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Economic Gamble

Written by Anees Jillani  •  Cover Stories  •  November 2011 PDF Print E-mail

China and India, skyrocketing Asian economies, have had rocky diplomatic and military relations. In attempts to boost its economy, the US will have a tough time trying to rub shoulders with both. India will be the most populous nation, surpassing China sometime around 2025. The United States will remain exactly where it is now: in third place, with a population of 423 million. This offers a revealing look into the future. It shows that China’s population boom is finally slowing down, while India’s population continues to rise; the latter’s population, according to the 2011 Census is currently 1.21 billion.

China’s population at present is slightly more than India’s but the difference in the GDP is phenomenal: $3,250 versus $1,311 billion. This difference is then reflected in their respective defense budgets: $84.9 versus $30 billion. Moreover, the state of poverty is very acute in India as compared to China. It can thus be surmised that there is at least, as of now, no comparison between the two states as far as the economic and social indicators are concerned. Things that India can cite in its favor are its democratic credentials which to its discredit are marred by serious corruption and criminal scandals. It also dangles its booming market as an attraction to western capitalist powers, particularly the existence of its large middle class.

Both China and India are recent discoveries for the West after they adopted the capitalist market-oriented economic models in the early nineties and achieved unprecedented economic growth rates. While looking for potential markets, it is thus not advisable, if not impossible, for the West to ignore these states.

The economic importance of India can be gauged from the fact that the United States recalled its ambassador to New Delhi when American companies Boeing and Lockheed Martin, along with Russian corporations, lost out in a $10.4 billion deal for 126 combat jets for the Indian Air Force in one of the world’s largest military contracts. Many saw this as a possible reflection of India’s unhappiness over the continuing US restrictive policies relating to the transfer of high technology to India. Others interpreted it as an Indian ploy to pressurize the United States to support India’s campaign for permanent membership in the United Nations Security Council, although President Obama had supported this bid during his October 2010 visit.

The Americans heaved a sigh of relief when a few months after opting for the European aircraft, India decided to go for the biggest defense deal in its history with the US by agreeing to buy ten Boeing C-17 strategic heavy-lift planes worth $4.1 billion. The jubilant US ambassador to New Delhi said that the sale would boost strategic ties and generate 23,000 jobs in America. “This sale captures the mutual benefits of the US-India global partnership. For India, the sale adds strategic and humanitarian muscle to its defense needs,” the ambassador said in a statement. He said that the sale will further strengthen the strategic ties between American and Indian armed forces, leading to enhanced cooperation for a safer and more secure region and world.

Facing a national debt of $14 Trillion, the Indian deal was a ray of hope for the unemployed in the United States and the Obama administration. Its extent also showed the importance of India to the US economy.  This is the bottom line when it comes to Indo-US relations. This may be coupled with the constant American endeavor to counter the Chinese influence in the region and to an extent in Asia by aligning itself with India. However, this may not be as easy as it proved to be in the sixties.

India has border disputes with almost all its neighbors, with the one with China on the McMahon Line being the major one. The Chinese way back in 1914 had refused to sign a treaty with British India at the Simla Conference on this very issue and the impasse continues to date. After the communists’ take-over in 1949, troops were sent to “liberate” Tibet in 1950. India reluctantly acquiesced to this annexation but the situation became complicated with the Khampa rebellion in 1956 that forced some Tibetan leaders to flee to India. In 1959, large-scale uprisings in Tibet further aggravated the situation by forcing the Dalai Lama and many of his followers to flee Lhasa for India. Indian premier Nehru met his Chinese counterpart Chouen Lai to resolve the dispute but failed. The impasse over the border eventually led to a war between the two states in 1962 which resulted in a humiliating defeat for India.

The war, coupled with the change of leadership in China in the seventies, resulted in a serious impasse in the Sino-Indian relations till Vajpayee, as the Indian foreign minister, visited China in 1979 to break the long hiatus in ties. This was followed a decade later by PM Rajiv Gandhi’s visit (1988) that brought about a serious thaw in relations. The two countries in 1996 agreed on confidence-building measures to keep the borders tranquil and peaceful.

Sino-Indian relations were improving, perhaps to the dismay of the Americans, until May 1998 when India justified its nuclear tests on grounds of security threats emanating from China. The Chinese strongly reacted to it and the resultant tension ensued until PM Vajpayee allayed their anger during his 2003 visit.

Sino-Indian relations since the Vajpayee visit have been even keyed and several Chinese leaders after decades have visited India (Chinese Premier Wen Jiabao’s 2005 visit which resulted in the two states declaring a strategic partnership; and President Hu Jintao’s 2008 visit in which he announced ten points to strengthen bilateral ties).

The Americans realize that both China and India are not pawns that can play in their hands and the British policy of “divide and rule” may not be successful in this day and age. Both the countries remain important markets not just for the Americans but for the whole of Europe. The western powers thus may not be unfavorably affected if the two countries maintain cordial and peaceful relations. India in the midst of this cordiality can help the West maintain the balance of power in the region. The question, one wonders then, sitting in Islamabad, is where does Pakistan fit into this strategic rigmarole? The answer might be difficult, and even unfavorable, but this is something that all Pakistanis need to seriously ponder about.  

Anees Jillani is an advocate of the Supreme Court and a member of the Washington, DC Bar. He has been writing for various publications for more than 20 years and has authored several books.

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