India and East Asia: The Look East Policy G. V. C. NAIDU* Abstract Key Words The global centre of gravity is shifting to India, East Asia, Look East policy, India- East Asia, due to its remarkable economic U.S., India-China. dynamism, but the rise of new power centres and their assertive attitudes also brings huge security challenges. India is renewing its age-old links with East Asia; after a long hiatus it is looking to East Asia once again to engage with it more Introduction purposely. Compelled by political and economic imperatives, New Delhi launched the ‘Look Until as recently as a decade ago, most East’ policy in the early 1990s, which, despite its 1 slow take-off, has evolved into a comprehensive assessments of East Asia tended to ignore engagement underpinned by several political- India as a factor in regional economic institutional mechanisms, strong economic or security affairs, but that has changed association through a variety of comprehensive remarkably, and today there is hardly any cooperation agreements, and robust defence links and security cooperation. As a result, discourse that fails to make reference to India has now become an inalienable part of India. This fundamental shift has come the evolving East Asian economic and security about in part due to the ‘Look East’ order. While India closely collaborates with the U.S., Japan and a few ASEAN countries policy which New Delhi launched in the in the management of regional security, India’s early 1990s in the aftermath of the Cold relations with China are undergoing major War, driven by economic imperatives changes as they become increasingly complex. and political expediency. The success story of India’s engagement with East Asia would not have been as dramatic if it were not for the fact that the East * G. V. C. Naidu is Professor and Head of Asian region itself has been witnessing the Centre for South, Central and Southeast unprecedented developments whereby Asian & Southwest Pacific Studies, School of International Studies, Jawaharlal Nehru many countries found it useful to involve University, New Delhi. India in regional affairs. While the 53 PERCEPTIONS, Spring 2013, Volume XVIII, Number 1, pp. 53-74. G. V. C. Naidu unparalleled economic dynamism that of around US $28 trillion in PPP terms, is sweeping the region is its most visible East Asia is already nearly as large as the feature, serious security problems also United States and the European Union beset the region, which could undermine combined (and is set to overtake them by peace and stability and seriously affect 2013). Besides it is being home to nearly economic vibrancy. Evidently, the rapidly half of the global population, the world’s increasing economic interdependence, fastest and largest growing markets are both in terms of intra-regional trade located in this region. Now that talks are and investments, does not seem to have going to begin in early 2013 for a Regional translated into the much anticipated Comprehensive Economic Partnership political dividends. The complexity (RCEP), it will become the single largest of the regional environment is further free trade area in the world. At the compounded by the recent resurgence same time, the regional security order is of new global power centres- most also undergoing tectonic changes. The prominently China and India. regional great powers, China, India and Japan, are redefining their roles and are increasingly becoming more assertive- While the unparalleled eco- this is likely to become a major enduring nomic dynamism that is sweep- feature of East Asia in the coming years, ing the region is its most vis- which will play a key role in any new ible feature, serious security regional order that may come about. The problems also beset the region, post-Cold War unipolarity is transiting which could undermine peace towards an East Asian multipolarity. and stability and seriously affect This transition is unnerving because one economic vibrancy. is not sure if it is going to be smooth and free of conflicts and tensions, so that regional peace and stability remain It must be kept in mind that today unaffected- a precondition for continued East Asia’s ascent is represented not only economic dynamism and development. by China and India, but by the rise of the In any case, there is no question that the 2 entire region. Consequently, its overall East Asian region is under global focus. weight in global affairs is also increasing Against this backdrop, where India significantly, and hence developments emerges as a major economic power with here will have major implications for the a formidable military, many countries, rest of the world. With a combined GDP especially the Association of Southeast 54 India and East Asia: The Look East Policy Asian Nations (ASEAN) and Japan, have Backdrop found it useful to involve India in regional affairs, not only to take advantage of In order to gain a perspective on the its economic potential, but also for current rise of East Asia and India’s role in its potential to contribute to regional it, it must be kept in mind that the global security. Consequently, today India is an center of gravity has been shifting from indispensable part of East Asia and its time to time. For nearly two millennia, role and interests are steadily expanding the Indian and the West Pacific Oceans within the region. That, in a way, also dominated global politics, with China and India at one point controlling nearly signifies the profound and fundamental two-thirds of the world’s GDP, before shifts the region is witnessing. the European industrial revolution and While the roots of India’s engagement their voyages in search of resources with East Asia can be traced back to and markets eventually led to the ancient times (nearly 2500 years ago), colonisation of the majority of today’s recent relations are a post-Cold War global south. This marked the major rise phenomenon, what is popularly called of the Atlantic and thus the global focus the Look East policy. What began as an on that region. The first sign of the re- attempt to improve bilateral relations, ascent of the Pacific appeared with the to partake in the regional economic emergence of the U.S. as a formidable dynamism and carve out political space power in the late nineteenth century, for itself, over the years has evolved into especially following the defeat of Spain in the 1898 Spanish-American War. one of the most successful foreign policy This was followed on the other side of initiatives that India has undertaken. It the Pacific by Japan’s meteoric rise and now encompasses a range of political, the defeat of the mighty Czarist Russia economic, strategic and cultural activities in 1905, which signaled the first sign of and interactions. The following article, Asia’s resurgence. Japan’s phenomenal in addition to providing a brief backdrop post-war recovery in the aftermath to East Asia, its growing significance of the Second World War was soon and principal features, explicates the followed by the emergence of the four contours of India’s relations with East Asian economic tigers, and then several Asia, especially the evolution of the Look Southeast Asian countries, such as East policy, its various phases and the Malaysia and Thailand, joined the ranks current status. of the tigers. Asia’s rise was complete, 55 G. V. C. Naidu firstly, with the success of China’s famous Japan is saddled with a runaway public ‘four modernisations’ program, launched debt, which by 2012 was nearly two and in the late 1970s, and then with India’s a half times the economy, as well as an recent emergence consequent upon ageing and declining population. It is the liberalisation of its economy in the a laggard compared to the rest of the early 1990s. With this, the Pacific once region; however, it would be imprudent again hogged the limelight, and now to underestimate its strengths: aside the Indian Ocean region’s economic and from huge personal financial assets at geostrategic significance is increasing around US $17 trillion (as of December because of its huge resources (notably 2012), it is the third largest economy, oil and gas), which are fuelling the with a GDP of over US $5 trillion. More phenomenal growth in East Asia, and the importantly, it is still a leader in several rising economic opportunities present in niche advanced technologies. the Indian Ocean rim region. Today three out of four of the world’s Unlike in the past, when their largest economies are located in East fortunes were dependent on Asia. By several estimates China is likely the U.S. and Western Europe to become the largest economy by 2035- because of heavy reliance on 40, and India is already the third largest their markets, the East Asian in PPP terms. By 2008, China had countries are coming of age emerged as the largest manufacturing economically. nation, surpassing the U.S., and is now the largest trading nation in the world. Despite considerable slowdown in the Others, such as South Korea, Singapore, last couple of decades, Japan continues Hong Kong and Taiwan, have emerged as to be an economic powerhouse. The major capital surplus countries, and their Asian economic tigers, followed by economic roles are rapidly expanding. Southeast Asia and China, were the Of the nearly US $7 trillion total foreign biggest beneficiaries of Japanese aid, exchange reserves held by the East Asian investments and technologies. However, countries, the above four countries alone ever since its asset bubble burst in the have nearly US $1.5 trillion. In addition, early 1990s, the Japanese economy has virtually the entire ASEAN region is gone into a tailspin, battered relentlessly faring exceptionally well economically.