On a whim and a prayer



Indians are sovereignty conscious. As a number of studies have shown, even by the standards of other emerging powers, India rates unusually high in terms of the fears of its middle class that their country’s engagement with the world will mean the loss of independent policy making.

“Non-alignment” can be seen as a past label for this sentiment. The present favourite in India’s foreign policy parlance is “strategic autonomy”. In pursuit of this, activists on both left and right argue against New Delhi doing too much militarily with the United States or other Western nations, putting all sorts of complex restrictions on foreign investment, voting at multilateral fora on sorts of curious “third world” issues.

Where exactly has all of this now led India today?

The Indian economy, as a former senior Reserve Bank of India official told me several weeks ago, is on a “knife’s edge” with almost no buffer against any negative international economic development. The recent yo-yo rupee is evidence of how true this is.

US central banker muses that it may be time for the US to rollback its loose monetary policy — and the rupee crashes. South Sudan, Libya and almost any country with over one million barrels a day of oil production undergoes a spasm of violence, the price of oil rises — and India’s current account deficit comes under threat. Election-driven welfare programmes like the food security bill or greedy silliness like the retroactive Vodafone would normally be blips on the economy. Today they each hold out the possibility of a credit rating downgrade.

And this is all very minor stuff. Tremors from across the globe now have a tsunami like impact on India. One can only wonder what would happen if a genuinely big daddy of a global crisis hit. Israel bombing Iran and plunging the Persian Gulf into war; Chinese and Japanese warships exchanging missile fire; or the eurozone disintegrating in a messy way — each of these would sink the Indian economy.

The past five years of zero economic reform, cold shouldering foreign investment and broadly doing as little as possible on the business front have led to a situation where sovereignty has been suitably debased.

The Indian finance minister is perpetually travelling to secure a billion of investment here and there, India contemplates overseas government bonds and FDI rules are changed overnight. To preserve economic independence, in other words, India has been pushed into the worst of both words.

The story is only slightly better in foreign policy. The United States is pulling out of Afghanistan and India is fretting about the consequences. But no one expects New Delhi to have a solution or any real influence in the country.

The US relationship is officially in tatters thanks to the sovereignty-rich civil nuclear liability law that was past. This, in turn, feeds into a sense of weakness towards China. Getting friends in the international system means sacrificing a bit of independence in each case. The sacrifice does not matter, what matters is what the country got in return. The cost-benefit analysis of sovereignty is what matters.

A country, the textbooks say, seeks first and foremost to control uncertainty in its foreign policy environment. India, in part because it has an outdated and impractical notion of sovereignty, has succeeded in ensuring that it is at the mercy of uncertainty in almost any part of the world. Neo-colonialism in the 21st century: to be enslaved through one’s own isolation and lack of networks.

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