(103'4FSJFT &EJUPST "SZBNBO#IBUOBHBS 3JUJLB1BTTJ NEIGHBOURHOOD FIRST Navigating Ties Under Modi Editors Aryaman Bhatnagar Ritika Passi NEIGHBOURHOOD FIRST Navigating Ties Under Modi Editors Aryaman Bhatnagar Ritika Passi © 2016 by Observer Research Foundation and Global Policy Journal Neighbourhood First: Navigating Ties Under Modi ISBN 978-81-86818-15-2 Inside design: Simi Jaison Designs Cover background image: Rajpath, New Delhi / Adaptor- Plug / Flickr Printed by: Vinset Advertising, Delhi Contents 1 India, India’s Neighbourhood and Modi: Setting the Stage ................................................ 3 2 India’s Neighbourhood Policy through the Decades ............................................................ 14 3 Dealing with Pakistan: India’s Policy Options ..................................................................... 24 4 India’s Afghanistan Policy: Going beyond the ‘Goodwill’ Factor? ...................................... 36 5 India’s Iran Policy in a Changed Dynamic ........................................................................... 46 6 Why Engage in a Neighbourhood Policy? The Theory behind the Act ................................ 56 7 India’s China Policy under Narendra Modi: Continuity and Change ................................... 66 8 Modi’s ‘Act East’ Begins in Myanmar ................................................................................. 76 9 China’s Role in South Asia: An Indian Perspective .............................................................. 86 10 India-Nepal Relations: On the Threshold ............................................................................. 96 11 Paradigms in India-Bhutan Relations and Pathways for Cooperation ................................. 106 12 India-Bangladesh Relations in Modi’s Era ........................................................................... 116 13 The Domestic Elements: States as Stakeholders .................................................................. 124 14 India-Sri Lanka Relations under Modi ................................................................................. 130 15 India-Maldives Relations: Solid Base, Shaky Structure ...................................................... 140 16 SAARC at Thirty: Integration by Parts................................................................................. 150 Newly elected Indian Prime Minister Narendra Modi’s diplomatic masterstroke: Leaders of all SAARC countries present at his swearing-in ceremony (May 2014) INDIA LEGAL 1 India, India’s Neighbourhood and Modi: Setting the Stage RITIKA PASSI and ARYAMAN BHATNAGAR rime Minister Narendra Modi continues to stress greater cooperation and better ties with India’s neighbourhood almost two years into his tenure. While he made an impressiveP start in this direction from his very swearing-in ceremony in May 2014, his ‘neighbourhood- first’ policy as yet has witnessed mixed results. This publication brings to focus India’s policy towards its immediate and extended neighbourhood— South Asian Association for Regional Cooperation (SAARC) members, Iran, China and Myanmar— under Modi thus far. Each country-specific chapter describes bilateral ties, debates elements of continuity or change since the new government has come to power, and explores future prospects for ties under Modi given existing challenges and opportunities. Thematic chapters also intersperse this publication, which contextualise India’s neighbourhood policy and its bilateral ties in the region. In this introductory chapter, we captures three catalysts that seem to more than ever before characterise India’s engagement in its neighbourhood, and which simultaneously underscore the importance of having a robust neighbourhood policy—the three-pronged impulses of geography, regional integration and geoeconomics; development imperatives; and security concerns. We end with a fourth catalyst— Modi’s prime-ministerialship, which, more than any specific change in strategic thought towards any one proximate nation-state, has shown a renewed vigour in engaging with India’s neighbourhood. 3 Neighbourhood First: Navigating Ties under Modi Geography, Regional Cooperation and Geoeconomics The term ‘South Asia’ was a cloak proferred forth by foreign elements—emerging American area study specialists1—to garb the Indian subcontinent and surrounding area, built on the frontiers demarcated largely by the British Empire. The Himalayan mountains in the north and the waters of the Indian Ocean in the south, related nomenclature of West Asia, Central Asia, East Asia and Southeast Asia has served to broadly ‘hem in’ the region under discussion, as also separate it from these other identified regions. The expanse of South Asia thus covers the original seven SAARC nations, and at times, Afghanistan to the west and Myanmar to the east. The ties that bind the region, effectively underscoring the inevitability of a geographic South Asia, range from the historic colonial legacy to the cultural, linguistic and religious commonalities, to developmental and economic co-dependency.2 The fulcrum of the region is very much India, due to its sheer size, population, economic weight and political voice. Indeed, India’s neighbours are more closely bonded with it, historically and culturally, than with each other and/or their other neighbours.3 The fact that no inner SAARC nation can interact with another member of the grouping without crossing the behemoth of the region is another telling factor. Likewise, economic ties are also stronger between India and its neighbours than they are between its neighours. India has inevitably engaged with its neighbours, even if to varying degrees over the years: Ashok Malik covers the basics of India’s neighbourhood policy since independence in Chapter 2, while Varun Sahni explores the building blocks of any neighbourhood policy, starting from what constitutes a ‘region’ in Chapter 6 on why nations engage with their neighbours. India’s neighbourhood has even been called the first ‘concentric circle’ of Indian foreign policy,4 particularly as the political establishment has faced the need to update its strategic thinking about its engagement and place in the world. On the other end, for neighbouring nations these same asymmetries have meant a continued fear of Indian expansionism in the region, domination in trade and other matters, and interference in national affairs. For instance, New Delhi has been accused of supporting non-state actors or “pro-Indian” elements opposed to the government of the day with the intention of shaping the domestic politics of its neighbour in a manner more conducive to its strategic and political interests—Rajeswari Pillai Rajagopalan, for instance, describes at length to what extent the ‘Tamil factor’ on India’s end has resulted in what has been perceived as interference by Sri Lanka in Chapter 14 on the India-Sri Lanka bilateral. Nationalism has played a key role as all South Asian nation-states are currently in the process of state- building; facing a ‘big brother’ has made it all the more important to sustain an independent identity. As Jayant Prasad describes in Chapter 10 on India-Nepal ties, sections of the Nepali elite believe their political fortune is tied to defining their nationhood and interests in opposition to India. Conversely, India has also been accused of neglecting the region and of pursuing narrowly defined self-interest through primarily bilateral ties. This persisting trust deficit, the India-Pakistan equation, and a lack of political will particularly on India’s end5 have continued to best the existence of linkages and interdependencies, physical and otherwise, and mark bilateral ties, as noted in several neighbour-specific chapters. And yet, acknowledgment of the region continues to drive forward engagement. Thus the first formal concretisation of the region, through SAARC in 1985.6 The motivation to check India’s influence and engage with it on an equal footing only brings to the fore the curse of geography. Several factors have prevented the organisation, 4 India, India’s Neighbourhood and Modi: Setting the Stage thus far, from functioning; recent developments, however, point to a re-energised enthusiasm and interest towards regional cooperation, if not through SAARC—although the South Asian University inaugurated last summer was “one of the most visible sign[s] of transformation of SAARC from declaration to implementation” as per the Indian Minister of Foreign Affairs7—then, as Sheel Kant Sharma devolves in Chapter 16 on what can perhaps be considered the ‘lame duck’ organisation, positively through sub- regional mechanisms. The Modi government is keen to not only cooperate but also integrate, given not only the reality of globalisation and common spaces and mutual destines, but also of renewed focus on geoeconomics in the region. Geoeconomics, here, is being taken in its broadest sense possible: the “concert between domestic economic goals, the global strategic environment and, above all, the opportunities that arise from geography.”8 Thus, these impulses, along with India’s regional and global ambitions, have led New Delhi to look beyond its immediate SAARC neighbourhood to an extended sphere of regional connectivity, one which includes Iran to the west, Central Asia northward, and Myanmar and Southeast Asia eastward. Connectivity has become the byword, both in bilateral and regional contexts: This has been amply highlighted by Modi during his visits to neighbouring countries and his speech