The confucian challenge

By V.N. Paranjape

The Cabinet Committee on Security is engaged in reviewing the Sino-Indian relations in the light of Beijing's belligerent posture towards India, though there is bonhomie between the leadership of both the countries as and when they meet each other at different levels. China professes friendship with India, but in terms of implementation it is neither willing to settle the border dispute nor abstains from claiming more territories which belongs to India. Thus, there is prevailing an uneasy peace between the two countries. One cannot rule out a large scale military operation by the Peoples Liberation Army (PLA) in the eastern sector. China has settled its border disputes with all its neighbouring countries except India. In any kind of border settlement with India the PLA will have the final say, and there are both hawks and doves within not only the PLA but also the Chinese Communist Party (CCP).
The influence of the PLA can be gauged from the fact that China's military expenditure is estimated at $150 billion per annum in terms of purchasing power parity, making it the world's second largest military spender, after the USA. China has the largest armed force in the world and has embarked on a rapid modernisation programme with particular attention to naval and air expansion. It was the second largest importer of arms in 2005-06. It is also an arms exporter. China has clearly given up the defensive war strategy and switched to one of power projection.
The Chinese economy's rate of growth has been very high and per capita income doubled in a record 10-year period. In the next 25-years China may emerge as the world's largest economy and military power. China tops Asia's list of most populous nations in the world; India is at second place, Indonesia is number four, followed by Russia and Japan. Japan is, of course, the world's second most prosperous economic power and all the Asian economies except Russia are growing fast. Even Russia is likely to reverse the present trend in the next few years. The Asian nations do not have a single civilisational tradition as the European nations do, though almost all of them have long civilisational continuity. As nation-states, India and Indonesia are relatively young, while China and Japan have an age-old consciousness of national identity.
There are at least three possible scenarios in respect of China. One, it continues with economic pluralism, which in turn would lead to political pluralism as happened in South Korea and Taiwan. Two, that it increasingly becomes democratic and federal. Though this is the most desirable scenario, it is not particularly likely. Alternatively, China might try to combine economic pluralism with political authoritarianism. In that event, it would emerge as the most powerful authoritarian state in history and may pose the threat of hegemony over Asia. A third scenario is the mismatch between political authoritarianism and economic pluralism, resulting in a breakdown like that in the Soviet Union. This would not destabilise China, it would send seismic shock waves through the rest of Asia.
In a recent lecture in South Korea, Professor Samuel Huntington of Clash of Civilisations fame seemed to consider the first scenario particularly likely. But at the same time, he also discussed the possibility of Chinese hegemonism over Asia. In his recent testimony to the senate committee Dr. Henry Kissinger referred to the possibility of conflict between China and India over south-east Asia. The three scenarios mentioned above have been analysed in an article in a recent issue of The Washington Quarterly. Dr. Kissinger also advocates a strategy of international balance of power for the United States in a polycentric world, in which the U.S. Japan, the European Unions, China, Russia and probably India, would be the major players. In the light of the communication and transport revolution and the reach of modern weapons, balance of power must be considered from a global, not regional point of view.
In his Seoul lecture Professor Huntington propounded his domino theory. He felt that once China becomes increasingly powerful, most East Asian states would be accommodative towards it and choose to align with it. The only Asian countries like to stand up to China are Russia, India, Vietnam and Indonesia. Even Japan, according to him, would prefer to jump onto the China bandwagon. If Professor Huntington's view of Dr. Kissinger's prescription has any validity in the eyes of the American politico-strategic establishment, the latter should be in the process of building countervailing power centres. This would entail developing Russia, India, Indonesia, Vietnam and Japan as major powers. Instead, the US is busy obstructing their growth as countervailing powers, thereby making it easier for China to pose a hegemonic threat to Asia.
Such perceptions of the growth of Chinese power are relevant in the evolution of international relations, whether or not high-intensity wars continue to be considered as viable policy instruments. It is in context that India needs to build its image as a nuclear weapon capable missile power. Most US State Department and Pentagon officials do no seem to have thought about the future strategic balance of power in Asia.
For those conditioned by four decades of bipolarity, in which the balance of power was in their favour, it may not be easy to envision the vastly complicated balance of power problem in a polycentric world shrunk by the revolutions in transport, communication and weapon technology. Long ago, Napoleon had said of China that the dragon should be allowed to sleep and not be stirred. But now the dragon has woken and is becoming less slumberous every day. Even allowed to sleep and not be stirred. But now the dragon has woken and is becoming less slumberous every day.
Even while cultivating China's friendship and maintaining good relations with it, India cannot afford to overlook the consequences of its growing might, however peaceful the latter's intentions may be. Indeed, nor can the US. INAV

Extremism- A challenge to democracy

By Pramod Kumar Tripathi

The guerrillas-who swooped down on three police stations, two district armouries, a police outpost and a police training school in Nayagarh in Orissa late on February 15 evening and killed 14 police personnel and one civilian-are holed up in caves of Gasama hill near Gallery in Ganjam district and Tikabali forests in Kandhamal district. Fierce gun battle between security personnel and Maoists was continuing in several places in Nayagarh and Kandhamal districts for the third day on February 18. Raids were being conducted at possible hideouts in Rayagada and Gajapati districts. The Orissa government in consultation with the Union Home Ministry has requisitioned the services of special task force to fight the Naxal guerrillas. Security experts consider the latest attack by the Naxals as most daring ever undertaken by the rebels.
Two months back the Prime Minister had said that Maoists pose the greatest challenge to the internal security of the country. Thirteen states are affected by Naxalite violence. The degree to which utter confusion prevails in our internal security policies is illustrated by the strange paradox that, while we provided every assistance to Nepal to fight the Maoists who had brought chaos and anarchy to that country, the Andhra Pradesh government entered into a dialogue with the extremists-applauded and encouraged by the Centre-and this was held up as a model for "resolution" of the problem for other states afflicted by Left Wing extremism and violence.
Worse, even while the state negotiated with the Naxalites in Andhra, their leaders had made it abundantly clear that they had no intention of giving up "armed struggle" or their antediluvian ideology, and contemptuously rejected the government's entreaties, first, to surrender their arms, and then, even to refrain from bearing arms when Naxalite cadres visited villages and other habitations. The Andhra government's interlocutors-including the state's Home Minister-meekly withdrew its "conditions" for the talks, and the Naxalties were free to strut about fully armed across the state, even as the security forces were prohibited from taking any action against them.
Policymakers in India do not appear to have come to terms with the enormity of the threat of extreme Left wing violence in the country, and eminent political leaders are still inclined to talk of these entities as "our children". This rhetoric is nothing new, and it echoes similar and completely misguided sentiments that were voiced during the years of terror in Punjab, even when thousands of civilians and security forces were being brutally murdered each year. This is, moreover, the rhetoric that has returned periodically to haunt Naxalism affected states, with a succession of political leaders seeking to flatter, cajole or bribe the Naxalites to abandon their bloody and unending enterprise.
The gravest danger at present is that the Left Wing extremist movement appears rapidly to be approaching a critical mass over the past few years. Two of the most powerful groups-the Communist Party of India (Marxist-Leninist) Peoples' War Group (PWG) and the Maoist Communist Centre (MCC)-who were long engaged in internecine and fratricidal turf wars-merged, creating a single and monolithic force under the banner of the Communist Party of India (Maoist). Later on a majority of the remaining 40-odd lesser splinter groups of Naxalites merged to form this inclusive entity. The rate of geographical extension of the movement over the past years, moreover, has been nothing less than spectacular. From some 55 districts in eight states in November 2003, the areas afflicted by various degrees of Naxalite activity have grown to currently comprehend as many as 157 districts across 13 states-thus accounting for more than a quarter of the total of 612 districts in the country.
In Andhra Pradesh itself, even as the state boasted of its great economic miracle and the "IT Revolution" in Hyderabad, the Naxalites extended their areas of operation from eight districts in the Telengana region of North Andhra to as many as 24 of the state's 26 districts by the end of Chandrababu Naidu's tenure. It is clear that the current ruling party had used these groups to win the elections.
It would be abundantly clear to anyone with common sense that a peace process, which gives licence to armed gangs to wander about extorting money from all and sundry, to recruit and train cadres, and to politically mobilise mass support for their subversive agenda, can only put the entire project of economic recovery and globalisation into jeopardy.
What message are we currently sending out to the world? We are desperate to attract foreign direct investment and technology transfers, and to encourage multinational companies to invest and operate here. At the same time, we allow free reign to lawlessness by armed groups that engage in disruptive activities at will. Basic law and order is part of the infrastructure needed for investment and economic growth. What is the use of roads if people and vehicles cannot move across them freely? How are business and industry going to grow when areas in the country where you cannot travel because of fear of being attacked widen continuously?
We are constantly boasting to the rest of the world about India being the world's largest democracy. The Naxalites totally reject India's constitutional democracy and its electoral processes. This leaves no ideological basis for a negotiated solution. Moreover, if we are to be taken seriously on our claims to being a "democracy", it is imperative that we rule according to the nation's Constitution and the laws of the land.
The "exceptionalism" that dominates much of our politics, and the entirety of the current "peace processes" with violent anti-state groups, and which exempts all such entities from the operation of India's criminal codes and Constitutional constraints, is altogether inconsistent with our claims to democratic governance. Such exceptionalism, moreover, demoralises and confuses the security forces and empowers elements both within the state and among the wider political forces who operate as apologists or overground surrogates of these subversive groups. There are grave dangers in going too far along these pathways, and a time will inevitably come when we may find the way back to order and civilised governance barred and bolted. INAV

Emerging economies under pressure

By S. Sethuraman

Crisis after crisis in the world economy through the decades have overtaken the International Monetary Fund, the post-war institution created in 1944 to become guardian of the international financial system promoting exchange rate stability and orderly growth of output, trade and employment. Though after every financial upset, IMF admittedly put itself at the learning curve, drawing lessons, it has not till today proved itself effective in crisis prevention or its management in most cases. The classic example is the ongoing global economic slump brought about by financial market turmoils of 2007 originating in USA's sub-prime mortgage market, which has already led to huge write-downs by financial institutions.
IMF did take note of the instability in financial markets in mid-2007 but it could hardly foresee the magnitude of a meltdown spread over advanced countries nor the destabilizing consequences for the world economy whose expansionary phase since 2003,the Fund assumed, would continue into 2008. IMF is now caught up with the sharp slowdown in the last quarter of 2007 in USA and moderating growth elsewhere. This is essentially a crisis in the developed nations holding the directional power over IMF whose surveillance of economies had till recently been asymmetrical.
The Fund had never wavered in advocating strict fiscal discipline and market opening for the developing member-countries, even at the cost of social unrest and street eruptions in many crisis-hit countries in the past. It is only in recent years that IMF began to take serious note of the build-up of global imbalances, again emanating principally from the US current account deficit of around 800 billion dollars a year, and initiated multilateral consultations. No doubt, IMF has strengthened its surveillance mechanism including exchange rates and says it would be more even-handed as between nations.
Though on January 25 revised down world and country growth rates for 2008, there are growing uncertainties about the depth of the downturn as the weakness in US housing sector intensifies and business and consumer confidence is declining. The world's largest economy may be already in a recession, according to leading economists. It is, therefore, that the international financial institutions like IMF are pinning their expectations for averting a global depression on the role of emerging economies, especially China and India, which have contributed to more than one-third of global growth over the last two years.
Excessive risks and weakening of lending standards and failures of supervisory and regulatory frameworks over new entities in the markets facilitated by financial globalisation are all now being laid threadbare after the damage is done. IMF has backed what US Fed and other central banks have done to provide liquidity and ease monetary policies and have welcomed the 125 basis points cut in US interest rates and the 165 billion dollar economic stimulus package of the Bush Administration and Congress. But it is uncertain whether this by itself would revive the economy for the rest of the year and beyond
At the same time, the world is faced with persistence of inflation both in developed countries (US and EU) as well as in emerging economies like China and India where growth has remained strong but inflationary pressures are developing, mainly from rising world prices of oil, food and other commodities. It would take perhaps several months before the consequences of financial market turbulence are played out. Meanwhile, IMF urges emerging market economies to sustain domestic growth, keeping inflation under control and help the world economy to grow.
IMF Managing Director M. Dominique Strauss-Kahn in a speech in New Delhi on February 13, talked of lessons from the global crisis, which began as a problem in a single sector (housing) in a single economy (USA), from which no regions are immune. In his view, the effects of the present global crisis would be felt in emerging economies sooner rather than later". Nor does he agree with those who contend that emerging economies like China and India have de-coupled from industrial economies. Strong growth of these economies, especially India, according to him, is based on gains from trade and financial integration in global economy.
In a clear departure from past policies, Mr Strauss-Kahn has now put forward IMF's new thinking that for the world economy to be restored to stable growth, monetary easing should be supplemented by fiscal policy to stimulate economy with "timely, temporary and targeted" measures which would support private consumption and boost demand. This is something Finance Minister Mr Chidambaram seems willing to do to some extent whether through the budget or later if the global situation worsens further. But IMF does not at present include India in the category of emerging economies, which have scope for fiscal stimulus, like China or Russia. IMF has also endorsed the current RBI monetary stance of giving greater weight to inflation expectations.
Citing reasons for emerging economies to act to forestall the spillover effects, the IMF Chief says their exports to US and Europe would suffer otherwise and there could be reversal of capital inflows for India, which has experienced large capital inflows since the sub-prime crisis, if there is general retreat from risk by global investors. In suggesting appropriate use of both monetary and fiscal policies by countries according to their circumstances, Mr Kahn indirectly made an exception for India where, he said, growth is already very high (even if it moderates to 8 per cent) public debt still high while medium term fiscal consolidation remains a priority.
Finally, the IMF Chief acknowledged that while the Fund did warn the world about the crisis in its Global Financial Stability Report in April and October, "perhaps we did not warn forcefully enough. We, like many others, did not foresee just how the turmoil would spread". Now, the Fund, he said, would have to pay more attention to the links between the real economy and financial markets and assess the implications of the linkages between the two. One has to wait and see how far the proposed reforms he referred to go to ensure effective voice and greater representation for emerging economies to enhance the legitimacy and relevance of the IMF.
(IRL-IPA )