulation of the ASEAN position is suffused with political wisdom that might benefit the regional bloc, he is not oblivious to the hurdles for an FTA.

The ASEAN leaders have emphasised the need for "a strategic approach" of looking at the big picture in Greater East Asia so that the FTA could then be clinched. For the regional outfit, the primary negotiating line is that New Delhi can and should make big tariff-related gestures in regard to products like, for instance, palm oil, which "India itself does not produce in any substantial quantity". The ASEAN refrain, unstated openly, is that India can hope to make political and strategic gains in Greater East Asia on the foundations of such an economic pact.

Some Indian opinion-makers share this view. Official India, too, is not unaware of the possibility of a strategic trade-off, as it were, in regard to the proposed FTA. New Delhi, however, is looking at the possibility that Chinese products could inundate the Indian market through the track of liberalised tariff on "ASEAN-made products".

The concerns relate to the proposals for liberalised "rules of origin". The worry is that any major concession with regard to the "value addition" by ASEAN countries might enable these players to process Chinese-origin products suitably and export them to India. China would then be the unintended beneficiary of the Indian gesture towards ASEAN. So runs the argument behind the scenes.

However, China is no stranger to the Indian marketplace. New Delhi and Beijing have also recognised the importance of a vibrant bilateral economic agenda. ASEAN tends to think that its proposed FTA with India need not, therefore, be held hostage to the economic gamesmanship, if any, between New Delhi and Beijing.

Authoritative Chinese sources told this correspondent that Beijing, too, faced the complicating issue of a huge asymmetry between China on the one side as an economic powerhouse and geopolitical player and ASEAN on the other as a negotiator with no comparable profile. China is understood to have "accommodated" ASEAN on the FTA issue by looking at it under the prism of the larger strategic picture relating to Greater East Asia. Some critics point out, though, that China's political system is more amenable than India's to hard negotiations with parties on a plane of asymmetry.

In an alternative viewpoint, China's "insider experts" such as Cai Bingkui emphasise that the country's diplomacy, in the development context, has a key component of "confidence-building measures" with regard to neighbours. This is an aspect that India can usefully study.

Prime Minister Manmohan Singh's proposal for the long-term creation of an "Asian Economic Community", with Greater East Asia as also India as the nucleus, has been received well in ASEAN circles. And the planned ASEAN-India FTA is being seen in South-East Asia as a test of New Delhi's political will to attain this objective.

In the larger political and strategic perspective, the success of India's economic diplomacy will depend on how well New Delhi navigates through a tough terrain in order to establish a niche role for itself in Greater East Asia. There are subtle moves, initiated by friends of Washington, to draw New Delhi into a possible concert of democracies, perhaps just an informal one for a start, in this region. The idea is that India, the U.S., Japan and Australia are the ideal candidates. India's response will be watched by ASEAN.