An IDC Analysis


New Delhi, 15 May 2006

We came across an excellent article in the Armed Forces Journal, by Brig Arun Saghal, a retired Armoured Corps officer and Parama Sinha Palit, his colleague in the USI. They were perhaps the first to coin the phrase, ‘The Singh Doctrine’ and they explain it very cogently and we post it below for the benefit of our readers.

In the past we had often showered praise on India's soft spoken Prime Minister Dr Manmohan Singh. We recall 1991, when he saved India from financial default as Finance Minister by garnering a $3b loan from the Paris Club in Bangkok and then came to Singapore to inform the world that India was open for investment in the power sector. He then systematically ushered in the dual rate of exchange for foreign capital, which skeptics like Deepak Nayyar said would not work. He began liberalisation of the Indian economy for the second time in India's history. The economy began to look up.

Unfortunately he then went into the opposition in Parliament as a Rajya Sabha MP, but seldom spoke against the BJP Government's economic policies because they were a continuation of what he had begun. He continues on that path today as India's PM. He had then contested for Parliament from the New Delhi constituency, but had lost and that tells us many things about how even the elite voters of India vote. A capable Leader was not able to garner votes as in is honesty he did not woo voters with side shows or personal promises but only touted his abilities. That in a caste ridden and lawless Delhi was a losing combination.

As PM Dr Manmohan Singh has steered the economy to a higher plane despite the Left parties breathing down his neck. Sonia Gandhi looks after the political housekeeping and so far the team is working well and India's economy is on a fast growth path and we hope the Left does not derail it.

But the notable praise for the Government must be for its strategic approach to the world and greater interest in security affairs. Brig. Sahgal was posted in the Integrated Defence Staff and spent time in the Pentagon appreciating the system called ‘Net Assessment’ and has applied his honed skills to expound what he calls ‘The Singh Doctrine’, which now includes a ‘Defense Framework’ with USA, close cooperation with Singapore and five other states in operations, the full involvement of India’s Navy's in the Indian Ocean Region and engagement with Pakistan and China. India will have an overseas presence in a military form in an airfield in Tajikistan and is looking out for long term security interests which are linked with energy security.

We also learn from the media that Dr. Manmohan Singh was sounded out for the post of UN Secretary General. If true this would be a rare honour indeed and even if he does not accept it, he should inform the nation –– it is a feather in the Nation's and Dr. Manmohan Singh's cap.

The ‘Singh Doctrine’

By Brigadier Arun Sahgal (Retd.) and Parama Sinha Palit

(Coutesy: The Armed Forces Journal)

Perhaps the most salient development in international politics in the brief history of the 21st century is the budding strategic partnership between the U.S. and India. America’s ideas about India are, unquestionably, changing. In Washington, strategists project India as a “strong and independent” nation representing “a strategic asset” even as Delhi insists that it is only a “partner” and not a formal ally. In the emerging U.S. view, the two countries’ interests are no longer at loggerheads.

Indeed, the recent “strategic coordination” being carved out seems to suit both Washington and New Delhi’s long-term strategic objectives. Whether one refers to the recent New Framework for the U.S.India Defence Relationship, agreed in June 2005, or the Joint Statement signed the following month, or the bonhomie of President Bush’s recent summit in India with Prime Minister Manmohan Singh, both the countries appear to be engaged in the opening courtship of an increasingly intense relationship.

To say that this kind of partnership is unparalleled in the history of IndoU.S. relations is an understatement. While some degree of cooperation was witnessed even during the Cold War years, we regard this as a new phase of partnership between the two countries; it’s the genuine article. This “transformed” relation seems to be in the larger interest of the U.S. and fits well into what the Quadrennial Defense Review report underlines as “America’s security role in the world” that “provides the basis for a network of alliances and friendships.”

Our concern is that the two sides may have very different perspectives about what is driving this relationship. While the U.S. perspectives are routinely articulated both within the official circles and plethora of American strategic think tanks, the Indian perspective, on the other hand, is often more nuanced than really ever clearly articulated. We hope to explain the logic and context driving IndoU.S. relations from an Indian perspective.

It’s The Economy, Stupid!

The current energy in the relationship flows from a new awareness of common security and strategic concerns, from both regional and global perspectives. While these are instrumental in shaping the strategic partnership, it is really, in our judgment and in the eyes of many Indians, economic imperatives that will provide the most crucial, long-term drivers.

With India beginning to play an important role in determining global economic prospects, the U.S. — and indeed much of the rest of the world — is eager to seize the opportunity of expanding business and commercial links with a “lumbering elephant” India. Greater economic engagement entails a win-win scenario for both nations. American businessmen anticipate lucrative returns from one of the largest and fastest-growing markets in the world, while India seeks higher inflows of capital and, just as important, access to advanced technology and global marketing networks through stronger commercial links with the U.S.

As promising as this natural economic process is, it is threatened by political land mines. Much of the optimism regarding a buoyant Indian economy and its attractiveness to the U.S. and international investors depends on India’s ability to carry out further reforms for enhancing and sustaining its growth levels. Let us be clear –– Indian economic reform is a vital strategic interest for the U.S.

Sustained economic growth is not only a strategic interest but also the key to what kind of great power India will become, how Delhi will view its role in the world. At the moment, among developing Asian economies, China continues to outperform India. India believes it needs to emulate the Chinese success for translating its potential into outcomes. Keeping up with China is, to an important degree, behind the policy shifts in India. The Indian political elite has come to a fundamental realization that the path to India playing a larger strategic role both in Asia and the world is inextricably linked to sustainable economic development through reforms and infrastructural development.

Consequently, growth-enhancing policies, capable of putting India on a high annual growth trajectory — the slogan is “8 percent plus” — are essential if India is to lay aside its past strategy of “nonalignment.” The U.S. needs to play a major role facilitating India’s economic and technological development, putting into place the kind of trade and investment policies Washington has adopted vis-a-vis China, while recognizing the vast strategic differences between Delhi and Beijing. Such signals are important not only to reinforce India’s credentials as a leading world economy, but also to impart strong internal momentum to IndoU.S. ties. No American should regard India as a “strategic competitor.”

Optimism And Doubts

This is, at its core, the key tenet of what might be called the “Singh Doctrine.” India’s prime minister is also the father of India’s economic liberalization. He is not simply at the helm of the state but is a larger figure in shaping India’s efforts at economic reforms, and thus exercises a concomitant political influence as an intrinsic part of India’s emergence on the world stage. By leading India in the direction of jettisoning the socialist model, Singh’s policies are being looked upon the way in which, leveraging economic and technology growth, India can realize its desire to be a reckonable world player.

The key to the success of the Singh Doctrine is sustaining economic progress while building strategic capabilities. There remain many contradictions in India’s economic policy, and whether India can maintain its growth — particularly if the U.S., in reaction to Chinese policies, moves to limit the openness of its markets — is an open question.

India’s rapid economic progress in recent years has earned it the distinction of being one of the fastest-growing economies in the world. After growing by a robust 8.5 percent in 2004, India recorded a growth rate of almost 7 percent in 2005 and is expected to grow anywhere between 7.5 to 8 percent in 2006. Recent history suggests that, apart from China, no other major economy has been able to grow at such high sustained rates. Indeed, the striking growth rates of China and India have shifted the momentum behind global economic expansion to developing Asia. While the expansion of global economic activity used to be determined primarily in the U.S., Europe and Japan, the balance appears to have shifted decisively toward China and India.

Such a critical shift in the locus of global growth has significant strategic implications. China’s continuing economic prowess for more than a decade has already allowed it to incrementally leverage its economic and trade potential to enhance its political and strategic importance in Asia and, increasingly, across the globe. Indeed, Chinese growth is such a key factor in international politics that even the staunchest allies of the U.S. in Asia, such as Australia, are unwilling to support policies that bring their economic interests in conflict with China. The strategic thrust of the Singh Doctrine and of sustained Indian economic growth and trade relations in Asia is to propel India to a similar position.

The Singh Doctrine is, if nothing else, in synch with emerging wisdom on India’s potential. A much-discussed and debated report by Goldman Sachs indicates that the so-called “BRIC” states — Brazil, Russia, India and China — are expected to grow to account for GDP reaching about half that of the six leading world economies — the U.S., France, Germany, Japan, Italy and Great Britain — by 2025. The report goes on to single out India as the one BRIC nation that can maintain growth rates above 3 percent until 2050, while the rates of growth in the rest slow down. The report is indicative of the level of optimism across the international financial community.

Doubts, however, continue to linger over the country’s ability to sustain high growth rates in the short to medium term. The euphoria over the country’s prospects continues to be shrouded by its underperformance in social and human development. Until recently, India’s growth rates, as high as they have been, have remained insufficient to make an appreciable difference in the large poverty levels in the country. Indeed, it is difficult to envisage India developing into a mature, capable and dynamic economy unless its economic growth is able to significantly ameliorate poverty. These doubts are quite similar to the ones expressed about the sustainability of the Chinese economic miracle, where success in the cities of the Pacific coast has yet to be replicated in the hinterland. A similar failure in this regard is bound to have repercussions on India’s economic and strategic capacities; moreover, as a democracy, the government in Delhi cannot be as cavalier about popular opinion.

Achieving and maintaining a growth rate of 8 percent or more is a tall order. Although the Indian economy has huge untapped potential, strategic success depends on radical reforms in key sectors. Despite progressive removal of controls, India continues to remain inward-looking in some significant activities. These include restrictive policies for foreign investment in retail trade; minority foreign equity participation norms in civil aviation, banking and insurance; rigid labor laws; prevalence of largely inefficient food and fertilizer subsidies; and lack of a coherent privatization policy. Infrastructure — a vital necessity for higher growth — continues to suffer from low investment and poor regulation in most components. On the other hand, limited public finances constrain the abilities of the state and central governments to deploy adequate resources to social and human development.

The Singh Doctrine will require a big push. The prime minister exudes optimism about the prospects of economic reforms, but divergent views within the ruling coalition are often emerging as roadblocks. While Singh continues to wax eloquent on ushering in liberal policies in politically sensitive segments of the economy, opposition to reforms displayed by prominent interest groups such as the left parties impede the emergence of a clear consensus on reforms and cast doubt on the establishment’s ability to carry forward the reform agenda.

Indian Growth And U.S. Interests

The Singh Doctrine equates an economically strong India with a strategically secure India. The broader vision of security, which moves beyond military security and encompasses political, environmental and economic security, presupposes availability of adequate resources for enhancing commercial, social and human capabilities. In the eyes of many Indians, China is an outstanding example in this regard. The overall increase in capabilities — including China’s growing military strength — is the result of growth-enhancing reforms.

And here the role of the U.S. is crucial. While initiating and implementing reforms is, without doubt, a necessary business for Indian domestic policy-makers, their decisions alone won’t be sufficient. In a globalized world, Indian economic reforms are unlikely to yield envisioned benefits without effective partnerships. Mutual coordination between India and the U.S. is significant in this regard; economic and strategic cooperation are inseparable.

India looks forward to the U.S. for securing greater inflow of foreign direct investment in critical sectors, achieving technology upgrades and quality benchmarks, and the best-practice systems of corporate governance. In return, India has a growing domestic market, a well-educated and substantial English-speaking workforce, mature legal traditions and relative economic transparency. India is like China in many ways, but unlike it in many crucial dimensions.

Indeed, over time, economic cooperation promises to be the key plank in the development of any sustained strategic partnership between the U.S. and India. The faster India grows, the deeper the partnership will become. From the economic benefits — on both sides of the equation but most certainly for India — will come the impetus and rationale for conjuring the necessary will to make a geopolitical partnership work.

The Challenges In Asia

The trade relationship will have to be strong indeed to weather the storms on the horizon in the region. Seen from Delhi, Asia as a whole is an increasingly complex geopolitical scenario in a marked state of flux.

American political and strategic commentators often refer to the 21st century as “the Asian century.” At the same time, the U.S. appears to be disturbed by the manner in which Asian balance of power is shaping up. While Asia’s growing economic power may translate into greater political and economic power, the emergence of a volatile Asia in the backdrop of growing Chinese political and economic influence and massive military modernization poses serious concerns to both Washington and Delhi. It was perhaps this underlying concern that made the Indian foreign secretary recently underscore the necessity of maintaining the balance of power in Asia.

Indian strategists believe that a major realignment of power structures in Asia is afoot. Going by the current trends, East Asia remains turbulent. North Korea continues to simmer with no signs of early resolution of proliferation crisis. Second, there is a pronounced deterioration in Sino-Japanese relations among signs of Japanese military revivalism. On the Korean peninsula, trends appear to be favoring reconciliation between two estranged parts of the same country. On the crucial question of the future of Taiwan, incremental integration through political and economic influence appears to be only a matter of time, even as China continues to flex its military muscle. Similarly, Southeast Asia appears to be increasingly under the economic and political influence of China, with growing dependency on trade and investments from mainland China. With 15 percent to 25 percent of their gross domestic products dependent upon mainland China, these countries are unlikely to adopt a path of political or military confrontation, whatever the provocation.

Similarly, Central Asia is marked by growing Chinese influence. The strategic understanding between Russia and China, a product of the immediate post-Cold War period but revived in recent years through the Shanghai Cooperation Organization, has begun to show results, particularly in regard to energy needs which are a core concern in Beijing. The politics of oil pipelines, of which the Kazhakstan-China pipeline is the recent manifestation, are at the core of the matter in the region.

West Asia remains in turmoil, evident from the growing Shiite-Sunni divide. This could accelerate into a major communal confrontation, engulfing almost all major oil-producing regions. The portents of proliferation which today remain centered on Iran could extend beyond. There is also the specter of growing Chinese influence as an alternative choice to Western interests, particularly in infrastructural development and military sales. Given the above profile, it is clear that the balance of power is undoubtedly shifting to China-centric Asia, in particular East and Southeast Asia. Further, there are growing Chinese inroads into South Asia based on military and defense cooperation, infrastructural projects and bases in the Indian Ocean in what is often referred to as a “string of pearls strategy.”

Thus the “rise of China,” which has been peaceful until now, appears to worry America policy-makers who concern about increasing volatility across Asia. In fact, there is a strong undercurrent that the rise of China, coupled with U.S. strategic overstretch on account of continuing commitments in West Asia and Afghanistan, is increasingly constraining American power and influence in Asia. Asian analysts see that the U.S. is being forced to operate within existing geostrategic constraints, thus seriously impairing the U.S. capacity to force politico-military escalation.

The issue for Indians is whether the developing scenario is likely to bring about peace and stability in Asia or simply create a new set of dependencies. Thus, we worry less about containment or confrontation with China than creating an environment where nations can make balanced choices based on their national interests. And so we think that an economically and militarily strong India augurs well for preserving the regional balance of power, and that an Indo-American understanding can play a crucial role in providing the stability in Asia that we seek. India’s goal is to realize economic and social growth rather than geopolitical confrontation.

India has much to contribute to maintaining a stable balance. Straddling the main sea lines of communication in the Indian Ocean and located on the flanks of two important fault zones — that is, East Asia and West-Central Asia — India can be an important swing player. India is already following a three-pronged strategy of integrating itself with the world economy, ensuring political integrity and security of the country, and last, but not least, attempting to further its interests in Asia, by leveraging its economic and political power. It is in this that the true value of Indo-U.S. relations lies and the essence of propelling India to play a larger strategic role initiates.

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