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POLICY
ANALYSIS
India's
Look East Policy
Analytical
perspectives from the political, economic and military lenses
Post-Cold
War, India has an improved interest in South East Asia. India has to compete
against a formidable rival, China, on many fronts. ERIC KOO PENG KUAN analyses
what factors make the Look East Policy important to India, the response of South
East Asia towards India’s new economic engagement, and what advantages India
can gain over China in competing for the attention of South East Asia in
economic co-operation
With the collapse of the Soviet Union at the end of the Cold War, and with the
onset of globalization, nations are beginning to realize that the means to
making wealth is by the securing of international trade and encouragement of
foreign investments. Free market rules following the proven philosophy of mass
capitalization dominate the international political scene over governing
ideology. The 1990s was a period seeing rapid economic development and growth of
Asian countries, especially in South East Asia. South East Asia is a region with
vast economic potential.
And India, a vast sub-continent in South Asia, is a fast emerging economic and
political force to be reckoned with. Thus it is, that the Indian leadership came
up with a concept of ideas called the “Look East Policy” of India, an active
economic policy of engagement with South East Asia to be implemented as an
official initiative in achieving two objectives, the encouragement of trade
links with individual partners and to provide foreign employment for India’s
own expanding work force.
India has an improved interest in South East Asia (SEA). The economy of South
East Asia is a virtually untapped market which is up for grabs by major regional
economic entities such as India, China, Europe or the USA.
Why was there a shift in policy towards South East Asia? Formerly, India, as a
nominal ally of the Soviet Union, became isolated from Asian mainstream affairs.
The military-strategic alliance of Pakistan and China also served as a
repressive policy against India’s national and economic interests, limiting
its options in seeking trading partners in other states.
The only SEA states which had serious ties with India were from the communist
bloc – Vietnam, Laos and Cambodia. During the Cold War, these states were also
impoverished because of years of war and social upheaval. India’s
multi-lateral relations in South East Asia during the Cold War brought little
benefits through serious trade links.
In the meantime, other ASEAN
states had gone forward from ex-colonial backwaters in the Pacific oceanic
region, to becoming rapidly developing societies and eventually, towards the
goal of modern, industrialized states with well developed and sophisticated
economies based on the twin pillars of national prosperity – trade and
industry.
India has missed the bandwagon of opportunity once during the Cold War, by
placing its stakes on the wrong superpower, the Soviet Union, which collapsed
abruptly and unexpectedly in 1991. As a result, India’s economic ties with
South East Asia are loose and the level of inter-state trade remains relatively
low in revenue, such as engaging in relatively insignificant import-export trade
of local Indian consumer products regulated by demand from local Indian
communities in SEA countries.
Deprived of a strong allied nation, it is imperative that India seeks new
markets with which to fuel its own economic growth alongside its own burgeoning
population.
India depends largely on itself on promoting its Look East Policy, having the
need to compete against a great regional rival, China. Having less attractive
pre-set conditions in contrast to China, India’s revenue from Foreign Direct
Investment (FDI), is minuscule compared with China’s FDI. An analysis of what
factors make the Look East Policy important to India, the response of South East
Asia towards India’s economic engagement and of what advantages it can gain as
an edge over China in competing for the attention of South East Asia in economic
co-operation, will be discussed in detail.
Historical
background – origins of policy
From
the 16th to 20th centuries, Indian migrants had voyaged
across the Indian Ocean to the Malay Archipelago as labourers seeking work on
the vast colonial plantations or as traders.
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The origin of the “Look East” policy arose from political consciousness,
focusing primarily on forging mutually beneficial ties between India with South
East Asia and Japan. At the end of World War 2, Prime Minister Jawaharlal Nehru
tried to engage Asia by supporting anti-colonial struggles, advocating pan-Asianism,
and a a new
international order based on not choosing sides during the Cold War. It can also be said that
the “Look East Policy” for India is an indirect expression of wishing to
return to a continuation of India’s historical behaviour.
However, India’s border defeat by China in 1962 became a setback for India’s
foreign policies and was also seen as an unimpressive military and diplomatic
performance
record from the South East Asian perspective. Moreover, India’s
pro-Soviet stand alienated it from SEA, culminating in the Indo-Soviet Treaty of
1971, which earned
India even more distrust.
India also had asymmetry
of trade in Japan and bilateral relations were only at the eliminatory stage.
However, until the 1990s, India was perceived unfavourably by ASEAN and Japan in
general, with negative impressions of a corruption-rife government with a
population yielding generally poor work ethics and sloth, resulting in low
quality products and services. It is a perception which India is determined to
change.
The “Look East” policy has achieved positive
results with improved Indo-Japan relations, transparency measures to demonstrate
non-corruption, and most importantly, India’s inclusion in the ASEAN Regional
Forum (ARF). In fact, this policy becomes increasingly attractive for a variety
of reasons as stated in section 3.
Developing
international events also altered the strategic calculus. The break up of the
Soviet Union after the Cold War made possible the improvement of US-Indo ties,
thereby also leading to favourable conditions to initiate economic encroachment
into South East Asia. Political stabilization of war-torn Afghanistan and
Cambodia also introduced changes in the prioritizing of national interests which
was incidentally, towards India’s favour. As India’s strained ties with the
South East Asian were considered to be with the region as a whole, rather than
with each individual country, the vanishing of Cold-War tensions in the South
East Asian region also made it possible to easily identify and pursue common
goals towards mutual inter-state interest.
India also accelerated its efforts in controlling the diplomatic damage done
shortly after the nuclear tests in 1998, seeking to re-engage with other Asian
countries. India was eventually seen as not truly posing a security threat to
the Asia –Pacific region, and moreover, has the potential in developing as a
serious counter balance against China’s growing influence in the region.
Factors
driving the policy
Pragmatism remains the central key driving India’s Look
East Policy. Several
factors
determine India’s interest in looking at the South East Asian region.
Need
to counter China economically
The
open door policies of China, India’s regional neighbour, during the 1980s had
seen the meteoric rise of an emerging economic giant in Asia, in contrast with
India’s own Fabian socialist policies in India under Nehru’s rule.
China competes with India in the political, economic and military sphere and
most importantly, for economic influence in the region of South East Asia. In
short, India must adopt an economically aggressive stance to compete well with
international market forces at work in the region.
Indian
Prime Minister Manmohan Singh said that he welcomed Foreign Direct
Investment
(FDI) into India, which rakes in only a current US$3 billion as compared to
US$53 billion in FDI to China annually.
India’s FDI barely measures up to 6% of its main rival’s.
Obviously,
there is a need to seek new markets in order for India to grow economically and
to seek a significant way of countering China’s own economic policies.
An
emerging middle class
The
Americans invented the concept of outsourcing, essentially the exploitation of
foreign labour with minimal amount of control, but nevertheless, governed by
motivation for profit. A US software engineer earns US$75,000 per year as
compared to his Indian counterpart, who earns US$20,000 per year in India. 60%
of India’s one billion population is below the age of 30, meaning that a vast
number of educated and talented people formed a huge manpower pool waiting to be
tapped.
Globalization
and the Western media have also brought about influences in
Western tastes and a materialistic lifestyle in a growing middle class in India.
A world wealth report in June 2004 by US brokerage firm Merill Lynch, revealed
that India has 61,000 millionaires, in US dollars.
However, the average Indian earns just US$1.60 per day. Materialism has led to a
disturbing trend in mercenary pursuit of wealth at the expense of traditional,
conservative social values. In a local crackdown in New Delphi, nearly 300 women
from middle class background were arrested for prostitution.
Thus, India seeks new markets to export its restless workforce. An ignoring of
changing trends however, could well lead to serious social problems for the
government of India.
Containment
from West and Central Asia
India’s
long dispute with Pakistan over the Jammu and Kashmir region has caused long
standing hostile bilateral ties between these two states. China, as Pakistan’s
ally and a potential economic rival, would sensibly pursue policies that either
not promote or even hinder India’s economic progress and interests.
Although
India also possesses business interests and provides foreign labour to the
Middle East, geo-political instability and the constant threat of terrorism
meant that there can be no serious undertaking of worthwhile financial
investment in Middle Eastern countries. As a consequence, India remains hemmed
in and severed from mainstream Asian affairs on either the western or northern
direction. The only remaining alternative of potential development is to look
eastwards towards the South East Asian region.
Despite having periodic irritants and
economic disruptions such as occasional terrorist or militant attacks, as in the
case of the Philippines, Indonesia and Thailand, the threat level remains well
contained and pose no danger of regime change to SEA state governments.
Moreover, such attacks are usually restricted to only localised areas, such as
Mindanao Province in the Philippines, Aceh Province in Indonesia, and the
southern border region in Thailand and Malaysia. South East Asian (SEA) state
governments also take an active interest in combating terrorism as well as
welcoming foreign expertise in augmenting their own local work forces.
In contrast to the Middle East, the economies of SEA countries have also been
progressing by leaps and bounds. SEA countries remain an attractive option for
India in seeking greener pastures overseas.
Response
of South East Asia and how it regards India
In
a speech made at Harvard University, Indian External Affairs Minister Yashwant
Sinha pointed out that formerly, India’s engagement with SEA was based on an
idealistic perception of Asian brotherhood, a shared colonial history and
cultural ties.
However,
modern regional dynamics dictate that the progress of SEA is also motivated just
as much by trade, investment and production.
The
truth is that Asia’s other large regional player, China, has much better
pre-set conditions conducive for economic investments and developments
attractive to SEA investors. This includes a larger, educated work force in
quantitative terms, cheaper material resources in abundance and a relatively
stable governance free from any significant external or internal security
threat. The simple fact of consumer behaviour gravitating towards a better
choice in terms of cost and quality ensures that SEA turns first to China for
trade and investment rather than other countries.
However, one major weakness exists for China. Its long history of socialist rule
results in a tightly controlled state with little room for political maneuvering
or reform. This meant that China is a state that plays by its own rules and is
not answerable to non-state players like foreign investors. Foreign investors
must adapt to local conditions instead of expecting adherence to international
law and trade conduct.
India,
in contrast, having less to offer in tangible terms like manpower costs and
resource abundance, however, enjoys the reputation of being a democracy which
respects consumer rights and international law governing trade and foreign
investments. Also, India’s long standing recognition of English as the
official language breaks down language and cultural barriers in trade
communications, and in theory, accelerates business procedures. This is the
advantage that India’s Look East Policy has over China, and should be
exploited to the full to gain an edge.
China has, in truth, a less than savory
reputation in its foreign relations with its neighbours with regards in pursuing
its own economic interests. It deals from a position of strength with regional
partners, and usually ends with the latter having to compromise with a lesser
share of the cake. Two clear examples were its past records of the Suzhou
Project with Singapore, and the occupation of the Spratly Islands. India,
however, starts with a clean slate in terms of economic co-operation with
regional partners, putting it in a favourable position to win and maintain trust
with its partners.
Thus it is very much up to India’s present leaders how they wish to promote
the “Look East” policy and market the virtues and advantages of having
bi-lateral economic ties with their nation.
Fear
in a growing regional hegemony: the race to project naval power in South East
Asian waters
The present status quo, with USA as the recognized
unilateral superpower ensures relatively little foreign military activity for
both India and China. China’s sole security concerns are the re-taking and
political integration of Taiwan with its historical claim as being part of its
traditional territory. India’s dispute over the Jammu and Kashmir dictates
that much military manpower and resources must be dedicated to this troubled
province. Significant ground forces are also currently deployed to guard its
twin frontiers against Pakistan and China.
In
naval projection of power, once again China is assessed as holding an upper
hand. China has been building up its naval capabilities for decades in
anticipation of a naval crisis in the Taiwan Straits. It has three fleets –
North Sea Fleet, East Sea Fleet, and South Sea Fleet, comprising a total of 888
ships by 2005 that can be easily brought to bear anywhere in the Pacific oceanic
region.
Aside from its own coastal naval bases, the People’s Liberation Navy also
occupies and have naval facilities in several convenient and strategic island
bases in SEA waters, such as Hainan Island and the Spratly Islands which may act
as springboards to easily dominate and control sea lanes from South East Asia to
the coasts of China, should the Chinese leadership chooses to adopt such a
policy.
In contrast, India’s navy of 145 ships of various classes is designed to
mainly
balance
against Pakistan’s naval assets.
Its awkward proximity of its naval bases on both east and west coasts of the
Indian sub-continent meant that attempts to control sea lanes in South East Asia
is difficult at best, with the Straits of Malacca making only one possible
strategic zone. However, ships may still bypass this narrow sea
zone easily on voyages from the Middle East and beyond to South East Asia. In
conceiving a strategy for possible Indian naval projection of power, it is
necessary that India secures an ally such as Indonesia, Singapore or Australia
for assess to naval bases in the region for convenient deployment of naval
ships.
Moreover,
states in SEA react poorly to other international players interfering in what
they view as internal SEA regional politics. For example, the Straits of Malacca
waterway, an important SEA sea-lane, is constantly patrolled by a cumbersome
arrangement of naval assets from three regional navies – Singapore, Malaysia,
and Indonesia. Media makes the most of what apparently is an optimistic
arrangement without a past precedent – a naval co-operation of three states in
the operational sense. But in practice, joint patrolling may give rise to
unexpected contingencies and problems as compared to if the sea lane is under
direct control of a single powerful entity.
Onus with
new leaders
The
onus of driving the “Look East Policy” of India, of course, lies in the new
generation of India’s leaders, since Prime Minister Manmohan Singh took office
in 2004.
Domestic
developments, such as an emerging middle class, dictates pragmatism in getting
India to play the game of international trade and economics with free market
rules. Unlike China, which enjoys a number of economic and military advantages
over India in tangible and quantitative terms, India cannot rely on FDIs as a
springboard toward achieving a well developed economy thriving on service
sectors and tertiary industries. As such, it is necessary it looks to other
intangible factors to form a niche for itself to offset the regional
competition. Its main advantage over China, its regional rival, lies in its
official recognition and use of English , the language of international trade
and technology and its relatively clean slate of records in economic
co-operation with South East Asia.
Currently,
SEA’s attention remains focused on China for potential economic development.
Relatively free trade and large-scale investments are still currently taking
place, bringing mutual benefits for both investors and China itself. Historical
experience, however, has shown that China will eventually wish to take its
historical place of dominance in Asia, and also the full control of its economic
destiny in the manner of a huge empire-like state. Simultaneously, China will
wish to restore bilateral relations with other Asian states in mutually
beneficial but unequal trade and economic status just like the historical
tributary states in pre-modern times.
Already,
China’s open intentions of preventing Taiwan from declaring independence were
obviously backed by threats of use of force if necessary. Frequent saber
rattling across the Taiwan Straits are putting unnecessary strains on the
region’s interstate trade dynamics and causing fluctuations in the regional
stock markets.
India’s
advantage over China lies in the fact of its abstinence from exhibiting
ambitions toward a regional hegemony, making it less threatening to states in
the SEA region. Should other nations in SEA discover that, in a future scenario,
options of trade and investments with China become unfeasible, countries in SEA
naturally will then turn towards the next obvious and available option ---
India.
It
is thus sensible that India prepares its own local economic infrastructure
toward supporting the “Look East Policy” in anticipation for such a
potential development in future.
REFERENCES
Books
consulted:
Adams,
Jad, Whitehead, Phillip, The Dynasty ---- The Nehru-Gandhi Story
(England: Penguin Books, 1997)
Alam,
Aftab, ed., Pakistan’s Fourth Military Coup (India: Raj Publications,
2001)
Chari,
P.R. e.d. India
– Towards Millennium
(New Delhi: Replika Press Pvt. Ltd, 1998)
Hoffmann,
Steven A., India
and the China Crisis
(United States of America: University of California Press, 1990)
Kamra,
Sukeshi, Bearing
witness – Partition, independence, End of the Raj (Canada: University of Calgary Press, 2002)
Khilnani,
Sunil, The
Idea of India (USA:
Hmiah Hamilton Ltd., 1999)
Lintner,
Bertil, Blood
Brothers – Crime, Business and Politics in Asia (Australia: South Wind Production, 2002)
Ludden,
David, ed., Reading Subaltern Studies – Critical History, Contested meaning
and the Globilisation of South Asia (London: Anthem Press, 2002)
Metcalf,
Barbara., Metcalf, Thomas. R., A
concise history of India (United Kingdom:Cambridge University Press, 2002)
Mehta,
Ved, Rajiv
Gandhi and Rama’s Kingdom
(United States of America: Yale University Press, 1994)
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Maroof, e.d. Generals
and governments in India and Pakistan (India: Har-anand Publications Pte. Ltd., 2001)
Sarda,
Har Bilas, Hindu
Superiority
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Shekhar,
Chandra, Lt. Gen, Arming
the Defence Forces, procurement and production policies
(India:
Manas Publications, 2004)
Singh.K.R.,
Navies
of South Asia
(India: Institute for Defence Studies and Analysis, 2002)
Stern,
Robert. W., Changing
India (Great Britain: Cambridge University Press, 1993)
Watson,
Francis, India
– A Concise History
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Varma,
Pavan, K., Being
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2004)
Documents consulted:
India’s
“Look East” Policy – Changing the Asian Strategic perspective.
Newspapers / News
websites consulted:
The
Straits Times, Asia Times Online
Analysis based on consulting Singh.K.R., Navies
of South Asia (India:
Institute for Defence Studies and Analysis, 2002)
The writer is a freelance writer who holds
a Master of Science in Strategic Studies from the Institute of Defense and
Strategic Studies (IDSS). He currently writes commentaries and analysis
articles on international affairs, security issues and terrorism for
newspapers.
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