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Australia and the Asia-Pacific R. James Ferguson © 2004

Lecture 10:

South Asia and the Indian Ocean: Cooperation or Institutionalised Conflict?

Topics: -

1. The Significance of India 2. The Tangled Web of South Asian Affairs 3. India’s Regional and Global Role 4. IOR-ARC: Slow Ground-Work or Stalled Regionalism? 5. India as a Key Player in the Asia-Pacific Region 6. Resources and Further Reading

1. The Significance of India

There will not be time in this subject give due credence to all the countries of South Asia. For reasons of time, we will focus on India and its regional impact on South Asia and the wider Asia-Pacific. India remains a great seminal civilisation, representing one of the great continuities in Asia, a source of three of the world’s great religions (Hinduism, Jainism, Buddhism), and a major influence on Southeast Asian art, culture and literature for the last 2,000 years. India and China, mutually, were the great external influences on Southeast Asian kingdoms down to the 18th century (indigenous civilisations were also diverse and culturally rich), and formed part of an extended trade network which reached from eastern Africa to Japan (see Chaudhuri 1990). These Indian travellers brought with them the great religions (Hinduism, Buddhism, and along with Arabic traders, Islam, often in the more eclectic version of Islamic Sufism). This traditional impact can be seen in the Hinduism of Bali, the great architectural temples of central Java, and in the role of the Hindu epic myths, the Ramayana and the Mahabharata, in shaping Malay dance, shadow theatre (Wayang Kulit) and story-telling. Brahmanism was the first Indian religion to flourish in Java - it was followed in the 5th century by Buddhism (Saksena 1986, p160). Some of these cultural ties have been partially redeveloped since the 1950s, with numerous exchanges of cultural delegations, and dance and puppet troops, though India has to be careful to avoid any sense of cultural imperialism (Saksena 1986, pp166-7).

In modern times, India, like China, was the source of a diaspora of traders and immigrants who spread out into the Indo-Pacific and the world. Overseas Indians (sometimes called Non-Resident Indians, NRIs) are found in Malaysia (comprising 8- 9% of the population), Singapore (comprising 7%), Burma, Hong Kong, and as far afield as Fiji, Australia, east Africa and South Africa, with small groups found in Indonesia and Thailand. A small but active Indian population is also found in the United States, Europe and Australia (Gordon 1993, pp98-9), and form part of an ‘intellectual’ export in many professions as well as scientists, academics and IT experts. Elsewhere Indians have been labourers, farmers, and merchants, e.g. in parts

1 of Southeast Asia and Fiji. Most of these groups, of course, like the Chinese diaspora, are second, third or fourth generation residents, and wish to view themselves as nationals of Malaysia or Singapore etc. (Suryanarayan 1995, p1207). Certain comparisons can be drawn with 'overseas' Chinese. The Chinese diaspora has been a source of massive reinvestment back into China, with an estimated $44 billion of foreign capital invested between 1970 and 1993 (Suryanarayan 1995, p1219). Comparatively, investment back into India by Overseas Indians has been very small, though government programmes in the 1990s have tried to attract this capital into the country (‘FDI approvals’ increased from around around $384 million during the late- 1980s to approximately $3 billion during the late 1990s, see Balasubramanyam & Mahambare 2003). At the same time, it must be remembered that, excluding Hong Kong and Taiwan, there were in the early 1990s at least 26 million overseas Chinese in Southeast Asia, while there are only several million Indians in the same region (Suryanarayan 1995, p1221). Likewise, there are some cultural factors for these differences: -

But India too has its Diaspora, why have they not sought to invest in India? The differing composition of the ethnic Chinese and Indian Diasporas provides one reason for the differences in the volume of FDI from them. Although there are no precise data on the exact size and composition of the ethnic Chinese and Indian Diaspora, evidence suggests that, whilst the Indian Diaspora is located mostly in the United States, the United Kingdom and other western countries, the Chinese Diaspora is mostly located in East Asia. And while the Indian Diaspora, especially so in the United States, mostly belongs to such professions as education, health services, science and engineering, the Chinese Diaspora is much more business oriented. The opening up of China to trade and FDI appears to have provided the Chinese Diaspora an opportunity to extend and or shift its business interests to China and take advantage of relatively low cost labour and land in China. The Indian Diaspora with its lack of business interests has for long opted for the portfolio variety of investment, principally bank deposits. The sudden withdrawal of such investments was one of the proximate causes for the economic crisis India experienced in 1991. The one notable exception here is the participation of India's Diaspora in the Silicon Valley and the spectacular growth of India's export-oriented software industry. The Indian software engineers and entrepreneurs in the Silicon Valley appear to have successfully utilized India's endowments of highly trained but relatively cheap engineering talent (Balasubramanyam & Mahambare 2003).

Alongside these traditional influences lies the reality of India as a significant nation in world affairs and especially in the Indo-Pacific region (see lecture 1). India (the Republic of India (Hindi Bharat), which received its independence from Britain in 1947, emerged as a poor nation greatly in need of economic and industrial development. In general terms, India has made massive strides in increasing food and industrial production. However, though poverty has been reduced, some 36% of the population still lives in extreme poverty, defined in terms of minimum calorific intake, therefore suggesting the metaphor of the half-full, half-empty glass in developmental terms (Kumar 1999). With a population growth rate of 2.1% and a population of now over 1.06 billion, these problems remain pressing, especially in supplying meaningful jobs for all levels of society (Gordon 1993, p40; DFAT 2004). One of the main aims of Indian policy has always been not just to increase GDP and GNP, but also to ensure through various welfare policies that economic growth lifts the everyday quality of life of Indians from sub-human conditions (Arora 1996a, pp1546-7).

2 Indian communities form a vigorous part of many Asian and western societies (Little India, Singapore)1

This is a crucial component of political stability for India, not an option. In India there is a widespread recognition that poverty exacerbates existing social, religious, ethnic and class tensions, and that environmental sustainability has to be linked to human development. The reduction of the suffering of the poor was a key element in the political and intellectual construction of the modern Indian state, and was emphasised by both former Prime Minister Nehru and Mahatma Gandhi as a true measure of independence and legitimacy (Kumar 1999). In spite of strong political consensus on the need to eradicate poverty, its gradual alleviation has been exacerbated by the growing gap between expectations and the limited delivery by governments of an improved quality of life to all sectors of the population, especially among the young (Singh 1994; Kumar 1999). Further serious reduction of poverty in India, as suggested by Government policy, will require annual growth of 6% GDP (sustained over a decade), combined with deepened provision of minimum services (water, health care, education, public housing assistance, food security, road infrastructure), and special attention to poor and 'socially disadvantaged groups' (Kumar 1999). Through 2003-2004 growth rates of 8.1 and 7.3% indicate that this is not impossible (DFAT 2004), depending on international trade flows.

At the same time, the potential of India must be grasped. It is the second most populous nation on earth, has control of most of an entire subcontinent with substantial agricultural and economic resources, and had a quite substantial education and transport infrastructure (largely developed in its modern form on the basis left by the British), and is now developing selected areas of high technology and research (computing, nuclear and missile technology, plus new areas of research in medicine and pharmaceuticals). India also has enormous problems - a large poor population with a relatively high growth rate, vulnerability to seasonal rains, fluctuating patterns of poverty and vulnerability, plus ongoing religious and social conflicts. Yet these negative images should not be taken as a permanent condition. Indian agriculture

1 Photo copyright, R. James Ferguson 1999.

3 has enormous potential - 57.15% of its land is arable, compared to 10% for China (Arora 1996a, p1550) - yet China supports a larger population. Here China's agricultural policies, which started their modernisations in the countryside, are seen as generally more effective than the Indian approach (Wang Hongyu 1995, p551), though India has now become largely self-reliant in food production. India's further steps in its 'green revolution' (use of irrigation, balanced use of farm inputs such as seeds, fertilisers and agricultural credit) could make use of some of China's experience, while trying to limit negative environmental impact (Wang Hongyu 1995, p552; Gordon 1993, p39; Ramachandran 1996). Likewise, there are considerable mineral resources in India (especially coal and iron), and India has about 40% energy self-sufficiency (Dobbs-Higginson 1993, p173) though certain imports, including oil, are essential. This reliance imported oil and gas has led to a new phase of 'energy diplomacy' whereby India has sought to improve its relations with Persian Gulf countries including Iran (Alam 2000). Likewise, there may be future prospects for China-India cooperation in gaining access to Central Asian resources, especially after a new round of improving economic relations between the two countries through 2003-2004 (Vatikiotis & Hiebert 2004).

India (Map courtesy of PCL Map Library)

4 The other resource is India's population. A growing ‘middle class’ (estimated anywhere between 12% and 40% of the population, 100 to 350 million, Dobbs- Higginson 1993, p174, p178) with disposable cash for commodities has meant that business groups around the world are wondering whether there can be an Indian- miracle, just as there was an economic miracle in East Asia. It is this class that also provides the main investment and capital saving source within the country (Dobbs- Higginson 1993, p178). Here comparisons are often made with China, which has experienced much higher economic growth and foreign investment during the 1980s and 1990s (Arora 1996a, p1572). China, of course, began its economic reforms earlier (1978 verses 1992), but both countries are still striving to integrate themselves further into the world economy (Arora 1996a, p1545). However, there is no guarantee that the middle class can continuously expand in countries such as India, which may wish to bypass the kind of 'destiny' suggested by demographic transition (Rogers et al. 1997, p47). The 'consuming class' may comprise only 150 million, with only some 6 million with the sustained interest and wealth for expensive foreign brand-named goods (see Tharoor 1998 pp280-282; For high projections as a neo-colonial desire to open Indian markets, see Rayan 2000). Yet, India has some distinct advantages in global terms. For example, the main business and nation-wide language in use is English (though there are seventeen official state languages in India, plus hundreds of dialects, Dobbs-Higginson 1993, p175), and a large segment of India is educated to a high standard in a system rather similar to Britain’s (for the need to further bolster primary education to maintain social reform, see Datta-Ray 1998).

This has resulted in a relatively high technical and scientific research base, which has since 1947 managed to build a large Indian indigenous industrial capability, and to develop weapons systems including tanks, attack helicopters, a light combat aircraft, a range of short and medium range missiles, and a strong nuclear industry. It has developed its own weather and telecommunications satellites, and India plans by the year 2006 to land an unmanned vehicle on the moon. Indian technology can provide most of its own telecommunication systems (Dobbs-Higginson 1993, p184). India has since moved in a major role in programming and software development, as well as beginning to explore a role in cost-effective research and development centres for medicine and other high technology areas, a move supported by the Indian government through 2002-2004 (see Bagla 2003).

India in the past had followed a somewhat socialist and government-guided economic path, especially under the early leadership of Jawaharlal Nehru, who looked to the Soviet Union to some extent as an economic model (Dobbs-Higginson 1993, p181; Arora 1996a, pp1548-9). Yet India also has a strong trading and entrepreneurial tradition, has established stock exchanges, a strong legal and accounting system (Yahya 1995, p36; Dobbs-Higginson 1993, p174, p197), and even under the early protected economy, a group of important businessmen grew rich 'behind the shelter of the world's highest trade barriers' (Dobbs-Higginson 1993, p181). Its economy can now be described as market oriented mixed economy (Arora 1996a, p1549), with a trajectory towards a more open market.

India has also been able to retain a formal democratic structure, both at state and national level, in spite of a range of problems ranging from literacy through to corruption and dispersed political violence. There are both advantages and disadvantages in India's democratic tradition: -

5 India, no doubt, is better recognised as far as its political, legal and judicial institutions and their democratic strengths are concerned; but India has always been slow in adapting to changes unlike China which has been quick in learning from past mistakes and adopting changes compatible to future needs. There is no doubt that the democratic institutions, the Press, the Opposition parties provide checks and balances by compelling the government in power to modify the ongoing plans to formulate new people-oriented policies and take preventive measures whenever required, but the role played by disciplined leadership possessing an ideology capable of mobilising people - workers, peasants and intellectuals - in the nation's restructuring and economic modernisation can also not be ignored. How these two aspects are reconciled would probably determine the course of further progress in both China and India (Arora 1996a, p1574)

India from 1947 was an independent voice in world affairs. Beginning in a period when India lacked the wealth and ability to arm itself, Indian leaders turned to diplomacy to help ensure their country's security (Saksena 1986, p19). Abutted by China to the north, and having a somewhat socialist orientation under Nehru, India opted for neutrality and then non-alignment, refusing to enter the bipolar contest between the superpowers in the Cold War. In spite of some serious courting by the US, India, though a democracy, resisted the temptation to enter the fold of the anti- communist US alliance which ringed the USSR, China, North Vietnam and North Korea. This stance meant that India emerged as one of the main leaders of the Non- Aligned Movement (NAM), nations mainly in the third world which refused to enter into the networks of the first or second worlds (i.e. the West and the Communist block). Alongside Egypt and Indonesia, India sought to influence these nations to promote an independent path to development, and to reduce global tensions.

The main aims of India's non-aligned aspirations can be summarised as: -

(a) the pursuit of peace, not through alignment with any major power or group of powers, but through an independent approach to each international dispute or conflict situation; (b) liberation of the people still under colonial rule; (c) the maintenance of freedom, both national and individual; (d) the elimination of racial discrimination; and (e) the elimination of hunger, disease and ignorance which affect the greater part of the world's population; and (f) economic development through international cooperation. (Saksena 1986, p20)

Yet this pacific and totally non-aligned role could not be fully maintained during the heights of the Cold War. This was largely due to India's strategic position. To her north, India had borders with a nuclear-armed Communist China, and even Tibet, taken over by Chinese forces in stages between 1950 and 1959, represented an armed Chinese presence to her north. India was forced to accept the reality of China's control of Tibet, though Nehru had some sympathy for the exiled Tibetans and for the Dali Lama's position (see Tenzin Gyatso 1990). By 1970s, the diplomatic relations with China improved, and ambassadorial relations were resumed in 1981 (Wang Hongyu 1995, p546). In fact, activist Tibetans and Tibetan sympathisers formed one remaining irritant in Indian-Chinese relations in the 1990s (see the 'official line' expressed in Wang Hongyu 1995, pp553-4), though these tensions have been reduced through 2003-2004 (Vatikiotis & Hiebert 2004, p12). India and China did engage in a short sharp border war in 1962 concerning China's need to build a strategic road into Tibet through territory controlled by India. In the long run, India had to develop special

6 relations with first the Soviet Union/Russia, and then increasingly with the U.S. (2000-2004), to secure her domestic and international goals (see below).

Yet for India, one key problem was the Chinese support for Pakistan. Some tensions have returned in the India-China relationship with the nuclear tests made by India in 1998, with a tense exchange of critical comments on both sides (see Malik 1998, pp204-205). From 2001, as India modernises and improves its armed forces, it is still concerned about possible 'containment' to its north, with China having strong influence in Pakistan and Burma (see further below).

2. The Tangled Web of South Asian Affairs

India's central political problems were caused by the partition in 1947 of the Indian sub-continent between a Muslim Pakistan and a mainly Hindu India. During that time, some 10 million people moved and were resettled (Saksena 1986, p18), while rioting and conflict led to the death of some 500,000. Yet sizeable religious minorities remained in both the new countries. Pakistan was the new and smaller state created to India's north-west (Bangladesh became independent of Pakistan at a later date). Here, we can see once again the effects of a security dilemma. As a less powerful state, Pakistan turned outwards to find allies. In the 1970s geopolitics fulfilled this need. The US moved closer to China between 1971 and 1979, using her as a 'card' against the Soviets. In turn, China, and the US for a time, became allies with Pakistan. For the US, access to Pakistan was extremely important after 1979 as a lever against the Soviet invasion of Afghanistan.

The result was that India felt threatened by this alignment of interests. It felt a need from 1962 onwards to improve her military and economic strength, and to build up her armed forces to a level 'commensurate with the needs of its defence' (Saksena 1986, p51). She had no option but to improve relations with the USSR as a counter balance, and as a source of cheap weapons (Saksena 1986, p20). A Treaty of Peace, Friendship and Cooperation was signed with the Soviets in August 1971, though this was not an alliance pact. Furthermore, India accepted Soviet aid and trade, which became very important in the technical and military areas. The Soviet Union, for example, helped technically in the construction of the large Bilai Steel Plant in the mid-1950s (Saksena 1986, p52; Gordon 1993, p10). Though still non-aligned, and not allied in a military treaty to the Soviets, India remained deeply suspicious of US, Chinese and Pakistani motives.

These issues have been somewhat diffused with the end of the Cold War. Yet Pakistan-Indian relations remain problematic, in spite of some promising overtures for dialogue over the last decade, with positive signs through mid-2004. Each side disapproves of weapons acquisitions by the other side, e.g. the sale of Chinese M-11 missile technology to Pakistan (Ollapally & Ramanna 1995, p15). Reports suggest that this missile system has been deployed, and is potentially capable of carrying a small nuclear warhead (Arora 1996b). This trend, of course, has heightened Indian threat perceptions, which more than ever feels justified in the further development of its short range Privthi (150 kilometre range) and medium range Agni missile programmes (Arora 1996b; Arora 1996c; see further Srivastava 2000). Even a small nuclear arsenal (see below) in India combined with the new

7 generation of Indian IRBMs (medium range missiles) may have a much bigger ripple effect than intended by Indian planners, with India having at least 106 missiles with a range of more than 1,500 kilometres and new missiles with a range of 3,000 kilomatres being developed after 1999 (see Khan 2003 Srivastava 2000).

Nuclear tests were conducted by both countries in mid-1998 (for detailed analysis, see Malik 1998; Heisbourg 1998; Chellaney 1998 – earlier on India had in 1974 exploded a ‘peaceful’ nuclear test as part of its nuclear power research). The tests on both sides greatly aided national pride, but do not seem to have been planned as direct threats (talks between Pakistan and India resumed in late 1998). Rather, the tests seem to have been a way to declare that both sides had moved from threshold-nuclear status to full nuclear status, and resist international pressures to keep both countries out of the ‘nuclear club’ (see further below).

Yet the tensions between India and Pakistan, though real, should not be exaggerated. Although the disputed control of the Jammu and Kashmir region remains unsolved, both countries have sought to limit how destructive wars between them could become. Thus from 1971 onwards, neither side has pushed into key territorial heartlands of the other (the Indians could have in 1971), and both sides have tried to avoid attacking civilian targets. Since that time, there have been several other agreements, 'not to attack each other's nuclear installations, reciprocal notification of key military exercises, and a hot line between the nations' army generals' (Ollapally & Ramanna 1995, p16). Tensions, which reached new heights in 1998, were pushed further in another short round of conflict over the actual area of control in Kashmir, with both artillery and air clashes in May 1999 over the Kargil sector (Anand 1999; Chengppa 1999). However,, both sides managed to pull back after tensions and border conflicts in 1987, 1990, 1999, and 2002 (Malik 2003a, p42). Likewise, after the nuclear tests, in spite of some intense negative rhetoric, talks were soon convened to reduce any immediate escalation of tensions between the two countries. A positive statement of this aspiration to find accord between Pakistan and India as nuclear powers is found in the Lahore Declaration of February 1999,2 though there is a considerable gap between the aspirations of this diplomacy and the reality of establishing a strategic balance in South Asia. Likewise, steps through 2003 have opened up the prospects of another round of talks, including good-will tours by Pakistani and Indian MPs through May and June. After major talks in February 1999 and July 2001, from November 2003 there have been efforts to maintain a cease fire in the disputed areas of Jammu and Kashmir, and to begin dialogue on the issue through 2003-2004 (see Table 1). Likewise, through June 2004 there has been a new round of discussions to reduce tensions, and new ‘hot line’ installed between the political leaderships of both countries to deal with ‘nuclear matters’ (Misra 2004).

2 The text of this joint statement will be found at: http://www.indianembassy.org/South_Asia/Pakistan/lahoredeclaration.html

8 Disputed areas between India and Pakistan, and India and China (Courtesy PCL Map Library)

Aside from these issues, India has other problems to face. It is true that India is the world's largest democracy and has remained as a pluralistic society guided by the rule of law. Yet in a country of this size and history, serious tensions remain. Separatist and nationalist tensions remain in Assam and north-eastern India, in the Punjab (Sikh secessionists), Kashmir (Muslim-Hindu disturbances), and for Tamils in the south (Das 2003b; Das 2003c; Samanta 2003). Likewise, Hindu self-determination movements, including 'fundamentalist' Hindu movements have gained a strong political following since 1992, and though the BJP (the Bharatiya Janata Party) was unable to retain government in 1996, soon dominated sectors of the Indian electorate and managed to maintain government from 1998 under the leadership of Prime Minister Atal Behari Vajpayee down until elections in 2004. From May 2004 a Congress Party led coalition took power, with Mr Manmohan Singh as Prime Minister and with foreign born Sonia Gandhi as a key player in the party but not PM,

9 perhaps because of opposition violence and strong resistance from her family (Majumder 2004).

Table 1: INDIAN TIME-LINE: SELECTED DATES: 1947- May 2004 (BBC 2004a)

1947 - End of British rule and partition of sub-continent into mainly Hindu India and Muslim- majority state of Pakistan. 1947-48 - Hundreds of thousands die in widespread communal bloodshed after partition. 1948 - War with Pakistan over disputed territory of Kashmir. 1962 - India loses brief border war with China. 1965 - Second war with Pakistan over Kashmir. 1971 - Third war with Pakistan over creation of Bangladesh, formerly East Pakistan. 1971 - Twenty-year treaty of friendship signed with Soviet Union. 1974 - India explodes first nuclear device in underground test. 1984 - Troops storm Golden Temple - Sikh's most holy shrine - to flush out Sikh militants pressing for self-rule. 1984 - Indira Gandhi assassinated by Sikh bodyguards, following which her son, Rajiv, takes over. 1987 - India deploys troops for peacekeeping operation in Sri Lanka's ethnic conflict.

1990 - Indian troops withdrawn from Sri Lanka. 1990 - Muslim separatist groups begin campaign of violence in Kashmir. 1991 - Rajiv Gandhi assassinated by suicide bomber sympathetic to Sri Lanka's Tamil Tigers. 1992 - Hindu extremists demolish mosque in Ayodhya, triggering widespread Hindu-Muslim violence. 1996 - Congress suffers worst ever electoral defeat as Hindu nationalist BJP emerges as largest single party. 1998 - BJP forms coalition government under Prime Minister Atal Behari Vajpayee. 1998 - India carries out nuclear tests, leading to widespread international condemnation. 1999 February - Vajpayee makes historic bus trip to Pakistan to meet Premier Nawaz Sharif and to sign bilateral Lahore peace declaration. 1999 May - Tension in Kashmir leads to brief war with Pakistan-backed forces around Kargil. 2000 - US President Bill Clinton makes groundbreaking visit to India to improve ties. 2001 July - Vajpayee meets Pakistani President Pervez Musharraf in the major summit 2001 September - US lifts sanctions which it imposed against India and Pakistan after they staged nuclear tests in 1998. The move is seen as a reward for their support for the US anti- terror campaign. 2001 October - India fires on Pakistani military posts in the heaviest firing along the dividing line of control in Kashmir for almost a year. 2001 December - Suicide squad attacks parliament in New Dehli, killing several police. The five gunmen die in the assault.

2001 December - India imposes sanctions against Pakistan, to force it to take action against two Kashmir militant groups blamed for the suicide attack on parliament. Pakistan retaliates with similar sanctions, and bans the groups in January. 2001 December - India, Pakistan mass troops on common border. 2002 February - The worst inter-religious bloodshed in a decade breaks out in western India after Muslims set fire to a train carrying Hindus returning from pilgrimage to Ayodhya. More than 800, mainly Muslims, die in revenge killings by Hindu mobs over the next two months. 2002 May - More than 30 people killed in raid on Indian army camp in Kashmir, which India blames on Pakistani-based rebels. Moderate Kashmiri separatist leader Abdul Gani Lone shot dead at a meeting in Srinagar. 2002 June - Britain and USA maintain diplomatic offensive to avert war. 2002 October - India says its troops have begun withdrawing from the border with Pakistan; Islamabad says it wants proof before starting its own pull-back.

2003 June - India, China reach de facto agreement over status of Tibet and Sikkim in landmark cross-border trade agreement.

10 2003 August - At least 50 people are killed in two simultaneous bomb blasts in Bombay. 2003 November - India matches Pakistan's declaration of a Kashmir ceasefire. 2003 December - India, Pakistan agree to resume direct air links and to allow overflights. 2004 January - Groundbreaking meeting held between government and moderate Kashmir separatists. 2004 May - Surprise victory for Congress Party in general elections. Manmohan Singh is sworn in as prime minister. 2004 May - Landmine attack on bus in Kashmir carrying Indian soldiers and their relatives kills 33.

Likewise, the complex 'caste' system of India, though counter-balanced by government efforts to engage positive policies to bring up the 'untouchables', has meant that India has a complex status system, based on the traditional four varnas and an overlay of subgroups or jati in part based on occupational affiliation (Milner 1994, pp46-62) that is very difficult to 'modernise'. Although India has instituted strong positive discrimination, e.g. in extra access to state education and government jobs for lower groups, this has not solved the generally lower socio-economic status of the lowest groups, especially the ‘Dalits’, the so-called outcast or untouchables (Milner 1994). The Dalits form 20% of the population, while dalits, tribals, and so-called Other Backward Castes(OBCs) form a total of 62% (Ghose 2003). There is still a need from the Dalit point of view to create a more inclusive vision of a future India, in which social as well as economic relations have been reshaped (see Guru 2004).

Associated with these trends has been an outbreak of religious tension and violence from 1989 onwards, which culminated in the destruction in 1992 of the 400 year-old Muslim Babri Mosque at Ayodhya by some 150,000 Hindu believers, who insisted that it was the birthplace of the Hindu god, Lord Rama, and that the mosque be replaced by a temple. These issues have led to sectarian riots (in 1990), and split Indians into those who favour a 'Hindu state' (the BJP, and more militant groups such as the National Volunteer Corps and the Shiv Sena, Lord Shiva's Army), and those who favour a secular state (Dobbs-Higginson 1993, p188), e.g. the Congress Party and various socialist parties. The BJP’s election in 1998 returned the debate over the nature of identity politics (Hindu nationalism verses secular state) to centre place, and has been part of a slightly more assertive foreign policy. On order from the Supreme Court of India, archaeological excavation under strict court monitored conditions has begun on the site from 2003 to try and locate the temple, making it one of the most political ‘digs’ in history (see Ratnagar 2004). Even if the remains of a temple are found, it may be hard to prove that it was the site associated with Rama, or to verify that it was destroyed (Chakrabarti 2003; Ratnagar 2004).

Although over 80% of India is Hindu of some form, with 11% Muslims and 6% Sikhs, Jains and Christians (Milner 1994, p47; Pye-Smith 1997), these figures disguise a more complex reality. It must be remembered that approximately 20% of the population comprise 2,000 'ethnic groups, castes, tribals, and so on' (Arora 1996a, p1550). Keeping a balance between regional and national interests, and between different religious and national groups within India must be the first priority of any government. Furthermore, these divisions are exacerbated by the growing gap between expectations and the delivery by governments of an improved quality of life to sectors of the population, especially among the young (Singh 1994). Likewise, regional differences also mean that there can be real tensions between local needs and national policy, e.g. in Assam. The Indian government, then, needs to attend to

11 economic growth and social justice. From this viewpoint, 'India's primary strategic objective is the socio-economic growth and betterment of the quality of life of its . . . people' (Singh 1994, p11). Unless this is done, India is unlikely to survive as a unified, democratic state. At the same time, India has been able to take on a steadily growing role in regional affairs (in South Asia and the Indian Ocean), in the wider Indo-Pacific, and in its global economic and political presence.

3. India’s Regional and Global Role

India’s international role has been extended in several circles of engagement that extend from South Asia (via SAARC, the South Asian Association for Regional Cooperation), into the wider Indian Ocean Region (enhancing IOR-ARC and weak South African and Australian linkages), north and westwards into Central Asia and the Middle East (in relation to ‘energy politics’), a strengthening engagement with ASEAN through 1995-2004 (see Gaur 2003), and eventually in a wider rapprochement with East Asia (see Rodrigo 1999; Gordon 1993; Singh 1999c). At the global level, too, India, aside from its traditional involvement with the NAM movement (see Hewitt 1997, p118), also has a host of critical views which range from reform of the Security Council through to serious efforts to eradicate, rather than limit, nuclear weapons. Overall, India has engaged a stronger regional dialogue, and improved relations with the US, EU, Japan, Russia and China through 2000-2004.

Strong opportunities exist for India to increase its positive influence with the Indo- Pacific region via the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) setting (from 1996), through continued dialogue and economic integration with ASEAN, through participation in the ASEAN Regional Forum, and via selective cooperation with middle powers such as South Africa and Australia (see Gaur 2004; Ferguson 1997; Jayakumar 1996; Naidu 1996). Full members include Australia, Bangladesh, India, Indonesia, Iran, Kenya, Madagascar, Malaysia, Mauritius, Mozambique, Oman, the Seychelles, Singapore, South Africa, Sri Lanka, Tanzania, Thailand, the United Arab Emirates, and Yemen, while China, Egypt, France, Japan and the United Kingdom are Dialogue Partners. Continued momentum of both track I and track II processes (formal and informal diplomacy) in IOR-ARC is needed if this circle of engagement is to effectively benefit South Asia as a whole. Likewise, the addition of dialogue partners such as Japan and Egypt will also strengthen this organisation (Baruah 1999). However, the formal membership of IOR- ARC needs to be seriously expanded to include more Middle Eastern states, and must eventually provide full membership of Pakistan (Jayanth 1999). In the end, if Pakistan becomes willing to accept the Charter principles of IOR-ARC, including the provisions for MFN trading status with other members including India, this would constitute a major diplomatic gain for South Asia as a whole. Although the IOR-ARC group may need to consolidate itself for some years. At present, the IOR-ARC process is not very effective in setting regional norms or building trade, but remains one avenue of dialogue (see further below).

India as improved relations with ASEAN over the last two decades. India itself had become a sectoral (trade) dialogue partner with ASEAN in the early 1990s (March 1993; there was an earlier abortive attempt to develop observer status in 1980, Saksena 1986, p60), with cooperation on trade, investment, tourism, science and

12 technology institutionalised since 1994. In 1995-6 these positive trends culminated in India achieving full dialogue status (not membership) with ASEAN, and with an extremely positive correlation of interests being expressed in the July 1996 ASEAN Post Ministerial Conference (Naidu 1996; Jayakumar 1996), and then full membership in the ASEAN Regional Forum. Recently, India has moved to improve its economic and diplomatic ties with Burma, as well as to deepen cooperation with the region through the recent Mekong-Ganga Cooperation (MGC) accords (Baruah 2001a & 2001b). Through 2003-2004 India has signed the Treaty of Amity and Cooperation (TAC) and has set up a framework agreement on comprehensive economic cooperation that aims to boost trade and investment with ASEAN over the next decade (see Gaur 2003).

In engaging these regional 'circles', India and Pakistan have worked together to a limited degree. In fact these two countries have been able to engage in dialogue in some areas, including limited cooperation through SAARC, and limited functional cooperation over water control of the Indus River and its tributaries (Newbill n.d.). Even in the more problematic area of strategic confrontation there have been efforts to limit the scale of conflict between the two countries (see above). At the same time, SAARC operations are limited whenever tension rise between Pakistan and India, e.g. over cross-border insurgency and terrorism in 2001, and also by a fear of smaller members that India in the end will dominate the organisation or in turn that these smaller states will ‘gang up’ on India, as well as by some ‘procedural inertia’ (see Tripathi 2003, p176, p183; SAARC members are Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka). Likewise, in the South Asian case, issues of terrorism as a method are often bound up with the goals of insurgency, self- determination and local claims of discrimination (see Mishra & Ghosh 2003, pxv). SAARC had a more hopeful track in 2004 with efforts to set up ‘the free trade area (FTA) at a summit which also set poverty reduction and welfare goals and, most importantly, talks between India and Pakistan over the disputed border territory of Kashmir’ (Hennock 2004).

These general steps, of course, need to be taken against the continued momentum of positive diplomacy in a number of multilateral fora, including NAM, the G15, the Commonwealth, and continued efforts by India to maintain its credibility for a future stronger role within the United Nations. In the end, however, any recognition that India is a major player in the international system with the ability (and moral prestige) required to help set norms, is underpinned by enhanced relations with major global powers. India's strong relationship with Russia has gained some boost from 2001, and though this has lagged with the economic 'down-sizing' of Moscow's influence from the late 1980s onward, there have been recent efforts to reinvigorate this 'friendship' through a summit between President Putin and Prime Minister Vajpayee, and major weapons acquisitions from Russia were confirmed through 2000-2003. In October 2000 the two countries signed 'a declaration on strategic partnership on greater defence and military-technical cooperation and joint effort to fight international terrorism, while giving a boost to the economic relationship between the two countries.' (INDOlink 2000) Although the long-term benefits from this relationship can be debated, the term 'strategic partnership' in this context is highly significant (Chengappa 2000), since this is the same terminology used in the crucial Sino-Russian rapprochement since 1996. This terminology seems, at least from the

13 Russian and Indian point-of-view, to be part of an emerging emphasis on developing greater multipolarity in the international system (Singh 1994).

Perhaps more crucial in the short to medium term has been the slowly improving relationship between the U.S. and India. Tensions had existed over India's leadership in NAM (which opposed the hegemony of the 'North', Western nations), and then over India's perceived shift to what was viewed as 'soft' alignment with the Soviets and then Russia. Furthermore, India did not agree with America's stance on the Nuclear Proliferation Treaty and the Comprehensive Test Ban Treaty. As India not only imported Soviet/Russian Weapons (since the Americans refused to supply them from 1962 onwards), but also developed its own missile technology, the U.S. came to view India's security stance as dangerously non-conformist. This negative U.S. view was reinforced by India’s nuclear tests in 1998.

However, after the end of the Cold War, with the reduction of U.S. aid to Pakistan and with the economic reforms in India post-1992, U.S. policies began to change. There were several small signs of accommodation as early as 1984, with U.S. warship visits to Indian ports in the mid-1980s (Singh 1994, p20). Joint naval exercises occurred for the first time in 1992 (Singh 1994). In 1995, the then Defence Secretary William Perry and Commerce Secretary Ronald Brown visited India (Wang 1995, p549), while in 1996 several trade delegations also tried to develop greater economic ties. A U.S. business delegation led by Ohio Governor George Vsinovich visited India in April 1996 to explore joint projects in high technology and 'environmentally friendly' areas, while a delegation from Kentucky also discussed ventures to solve India's environmental problems (Indolink News 1996a; 1996b). This were was also a large expansion of U.S. investment in India, which by the mid-1990s expanded 10 times to reach $US5 billion (Indolink News 1996c). In sum, India-U.S. relations through the mid 1990s reached a level of practical accommodation in many areas, though they could not be described as 'warm'. From the late 1990s, there was a sense in Washington that India might act as 'counterweight' to growing Chinese power (Malik 2003a, p36).

After a renewed chill in relations during 1998 following the Indian and Pakistani nuclear tests, the U.S. administration became willing to invest in new efforts in its relationships with South Asia, including the possibility that the U.S. might accept the creation of a 'limited but credible deterrence' but hoped that India was willing to enter into some kind of international non-proliferation regime (Hewitt 2000). This shift was signalled by the March 2000 visit by former President Clinton, in which India's importance to the region and the future of global politics was explicitly recognised. President Clinton began to speak in terms of a 'new respectful partnership', of the two countries as 'natural allies', or of a 'true partnership of mutual respect' (Strategic Digest 2000a; 2000b). Among the most important outcomes of the meeting was the agreement to hold regular summit meetings, and regular meetings between ministerial and department heads. Through 2002 there was continued cooperation between the US and India, some joint training exercises, the sale of some military equipment to India and the signing of a General Security of Military Information Agreement to improve such cooperation (Malik 2003a, p44; Khosla 2003, p151). Post September 2001, the importance of India was increased for the Bush administration, which saw it as one of the states most eager to join in the ‘war

14 on terror’, and as a source of regional intelligence and cooperation, as spelled out in the U.S. National Security Strategy (NSS) of September 2002: -

U.S. interests require a strong relationship with India. We are the two largest democracies, committed to political freedoms protected by representative Government. India is moving toward greater economic freedom as well. We have a common interest in the free flow of commerce, including through the vital sea-lanes of the Indian Ocean. Finally, we share an interest in fighting terrorism and in creating a strategically stable Asia. (in Malik 2003b)

These trends were complicated by the U.S. need for cooperation from Pakistan over its intervention in Afghanistan, and need to control the border from the Pakistan side as well as gain intelligence and support from a dominantly Muslim country. Lifting of sanctions and promises of aid and debt rescheduling were extra inducements for Pakistan cooperation (Malik 2003a, p37). This alignment was achieved, with the government being more critical of ‘sectarian’ groups, but at a high price for President (General) Pervez Musharraf, whose actions were strongly criticised from within the country (see Khosla 2003, pp152-153). In Pakistan's October 2002 parliamentary elections, for example, Islamic parties emerged as a strong third force (Malik 2003a, p35). Likewise, scattered terrorist actions against U.S. and Western interests continued within Pakistan, indicating serious internal political pressures on Pakistan's foreign policy.

At this time India increased its criticisms of Pakistan, claiming that terrorists who had been active in Afghanistan and Kashmir had been trained within camps and religious schools within Pakistan, and suggested that military pre-emption might be required by India to remove this threat. Terrorist attacks on the Kashmir Assembly (October 2001) and the Indian Parliament (December 2001) brought matters to a head (Malik 2003a, p37). Promises by President Musharraf in January 2002 to crack down on 'extremist organisations' within Pakistan only partially reduced tensions (Malik 2003a, p38). Through early 2002 these tensions raised the prospect of another major round of hot conflict between the two countries, leading to a high level of mobilisation in both armed forces, with serious reduction in tensions only occurring through June-October 2002. Since both countries at this stage were declared nuclear powers, some war-game scenarios included the possibility of escalation into a nuclear exchange, though perhaps of a limited kind (Malik 2003a). These factors reveal the relative fragility of the overall balance of forces within South Asia: external pressures and new opportunities can radically heighten the prospects for conflict. Here both the US and China need to be extremely careful diffusing conflict, but also in not offering excessive guarantees that might be taken as a 'green light' for conflict. Improving relations between Indian and the U.S. (2000-2004), and improving relations between India and China through 2003-2004 (see above), have somewhat decreased the prospects for large-scale conflict in South Asia.

However, the most important area of political gain for India has been a gradual improvement in its relationship with the PRC. With the old geopolitics of Sino- Russian and U.S.-Soviet tensions now removed, it is possible to reduce tensions between India in China. The changing world context has meant that Beijing and New Delhi have more to gain from cooperation than competition (Halliday 2000), so long as short-term instabilities can be overcome. It is suggested that such a direct approach toward cooperation should be engaged in, despite concerns over Chinese nuclear and

15 missile capability, and worries over the transfer of missile (M-9, M-11) and nuclear technology to Pakistan (Chellany 1998-1999, pp96-97). Likewise, both India and China have been worried about international terrorism, but also have seen an increase of US global capability in adjacent regions (e.g. U.S. bases and forces in Pakistan and Kyrgyzstan).

Today, both India and the PRC are developing nations which are becoming major economic powers, and both have revisionist concerns over the structure of power and rule-creation in the international system. Put simply, regional competition aside, in the current period 'China does not, in any direct sense, threaten India' (Halliday 2000). Nor should Pakistan's importance to China be exaggerated (contra Chellany 1998-1999, p97). Thus it is no longer productive to speak of China's 'containment' of India. As suggested by Fred Halliday, the 'greatest challenge facing India is not its position relative to China, but that of ridding itself of the myth that its major challenge comes from China at all' and that India will waste its advantages 'by re-entering a world of strategic and nationalist competition from which its own history and qualitative strengths have the potential to free it.' (Halliday 2000).

Relations between India and China have oscillated widely over the last fifteen years, but began to improve again through 2003-2004. Relations with China began to improve after 1988, with an agreement to settle border disputes peacefully, and the proposal that peace and tranquillity should be allowed to reign along the 'line of actual control' (LAC) until the matter could be fully resolved (Wang 1995, p547). Dialogue between India and China was widened after the mutual signing of the Peace and Tranquillity Agreement (PTA) in 1993 through the use of Joint Working Groups (Srivastava 2000, p31). Li Peng visited India in 1991, followed by a return visit by a visit by Narasimaha Rao in 1993. An important trip by Jiang Zemin in late 1996 suggested that China may have tried to adopt a new positive view of South Asia as a whole, rather than aligning too narrowly with Pakistan. This policy of mutual conciliation was set back by tensions after India's declared nuclear-weapon status in 1998, followed by a tense exchange of critical comments from both sides shortly after the tests (Malik 1998, pp204-205). Tough rhetoric by the Indian Defence Minister seemed to paint China in the role of 'enemy number one' (Limaye 2000). However, within a year tensions began to reduce between China and India. Even when regional tensions were heightened due to the conflict with Pakistan in the Kargil sector from May 1999, China promised that its own frontier with India would remain a 'cold border', not a hot zone (Srivastava 2000, pp331-332). Likewise, from mid-1999 China seemed keen to follow a policy of engagement, pursued through meetings between the foreign ministers of the two countries (Srivastava 2000, p335- 336). Tensions were heightened again between Pakistan and India through December 2001 down till May-2002, with a peak of a over a million men mobilised along their shared border (Malik 2003a). China moved into diplomatic mode (along with the US and Russia), neither wanting a hot war to erupt, nor willing to see a political or military collapse of Pakistan (Malik 20003, pp36-38). India, however, continued to view PRC's covert technological and open diplomatic support for Pakistan as a direct challenge to its own interests, and saw the PRC's nuclear capacity as the main reason why India could not disarm regardless of the status of Pakistan's nuclear program (a view reiterated in early 2003).

16 Through 2003-2004 there were clear signs of improvement in China-India relations: -

That led to the formation of joint groups to work on border issues and study economic cooperation; it has also yielded a border-trade agreement, laying the foundations of a possible free-trade pact. As part of that agreement, India recognized China’s rule in Tibet and China dropped its recognition of the disputed India territory of Sikkim as an independent state, two significant concessions. Most recently, Chinese Defence Minister Cao Gangchaun visited India last month, and the two sides agreed to hold joint military exercises laster this year. (Vatikiotis & Hiebert 2004, p12).

Bilateral trade between the two countries has also grown from very low levels, from a mere US$62 million in 1984 and US$765 million in 1994 (Wang Hongyu 1995, p551), with China importing more accessible Indian iron ore. Between 1990 and 1994, India signed 24 contracts to import 'turnkey plants', worth US$350 million, with the Chinese showing superior expertise in small and medium steel mills (Wang Hongyu 1995, pp551-2). In return, China too has something to absorb from Indian structures: 'China has sent high level delegations to India to study the civil service system, judicial reform, the stock market, and other institutions' (Wang Hongyu 1995, p551). Likewise, India has a greater expertise in advanced computer software (Wang Hongyu 1995, p552). Trade flows have increased between the two countries, worth $6 billion in 2003 and expected to rise to $10 billion by 2005, with clear complementary areas, e.g. Indian software skills and China’s production of electronic hardware (Vatikiotis & Hiebert 2004, p14). Improving India-US relations have also forced PRC to re-assess India’s wider Asian role, and PRC has suggested that it might be an observer SAARC, while India might join the SCO, Shanghai Cooperation Organisation (Vatikiotis & Hiebert 2004, p14). Likewise, China has stated that it no longer wishes to use Pakistan to ‘check India’, and Chinese diplomats have urged Pakistan to resolve the Kashmir problem peacefully (Vatikiotis & Hiebert 2004, p14).

Moreover, the Indian nuclear capability can be viewed as much more than a reaction to China's perceived strategic and nuclear superiority. In large measure, the nuclear tests were a challenge to the nuclear policies of all the other great powers, and a declaration of the covert capability that both India and Pakistan already had (Singh 1999a). India had been unwilling to support the terms of a Comprehensive Nuclear Test Ban based on Western dictates (Saksena 1986, p41), and why India was unable to sign the latest Comprehensive Test Ban Treaty formulated in June 1996 unless the nuclear powers undertook to disarm totally within a specified time frame. On this basis, Pakistan also declined to sign the treaty, i.e. if any threshold state refuses to sign, its own security could be compromises if it gave up nuclear weapons research (Straits Times 1996).3 Efforts to bring India back into the NPT by Japan and US through 1999-2000 did not succeed. Instead, through 2003- 2004 it has been suggested that new agreements limiting future development might be a better approach: -

If nuclear weapon states are ever to achieve deep cuts in their nuclear stockpiles--an important part of the basic bargain of the NPT and essential to the long-term viability of the treaty--some account has to be taken of Israel, India, and Pakistan's nuclear weapons. They must be integrated into the nonproliferation regime.

3 "Talks on Nuclear Test-Ban Treaty End without Agreement", Straits Times, 30 June 1996 [Interactive Internet Access].

17 To amend the NPT and admit the three as nuclear weapon states is a political impossibility. And none of these states can be expected to give up its program to become a non-nuclear weapon party to the treaty. One answer could be a form of associate membership under a separate, freestanding agreement or protocol. Such a protocol might permit Israel, India, and Pakistan to retain their programs, but inhibit further development. The protocol could also require cooperation with international nuclear export controls, prohibit the explosive testing of nuclear devices, and call for the phased elimination of fissile material production. Israel, India, and Pakistan would sign the agreement along with the Depositary States (Russia, Britain, and the United States), which since the 1960s have been considered the general managers of the NPT. By becoming party to such a protocol, the three could acknowledge their nuclear status through association with the existing nonproliferation regime. (Cohen & Graham 2004)

The wider political implications of the Indian tests has been summarised by Mohan Malik: -

. . . India's elite has long nursed a sense of grievance over the lack of respect accorded to India in view of its civilizational and cultural attributes, its population, and its potential, let alone its dominant position in South Asia. The nationalist Bharatiya Janata Party (BJP) wants India to be a nuclear, space and information technology (IT) power. The nuclear ambition, in particular, has always been part of the BJP's philosophy of negotiating with the outside world from a position of strength. Believing that it was a lack of advanced military technology by Asian powers like India, which led to their colonization by European powers, nuclear weapons are seen as a currency of power by the military establishment, which had been urging successive governments to cross the threshold from the very day that China did its first test. (Malik 1998, p201)

India has since moved to develop a declared nuclear doctrine designed to both legitimate its possession of nuclear weapons, but also avoid a sustained nuclear arms race in South Asia. The evolution of this doctrine has been controversial, and certain elements of the August 1999 Draft Report of the National Security Advisory Board on Indian Nuclear Doctrine (DND) led to a sustained debate on whether India could realistically move to a triad of launch platforms, and whether a 'minimal deterrence' could be combined with a strong second strike doctrine (Srivastava 2000).4 Nonetheless, the emerging outline of the doctrine does contain elements of restraint that need to be further calibrated. This is based on three core concepts (Singh 1999a), including the development of a minimalist theory of deterrence, with the smallest degree of weaponisation and deployment combined with the real ability to launch a punitive counter-strike. India has also explicitly developing a doctrine of no-first use, with nuclear weapons not being deployed against states without nuclear weapons or nuclear-armed allies, and not deployed against non-nuclear threats (Singh 1999a).

In the long run, it would not be surprising if India chooses to weaponise to the extent of developing a small, robust nuclear force capable of second strike capability. It is estimated that between and .5 and 1% of India's GDP over a 10-15 period would be needed to create such a deterrent force (Srivastava 2000, p313, footnote 2). It must be emphasised that such a force need not be based on numerical parity with China's nuclear force, but on the basis of creating a credible launch base, perhaps of between 86 and 350 warheads, including tactical weapons (Srivastava 2000, p318; Chellany 1998-1999, p97; Strategic Comments 1998). However, transition to the deployment

4 A copy of the report will be found on the Indian Embassy (Washington) Website at: http://www.indianembassy.org/policy/CTBT/nuclear_doctrine_aug_17_1999.html

18 of such a deterrent is fraught with problems, and there are serious theoretical and legal issues in such a transition for two countries with ongoing disputes (Friedberg 1993, contra Chellany 1998-1999). Short term problems include an early stage before the development of second-strike abilities, when deployed weapons will be potentially vulnerable to a first strike, the question of the evolution of nuclear doctrine in the triad of regional players (India-Pakistan-PRC), the maintenance of political command and control, and the fact that in the conventional theatre all sides have a culture of 'offensive defence' (Hewitt 2000). The Indian position has also not fully considered the possibility of Pakistan deploying very small tactical nuclear weapons (TNW's, less than five kilotons) along parts of its border, weapons so small that they might be used against mobile armoured forces, and might not be viewed as worthy of a strategic counter-strike (Malik 2003a, p41). However, in the long run, this nuclear capacity on both sides has also had a symbolic and nationalist function, and has not directly increased bilateral tensions. India was thereby staking its claim as a virile, modern, technically and scientifically able nation (Das 2003), fit to compete with China and to assert it claims before the great powers of the international community. Nationalistic rhetoric boasting improved missiles and warheads having the reach to counterstrike targets deep in the Chinese heartland, including Shanghai and Beijing, may help justify Indian military budgets, including a $3 billion order with Russia through 2000- 2001 to incklude 150 new SU-30 fighter bombers (Sheth 2000).

A more balanced approach needs to set these tensions against the changing global environment: -

Additionally, the fear of a war between China and India can be dismissed because in the post-Cold War world, Sino-Indian economic and political interests are converging. Both countries are primarily interested in maintaining a peaceful environment to ensure unhindered economic growth which will allow them to exercise a greater degree of autonomy in international politics. The present trend of positive developments between China and India rather indicates that they are in a process of building up an Asian balance against the unilateral domination of the United States in Asian affairs. Although India's nuclear explosions of May 1998, avowedly for military purposes, and its defence minister's identification of China as the number one potential threat to India, slowed the Beijing-New Delhi rapprochement process, tensions seem to have subsided since both countries are emphasizing economic values more than military ones. Besides, strategic calculations suggest that a future war between China and India armed with nuclear weapons is most unlikely since both parties can lose much and gain nothing out of it. The slow but progressive trend in Sino-Indian relations suggests that the old parameters of military hostility, although unlikely to disappear totally, are gradually being replaced by the imperatives of political peace and diplomatic co-operation (Das 2003, p80).

India and China have important global agendas on which they can cooperate. This includes cooperation with ASEAN (via both signing on to the Treaty of Amity and Cooperation, plus both setting up improved trade agenda with ASEAN through 2003- 2007; see lectures 4 and 6), an effort to sustain some multipolar leverage on the international system, shared concerns over international terrorism, efforts to improve energy security, and concerns over the security of sea-lanes of communication through the Indo-Pacific zone. Moreover, India has many credentials that may prepare it for such a path: its commitment to NAM, its desire for a totally nuclear weapons- free world, its understanding of the problems facing the developing countries, its highly educated academic and bureaucratic elites, its national use of the de facto global language (English), its open and active news media, and its skills in computing

19 and communications capabilities (Natarajan 2000) that will help it keep up with the new media-oriented diplomacy. For example, India seems to have little hesitation in opening up to the World Wide Web, and through its Sankhyavahini project is keen to open up a window to the world with very 'high bandwidth' (Nuruzzaman 1999; Srivastava 2000).

4. IOR-ARC: Slow Ground-Work or Stalled Regionalism?

India had sought to pursue a more peaceful environment through extending its influence from South Asia into the wider Indian Ocean region. Its Indian Ocean Zone of Peace proposal (developed through 1971-1979) hoped to see the elimination of all foreign military bases in the region, and an end to regional military escalation (Saksena 1986, p35). Likewise, though the Declaration of the Indian Ocean as a Zone of Peace was adopted by the U.N. General Assembly in 1971, it was difficult for same nations to fully accept the idea due to relative Indian dominance of the region, and especially while India developed its nuclear weapons potential (Saksena 1986, p36). It is true that India has largely been unable to sustain the idea of the Indian Ocean as a Zone of Peace, largely due to two factors. In the 1970s, the Indian Ocean became a region of relative naval competition between moderately strong Soviet and U.S. naval forces. The U.S., in particular, saw a strong Indian Ocean presence as a way of counterbalancing the advantage the Soviets had in land access to the Middle East in case of a major conflict or instability in the region (Gordon 1993, p15). The idea remained important because of access to oil resources and protection of sea-lanes through the Persian Gulf, Suez Canal, and Indian Ocean. The U.S., Japan, India, China and most European states have a vested interest in ensuring access to the oil reserves of the Middle East via the Persian Gulf - which itself exits into the Indian Ocean. Considerable volumes of oil and other trade goods pass east and west across the Indian Ocean as well. As a result, the U.S., and the 'coalition' forces of the war with Iraq, were keen to continue patrolling and controlling segments of the Western Indian Ocean, with a careful eye also placed on the Malacca Straits (between Sumatra and the Malay peninsula). The U.S., for instance, kept strong naval and air-base facilities on the island of Diego Garcia in the middle of the Indian Ocean. The U.S. Fifth Fleet has the role of controlling naval operations in the Persian Gulf, the Arabian Sea and the Indian Ocean (Chipman 1995, p13). After improved relations with U.S. through 2000-2002, joined naval exercises occurred, and there have been joint naval patrols in the Indian Ocean towards the Malacca Straits, with the approval of nearby Southeast States (Khosla 2003, pp150-151).

20 Indian Ocean Region (Map Courtesy PCL Map Library)

Another proposal has been for the creation of an Indian Ocean economic grouping. The emerging regionalism of the Indian Ocean region, which has been the subject of a series of meetings and conferences since the early 1990s, has moved beyond the more limited role of the Indian Ocean Commission (IOC) originally formed in 1984 (McDougall 1997; Dellios & Ferguson 1997). This idea of a strong regional organisation for the Indian Ocean had been raised as early as November 1993 by former South African foreign minister Pik Botha, but was also supported in early 1995 by President Mandela (Gupta 1995a; McDougall 1997). This would counter- balance the APEC group focused on the Pacific, and also bring in large numbers of countries in South Asia, Africa and Middle East who only have representation in smaller regional organisations. This idea was developed in a Conference held on Mauritius in March 1995 in a major ‘first track’ process, and then sponsored by the

21 Keating Australian government in a wider ‘second track’ process at a Conference held in Perth on June 11 1995, the International Forum for the Indian Ocean Region (McDougall 1997, p60). Some 28 countries were involved in this Forum to 'discuss economic cooperation, education, environmental protection and security issues' (Mill 1995, p23). Growing trade flows in the region, the economic reforms in India, reduction of Cold War tensions, and the re-emergence of a post-apartheid South Africa on the world stage made this a logical idea (Beri 2001).

Yet cooperation was at first limited by India-Pakistan tensions, and by the fact that Iraq, Burma and Somalia have not been effectively involved (Mills 1995, p23). The political and economic diversity of the region also complicated dialogue. There is a danger of some players being left out of effective involvement due to their small size. Ranjan Gupta, for example, has suggested that though there are clear options for Indian-South African-Australian cooperation, it would take longer for other states to become more fully involved (Gupta 1995a, p18). Hopes of opening up potential markets worth $300 billion (Egan 1995a, p3) are therefore still premature. Australia's trade with the Indian Ocean region in 1994 totalled $7.1 billion, 18.4% of Australia's total trade, but only 1.5% of the regional market (Egan 1995a, p3). Yet it was hoped that regional cooperation would allow Australian exports to increase by several billion dollars by the year 2000 (Walker 1995, p2). Western Australia, in particular, hoped to benefit from closer trade links with 11 of these countries, including Malaysia, Singapore, Thailand, South Africa, Kuwait, Mauritius, Sri Lanka and The United Arab Emirates (Irving 1995, p2). Australia's then foreign minister, Senator Evans hoped that in due course that an Indian Ocean Economic Co-operation Council would be established to promote trade and cooperation in the region (such a Council for the Pacific had been the forerunner of the APEC process). However, the Australian idea that security issues should also be considered by the Perth conference was rejected by both South Africa and India as 'pointless' and 'divisive', and security played a minimal role in the Conference agenda (Egan 1995b, p2).

This dialogue process resulted in the formal launching in March 1996 of the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC), comprising an initial membership of Australia, India, Indonesia, Kenya, Madagascar, Malaysia, Mauritius, Mozambique, Oman, Singapore, South Africa, Sri Lanka, Tanzania and Yemen. One of the hopes of this organisation has been that it can in the long term create a free trade or a low tariff zone, boosting the existing intra-regional trade and investment volume of 20%, aid global trade liberalisation, and link the Indian Ocean Rim into the economic dynamic of the Asia-Pacific Region (Nanda 1997; McDougall 1997, p60). This could be followed with science and technology development, infrastructure development, further communication services, and tourism (Nanda 1997). Membership thereafter expanded to include Australia, Bangladesh, India, Indonesia, Iran, Kenya, Madagascar, Malaysia, Mauritius, Mozambique, Oman, the Seychelles, Singapore, South Africa, Sri Lanka, Tanzania, Thailand, the United Arab Emirates, and Yemen, while China, Egypt, France, Japan and the United Kingdom are Dialogue Partners.

This organisation is still in the formative stage, and concrete agendas on trade liberalisation or large-scale joint ventures have yet to be formulated. Nonetheless, this supraregional framework could offer certain opportunities to member states. For Australia it offers the opportunity to deepen trade and relations with India and South

22 Asia as a whole (Gordon 1993). For Singapore, it offers investment opportunities in India and Africa, balancing its current investment flows into East Asia (Yahya 1995, pp25-37). For India, this Indian Ocean network allows it to play a positive role in a region of direct strategic significance (Panikkar 1962, p84), while reducing perceptions of strategic or military threat. The Indian Ocean has always been of great economic importance to India, which conducts most of its trade through this ocean. Alongside existing trends in India to deepen relations with ASEAN as a whole, and Malaysia and Singapore in particular (Miglani 1996), this process can return India to one of its original visions of a wider Indo-Asian region (See Saksena 1986, p47). Thus, the IOR-ARC core group could be part of a much larger Indian Ocean process, resulting in what one Indian official described as ‘the rediscovery of the littoral economic, social and cultural community that existed in the Indian Ocean for centuries’ (Nanda 1997), referring back to earlier trading patterns in the Indian Ocean.

Yet certain limitations need to be met if the Indian Ocean grouping can become an effective model, either for economic development or for some return to the notion of the Indian Ocean as a Zone of Peace, (Saksena 1986, p35). The first problem that must be addressed is the somewhat narrow membership of the IOR-ARC grouping, and particularly the absence of states such as Pakistan. There were some initial Pakistani overtures for cooperation with the IOR-ARC group through the mid-1990s. At a seminar organised by the Islamabad Council of World Affairs and the Hanns Seidel Foundation on November 4 and 5, 1996, there were suggestions for a widening cooperation beyond the existing 15 IOR-ARC members, for cooperation with SAARC, ECO (a Central Asian grouping) and ASEAN, and for extension of this cooperation to nearby landlocked countries (Indian Ocean Network News 1996a). Similar concerns were expressed at an International Conference on the Indian Ocean held at Teheran in November 10-12, 1996. This conference not only suggested the widening of IOR-ARC, and joint approaches to regional development, banking and insurance, but also discussed regional problems such as 'drug trafficking, money laundering and illegal proliferation of arms' (Indian Ocean Network News 1996b). Likewise, the Bangladesh Institute of International and Strategic Studies, an autonomous organisation, has indicated a desire to become engaged in the Indian Ocean Research Network (Indian Ocean Network News 1996c). Unfortunately, some of these trends have received set-backs due to increased tensions since Pakistan and India both conducted their nuclear tests. However, in the January 2000 meeting of IOR-ARC, some progress was made in further institutionalising the meeting, setting guidelines for new members, and drawing in observers such as Egypt and Japan (Xinhua 2000).

It is possible, of course, to divide progress on regionalism in the Indian Ocean into first track (official) and second track (unofficial, bilateral, business, or person-to- person) activities. At the second track, and in areas of economic cooperation, we already find some widening of integration between South-East Asia and Indian Ocean concerns. This can be seen in several recent Malaysian initiatives. Iran and Malaysia have recently explored the opening of a distribution point of Malaysian goods in Iran, allowing access to Iran and the Commonwealth of Independent states. Mauritius has also hoped that it can become an offshore provider of financial and investment services into Africa, as well as a transportation hub.

23 From October 2003, IOR-ARC in its meeting held in Colombo, Sri Lanka, sought to push forward progress by adopting task force reports on trade and investment facilitation, decided to establish an IOR-ARC Fisheries Support Unit, sought to push forward group support for agricultural negotiations in the WTO, has sought liberalisation of agricultural trade in the region (Anderson 2002), and to engage skills of trade investment negotiators throughout the region (DFAT 2004a). For IOR-ARC to become a vital organisation its membership must be expanded, and definite projects and agendas further developed on a regional basis. It success will also strongly depend on its ability to cooperate with other regional groupings, (especially SAARC, which has called for new initiatives and cooperation to revitalise the economy of South Asia), with African organisations such as the South African Development Community (SADC), with ASEAN, and in the long run with APEC. Serious progress on Pakistan-India relations is also central to these processes.

For India, engagement in IOR-ARC is part of a wider regional strategy: -

India also concentrates on other Regional Economic Groups (REG) in Asia like Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation (BIMSTEC), Bay of Bengal Community (BOBCOM), the countries of Mekong-Ganga Initiative and Indian Ocean Rim Association for Regional Cooperation (IOR-ARC)--to achieve quick interregional trade and commerce, as well as, to strengthen strategic relations with them. The formation of South Asia Growth Quadrangle comprising of Bhutan, Bangladesh, Nepal, and India (BBNI) keeps the economic and political relations ticking between these SAARC nations. Strengthened Indo-Myanmar economic relationship helps to contain drug trafficking along the border. It also provides for over-land trade via Myanmar to the eastern countries. The growing economies of South Korea and Japan find India as a potential market. With smooth trade relations with South Asian regional groups and ASEAN, India looks beyond to the tiger economy of Asia Pacific Economic Cooperation (APEC). India increases political and economic collaboration with the APEC. Strong economic and political relations between India, South East Asia and Asia Pacific, becomes an influential factor in the Asian regional security. (Waslekar & Bhatt 2004)

5. India as a Key Player in the Asia-Pacific Region

There have been modern hopes that India will rediscover its historic role in a re- empowered Asia. This was expressed by the Indian Prime Minister Jawaharlal Nehru in a broadcast on 7 September 1946: -

We are of Asia and the peoples of Asia are nearer and closer to us than others. India is so situated that she is the pivot of western, southern and south-east Asia. In the past, her culture flowed to all these countries and they came to her in many ways. Those contacts are being renewed and the future is bound to see a closer union between India and Southeast Asia, on the one side, and Afghanistan, Iran and the Arab world, on the other. To the furtherance of that close association of free countries we must devote ourselves. (in Saksena 1986, p47).

Indian Ocean initiatives, even though in their infancy, are a good sign of improving relations in the Indian Ocean. This in turn, will allow a greater participation of South Asia in renewed Asia-Pacific growth. Yet these hopes will not be easily fulfilled so long as the disputes between Pakistan and India remain outstanding. At present, the strongest trends have been enhanced interactions with ASEAN (1995-2004), and prospects for improved relations with China (2003-2004). India has validated it

24 importance to the U.S., China and Japan, while the EU is India’s major trading partner. Combined with a strong regional diplomacy, India has also been able to challenge and engage some norms of the international system, even while having to deal with enormous domestic pressures. Although India is establishing powers and capabilities in the international system, it also has serious national and regional constraints that need careful development and attention.

8. Bibliography and Further Resources

Resources

A wide range of articles on South Asia and Asia generally will be found on the Homepage of the Institute for Defence Studies and Analyses (IDSA), New Delhi, at http://www.idsa-india.org

Articles on Indian foreign policy and key developments can be found on the webpage of the Institute of Peace and Conflict Studies, New Delhi, at http://www.ipcs.org/

A wide range of current news on India will be found on the IndoLink webpage, at http://www.indolink.com:80/index.html

Further Reading

BERI, Ruchita "Indo-South Africa Relations After Mandela", Strategic Analysis, 24 no. 12, March 2001, pp2235-2255 [Internet Access at http://www.idsa-india.org/an-mar-7.01.html] GARVER, John W. Protracted Contest: Sino-Indian Rivalry in the Twentieth Century, Seattle, University of Washington Press, 2001 GAUR, Seema “Framework agreement on comprehensive economic co- operation between India and ASEAN: first step towards economic integration”, ASEAN Economic Bulletin, 20 issue 3, December 2003, pp283-291 [Access via Infotrac Database] GURU, Gopal “Dalit Vision of India: From Bahishkrut to inclusive Bharat”, Futures, 36 nos. 6-7, August-Sept 2004, pp757-763 [Access via Infotrac Database] JACQUES, Kathryn Bangladesh, India, and Pakistan: International Relations and Regional Tensions in South Asia, N.Y., St. Martin's Press, 1999 MISHRA, Omprakash & GHOSH, Sucheta (eds.) Terrorism and Low Intensity Conflict in South Asian Region, New Delhi, Manak, 2003 SINGH, Jasjit "India's Nuclear Doctrine", in SINGH, Jasjit (ed.) Asian Strategic Review 1998-1999, New Delhi, Institute for Defence and Strategic Studies, November 1999a, pp9-23 (Vertical File) THAROOR, Shashi India: From Midnight to the Millennium, N.Y., Harper Perennial, 1998

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30 VATIKIOTIS, Michael & HIEBERT, Murray “India and China: Dancing Elephants”, Far Eastern Economic Review, 29 April 2004, pp12-15 WALKER, Jamie "McMullan Predicts Export Rise Worth Billions", Australian, 13 June 1995, p2 WANG, Hongyu "Sino-Indian Relations", Asian Survey, 35, June 1995, p546-554 WASLEKAR, Sundeep & BHATT, Semu “India's strategic future: 2025”, Futures, 36 nos. 6-7, August-Sept 2004, pp811-21 [Access via Infotrac Database] Xinhua " Indian Ocean Rim Association to Emerge As Major Economic Bloc: FM.", Xinhua News Agency, 26 January 2000 [Access via Infotrac SearchBank] Xinhua "Pakistan Criticizes India for Slowing on Negotiations", Xinhua News Agency, 18 June 2003 [Access via Infotrac Database] YAHYA, Faizal "Singapore-India: A Confluence of National Interests", Asian Studies Review, 19 no. 2, November 19995, pp25-37 ZEHRA, Nasim "Pakistan-US Summit Special-I: Substance and symbolism of F-16s", The International News (Pakistan), 20 June 2003 [Internet Access via http://www.jang.com.pk/thenews/]

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