The 2015 Iranian Nuclear Deal: Concerns and Expectations

Alvite Singh Ningthoujam, 

Research Associate, VIF

The much-awaited nuclear breakthrough has happened again when Iran and the P5+1 countries comprising of the United States (US), Russia, China, France, Germany and the United Kingdom (UK) signed the “parameters” for a Joint Comprehensive Plan of Action (JCPOA) on 2 April 2015. As it was with the 2013 Geneva interim accord, this deal is considered as a “good deal” or a “historic understanding” by the US President Barack Obama. Simultaneously, Israeli Prime Minister Benjamin Netanyahu continues to consider the deal as a threat to Israel’s survival and to the region. A few of the Arab countries welcomed the deal but with “caution”. India, which is the second largest importer of Iranian crude oil, is watching the developments anxiously.

The Deal:

After a prolonged gridlock, Iran and P5+1 countries have finally agreed on some conditions, which would halt the former’s ambitions to acquire nuclear military capabilities. This particular deal has fructified only after Iran has consented to limit its nuclear capabilities in return for lifting of financial sanctions which were crippling its economy. That said easing of sanctions would come only if Iran remains committed to the framework agreed upon.

According to the parameters of the JCPOA, Iran agreed to scale down nearly two-thirds of its installed centrifuges. Out of 19,000 centrifuges installed, Iran would restrict to 6,104 under the deal, and only 5,060 would be enriching Uranium for 10 years. It should also be noted that these 6,104 centrifuges will be IR-1s, or Iran’s first-generation centrifuges. On the enrichment, Iran would lower its stockpile of approximately 10,000 kilogram (kg) of low-enriched Uranium (LEU) to only 300 kg, or not to exceed enrichment beyond 3.67 percent. Another important parameter is the agreement of Iran to stop enriching Uranium at its Fordow facility for 15 years, and this facility would be converted into research centres for nuclear, physics and technology, etc. However, research and development related with Uranium enrichment in Fordow will no longer be conducted by Iran. The level of Uranium enrichment has always been a major point of contention between Iran and the Western countries involved in the negotiation process. Moreover, owing to the geographical location of the Fordow facility, which is deep beneath the ground and heavily fortified this particular parameter is a crucial one.

Another pivotal parameter is that Iran will remove the 1,000 IR-2M centrifuges which are currently being installed at Natanz facility, and these would be monitored by International Atomic Energy Agency (IAEA) for ten years. Along with this, the Islamic Republic will not use its IR-2, IR-4, IR-5, IR-6 and IR-8 models. Under the agreement, the IAEA will have constant monitoring on the nuclear activities undertaken by Iran. On reactors and reprocessing front, Iran and the P5+1 have agreed to redesign and rebuild the heavy water research reactor situated in Arak. This reactor, however, will assist in peaceful nuclear research and in the production of radioisotope but it will not produce any weapons grade plutonium. Further, all the spent fuel from this reactor will be shipped out of the country, and no additional heavy water reactors will be built for 15 years.

The above mentioned are a few of the parameters agreed by both the negotiating partners. That Iran entered into negotiations on issues such as reduction of stockpiles; reduction of levels of Uranium enrichment; constant monitoring of its nuclear facilities; is significant as its officials had vehemently opposed to any of these earlier. If Iran fulfils or abides by its commitments, it will receive the much-needed relief, that is, the lifting of US and European Union (EU) nuclear-related sanctions. This requires a thorough verification by the IAEA. These sanctions, however, will be restored if Tehran does not adhere to the 2-April parameters agreed in Lausanne. Nevertheless, those US sanctions on Iran on issues related to terrorism, abuses of human rights, and ballistic missiles will continue to remain in place.

The unveiling of the nuclear agreement framework ushered in a significant ray of hope for the Iranians, who have been surviving under a deteriorating economy for the last several years. It was certainly a big relief for the common Iranians; not only they took to the streets in different cities and they expressed their joy through social media tools such as Twitter, right after the announcement of the deal. The Iranian society, for all these years, has gradually learned to survive under tight economic sanctions, high-level inflation, and rising unemployment rate. As a result, rejoicing by the people from different quarters is justified. The efforts of the Foreign Minister Javad Zarif and his negotiating team were acknowledged by many in the country. Meanwhile, Iranian hardliners or conservatives criticised the deal as they considered it to be “a bargain for the West and a disaster for Iran.” It should also be recalled that Iranian President Hassan Rouhani, who came to power in 2013, was severely criticised for his efforts to normalise relations with the outside world, and the negotiation with the US-led Western countries on nuclear issues was particularly targeted. But the indirect backing from Iran’s Supreme Leader Ayatollah Ali Khamenei helped reach the deal. The leader was believed to have lent his crucial support with a motive to end Iranian isolation in the international community, and to revive its economy.

Reactions from Israel and the GCC Countries

The harshest reactions, as expected, came from Iran’s arch-rival, Israel. Netanyahu, who considered the 2013 deal a “historic mistake”, reiterated his firm opposition to any sort of agreement between Iran and the West. Calling it a “bad deal” and a threat to Israel’s existence, he is now lobbying for support to “kill” this deal. Prior to the agreement, Netanytahu tweeted that, “Any deal must significantly roll back Iran’s nuclear capabilities and stop its terrorism and aggression.” Acknowledging Israel’s concerns, Obama called up Netanyahu and briefed the latter on the JCPOA, and he “emphasized that the United States remains steadfast in our commitment to the security of Israel.”But this did not budge the Israeli leader who still subscribes to the Iranian threat of “annihilating Israel”. Israel’s sense of insecurity has been heightened as the commander of the Basij militia of Iran’s Revolutionary Guards said that “erasing Israel off the map” is “non-negotiable”, just a couple of days before 2 April. Under such circumstances, the Jewish state would not take any agreement on Iranian nuclear programme lightly. The political spectrum in Israel, including Netanyahu’s opposition, raised their concerns about this agreement. As a result, Israel’s security cabinet unanimously opposed the deal. It was during this meeting the Israeli PM talked about “a clear and unambiguous recognition by Tehran of Israel's right to exist”, a demand which the US State Department and Obama bluntly rejected, considering it to be “fundamental misjudgement”.

The vehement opposition to the deal is described by Netanyahu: "This deal would legitimize Iran's nuclear program, bolster Iran's economy & increase Iran's aggression and terror. The alternative is standing firm and increasing the pressure on Iran until a better deal is achieved."

Obama’s repeated assurance of making Israel maintain a military advantage over Iran with its support is unlikely to alter the latter’s mood. As it is, the relationship between the two countries is undergoing a rough phase which got deepened with Netanyahu’s election campaign rhetoric. For the moment, it cannot be forecasted as to how the US would convince Israel about the ‘positive’ side of this deal, but from Israel’s side, it is very probable that it will lobby the US Congressmen and senators (mostly the Republicans) to pass legislation to thwart the comprehensive, or pressurise Washington D.C. to make “improvements” in the terms and conditions of the deal. Either of these two possibilities, however, seems to be a difficult task, if not impossible. Moreover, given the broad international support for this kind of agreement, it appears unlikely that Israel can prevent the final deal which will be signed on 30 June. And this will depend on how successfully Iran and the P5+1 nations will agree on the framework. This in itself is a humongous task before them.

With regard to the Gulf Cooperation Council (GCC) countries, ‘Cautious’ is the word that is best suited to describe their feelings. Although a few Arab countries welcomed the deal publicly, they seemed to have mixed feelings about the framework agreement. While the deal is expected to lead to more security and stability in the region as predicted by experts, many of the GCC countries have always viewed Iran as a rival that tried to expand its influence in war-torn Iraq, Yemen and Syria. A source indicated that the deal will ensure “more space to arm and finance proxies that Riyadh opposes in countries across the region”. As a result, Saudi Arabia, in particular, despite its public welcoming of the deal, remained extremely concerned about the wider implications of the framework. Riyadh viewed the Iranian nuclear programme with dismay, and it has already hinted at seeking its own atomic weapons, preferably from Pakistan, were Tehran to acquire nuclear weapons. There is a fear that a nuclear or an armament race in this region might be ignited as a result of the agreement, while renowned security expert Bruce Riedel said, “it [deal] will significantly reduce the risk of further proliferation in the Middle East.” Moreover, with its regional ambitions, this kingdom would view the American-Iranian rapprochement with fear as the deal, for them, will undermine their security and influence in the region. Similarly, the United Arab Emirates which has long-running dispute with Iran over three islands in the Persian Gulf has its own concerns even though its businessmen hope to benefit from the agreement as they could expand trade volumes with Iran. Likewise, Kuwait, Bahrain and Iraq continue to remain uneasy about the deal. The only country which has expressed warmest reception is Oman, which is believed to have contributed towards efforts leading to the breakthrough. In 2012, Oman brokered secret nuclear talks between Iran and the US.

Given the deep-rooted suspicion about Iran, many Arab leaders doubt the ability of the Iranians to stick to the agreements. An analyst on the region mentioned that, “Saudi Arabia and the United Arab Emirates, the Gulf’s hawks, fear Iran’s international rehabilitation through the nuclear agreement will ease its political and economic isolation and embolden its designs in the Arab world”. These uncertainties reflect the cautious approach of the mentioned GCC countries towards the deal. It is yet to be seen how Obama’s upcoming conference with the GCC leaders at Camp David can actually assuage their concerns. The main agenda is to discuss “their security and the Iran diplomacy”. The US President, however, expressed that “The biggest threats that they face may not be coming from Iran invading. It’s going to be from dissatisfaction inside their own countries”. And, the general perception that this deal would bring calm or usher in a major shift in West Asia, which is engulfed by conflict, appears to be a tall claim, considering the entrenched sectarianism and political discord that exist between different sects in the region.

India’s Expectations:

India, too, “hailed the agreement” as a “significant step” towards a comprehensive settlement of the Iranian nuclear dispute. According to a Ministry of External Affairs (MEA) statement, “The announcement yesterday underlines the success of diplomacy and dialogue, which India has always supported and which we hope would lead to a comprehensive agreement by June 30”. If the deal is finalised without further obstacles, there are certain benefits which India can enjoy. These are mainly in areas pertaining to economic transactions and energy-trade, which at the moment, have remained hampered due to the sanctions. For instance, after the 2013 interim agreement, India imported from Iran 276,800 barrels per day (bpd) of oil and condensate in 2014, as compared to that of 195,600 bpd in 2013. But the unresolved payment imbroglio for the import of Iranian crude oil; inability to streamline trade between the two countries and various other issues have downgraded the bilateral ties visibly. As a result, the Lausanne-deal is being looked at with lots of expectations in India.

Since the last few years, India has been facing the adverse impact of the economic sanctions on Iran. Severity of the US pressure was such that it had to halt importing Iranian oil in March 2015, the first time in at least a decade. Moreover, New Delhi has been unable to pay Iran approximately US$8.8 billion for imports of oil. Due to this, the Indo-Iranian bilateral trade, which is currently estimated at US$15 billion, has been adversely affected. These issues are expected to be streamlined if the negotiating partners reach a final agreement two months later. As an immediate impact, it has been reported that Essar Oil and Mangalore Refinery and Petrochemicals Ltd have planned to import oil from Iran sometime from this month (April). Despite this, it would be unrealistic to expect a quantum rise in Iranian oil imports as the earlier dues need to be cleared, that too, by having a proper payment mechanism in place.

An added optimism out of this deal is that it will provide an incentive for India and Iran to play a proactive role in the reconstruction process of Afghanistan. Therefore, the agreement happens at a crucial juncture when the US is aiming to complete the withdrawal of its troops by the end of 2016. The newly-elected Bharatiya Janata Party (BJP) government, in late 2014, approved India’s participation in the development of Chabahar port in Iran by sanctioning approximately US$85 million. This amount will be utilised for the construction of two berths that would include container terminal and a multi-purpose cargo terminal. The importance of this port lies in the fact that it would offer an alternative route to the landlocked Afghanistan and resource rich countries in Central Asia without actually depending on Pakistan.

Along with the above expectations, also comes a little bit of concern. Indians, who are heralding the nuclear deal, should also be mindful of the fact that there are high chances of Indian companies facing a stiff competition inside the Iranian markets, should the final agreement be reached. The European and American companies will make unrelenting efforts to tap the Iranian economy. It is now in the hands of the Indian policy planners to reap the benefits of this thawing Iran-West relation. Tellingly, these projections will be actualised only if the final deal is clinched; as a result, India needs to have clear visions about its course of actions with Iran, should there be any negative fallout on nuclear talks. It is quite evident that the opening of Iran to the West and removal of sanctions presents India with an opportunity to strengthen its relationship with Iran in many ways.

As the Lausanne breakthrough provides only a framework, a major task is still left for the negotiators to convert it into the final nuclear deal. This in itself is going to be an important challenge. The potential for sabotaging deal is ever present as the Republicans in the US Congress and Israeli leaderships are dead against the deal with Iran. As a result, there is no room for complacency. It remains to be seen whether Obama’s foreign policy skills and leadership acumen can achieve the goals of the deal.

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Published Date: 16^th April 2015, Image Source: http://www.financialexpress.com

India-US Ties: Opportunities and Challenges

Kanwal Sibal, 

Dean, Centre for International Relations and Diplomacy, VIF

Prime Minister Narendra Modi’s visit to the US was undoubtedly a great personal success. President Barack Obama, following the personal gestures made by Japanese Prime Minister Shinzo Abe to Modi and those made by the latter to Chinese President Xi Jinping, probably felt it would be diplomatically politic if he too could emulate them in some way. He made the unusual gesture of accompanying him for a tour of the Martin Luther King memorial, and through this show of regard sealing the reconciliation between a forgiving Modi and a defensive Obama on the visa denial issue.

By providing firm leadership, expressing determination to attend to some long neglected basic social issues, focusing on development, wooing the business community, emphasizing his agenda to make India a manufacturing hub, Modi has caught the imagination of Indians of course, but foreign partners of India as well as they see doors opening for more economic opportunities in India. By his remarkable self-assurance and the confidence he exudes, Modi is changing perceptions about India. This is in itself a major achievement. But now that he has raised expectations about the changes he intends to bring about, his performance in the months ahead will be closely watched.

Modi’s US visit presented him with a particularly difficult challenge, as the relationship between India and the US presents opportunities as well as problems that are on a different scale compared to our relationship with any other country. At the rhetorical level projecting the India-US relationship is easy, especially as rhetoric comes easily to the Americans and we too are comfortable with platitudes. The US can call its relationship with India as a defining one in the 21st century, though what it means is unclear and actual US policies towards India do not support that rhetoric. Our hype about India and US being natural partners- or “natural global partners” as embellished by Modi- is not justified by the record of our relations with the US ever since our independence. Even after the end of the Cold War, we were not brought together “naturally” and even now, with the general perception that India-US relations are marked by loss of dynamism and have entered a phase of stagnation, the rhetoric of a natural partnership seems unconnected with reality.

One big underlying problem is the widespread US grouse given vent to in US official and strategic circles is that India has not adequately rewarded the US for lifting nuclear sanctions on it through the bilateral nuclear deal and the NSG exemption. The assumption behind such thinking is that India should have had no grievance against the US for over three decades of sanctions aimed at stunting India strategically and confining it permanently to an inferior international status, and should actually be grateful for the reprieve given to it by the US. India has, in fact, made compromises when it comes to sovereignty over our nuclear programme by accepting oversight and safeguards that no other nuclear weapon state has conceded. We look upon the lifting of sanctions on India as a necessary step for India and the US to have normal ties, even though it is recognized that the US was politically bold to revise its nuclear posture towards India. But that is no reason for India to be so grateful as to abandon an independent view of its interests, and act as an ally of the US. That the US should expect its nuclear firms to get business in India is normal, but to behave as if the nuclear deal’s primary purpose was to open commercial doors in India for its firms does not make sense. The US can certainly lobby for an amendment to the Indian nuclear liability act in order to facilitate the business interests of its firms, but to make it almost a central reason for the malaise currently affecting the relationship is taking a transactional, not a strategic, view of the India-US nuclear deal.

The other US grievance colouring US views of India currently was the exclusion of its firms from the magnum combat fighter deal. After that “unfair” blow, the US now eyes a big share of the Indian defence procurement pie as compensation. On the economic side, apart from the slowdown of India’s economic reforms, particular in the financial sector, that has cooled off the ardour of US firms towards India, US corporations have launched a political campaign against India’s intellectual property, trade and investment policies for the damage they do to US corporate interests, especially in the pharmaceutical sector. On WTO issues, the US sees Indian positions as obstructing consensus. 

Unfortunately, the US government converts differences in a multilateral forum that affect several countries into bilateral differences. This then becomes a point of pressure on India bilaterally, adding to the list of divergences between the two countries on shaping the global trading system.

It is in this background that one must assess the results of the Modi visit. In effect, Modi and Obama have discussed these issues without being able to close differences. Normally, at a joint press briefing, both sides highlight the principal agreements and concrete understandings reached. A careful reading of Modi’s remarks shows that while discussions may have clarified respective positions, they did not produce concrete results. In his remarks, Modi said he “believes” that with the change in Indian policies and processes intended to make it easy and productive to do business in India, the India-US economic partnership will grow rapidly in the coming years. This is a reasonable expectation to have. On IT related issues, Modi pointedly mentioned that he had sought Obama’s support “for continued openness and ease of access for Indian services companies in the U.S. market”- a major concern for us. He did not clarify what Obama’s response was to his expression of dissatisfaction. On the “candid discussion” on the WTO stand-off over the trade facilitation-agricultural subsidies issue, Modi maintained the position that while India supports trade facilitation, he also expected a solution, hopefully soon, “that takes of our concern on food security”. It is to be hoped that Obama found force in Modi’s concerns and that India will not be berated diplomatically by the US in the WTO.

On a more positive side, he spoke about the great convergence on stability on “peace and stability in the Asia Pacific region” and of the US being intrinsic to our Look East and Link West policies. This is a significant statement as it recognizes the role of the US in our larger strategic calculus. However, on terrorism and the “new threats of terrorism in West Asia”, contrary to advice being proffered by many in the US and India, he did not mention the ISIL by name in his joint press conference, simply mentioning the agreement “ to intensify our counter-terrorism and intelligence cooperation”, which is unexceptionable. Modi’s reticence in supporting the US-led “coalition of the willing” in West Asia would have disappointed those campaigning for India to join Obama’s war against the Islamic State. Why India should not have learned the right lessons from the abysmal failure of an earlier such coalition in Iraq is not explained. The current US action is outside the UN framework, and to that extent is contrary to international law. Bombing Syria without obtaining the consent of the Syrian government is against international law too. Obama himself has been ambivalent about military action in Iraq, as the centre-piece of his strategy has been to extract the US from wars in this region. The US has decided to arm and train Syrian “moderate extremists” to fight the ISIL as well as the Assad government. With these kinds of legal and geo-political complexities, it hardly made sense for India to feel obliged politically or morally to support the US in its military action against the Islamic State, however odious this group is.

In his joint press conference, Modi especially welcomed “the U.S. defence companies to participate in developing the Indian defence industry”, without mentioning any specific initiatives, in particular the US offer of 10 co-development and co-production projects. It is unlikely that even with the FDI ceiling in defence raised to 49%, US companies will invest in India’s defence sector substantially and transfer technologies meaningfully. They would want majority shareholding, and even then they would deny certain technologies so that any recipient country remains dependent.

Those curious whether the joint statement would say more about the nature of discussions and the concrete outcomes would have not been better enlightened. The joint statement expresses positive intentions and decisions to set up committees or other mechanisms to deal with issues on the agenda, but without announcing any breakthroughs. Some are arguing that this vision statement has a longer-term perspective and not immediate deliverables. This begs the question why it was not possible to have immediate deliverables if the relationship is otherwise so fecund in prospects. Is there nothing achievable with the US in the short term? If not, what is the guarantee that the medium to longer-term prospects would be better?

The joint statement says that both sides “will facilitate” actions to increase trade five-fold, meaning that the figure will almost reach US-China levels. This might be a desirable objective but it is simply not achievable in any realistic time frame. India needs to modernize its poor infrastructure. Can the US realistically help build India’s physical infrastructure on the scale of India’s requirements? The two sides have “pledged” to establish an Indo-US Investment Initiative and an Infrastructure Collaboration Platform to develop and finance infrastructure. Is the US ready to develop industrial corridors like Japan is doing? Can it compete with more cost-efficient competitors in building highways, ports and airports etc? India has “offered” U.S. industry lead partnership in developing three smart cities, but then we have offered cooperation in this area to Japan, Singapore and even China. US technology in Indian railway networks is mentioned, but can the US compete in this area with Japan, France, Germany and now China? It is certain that some homework has been done by both sides about commercial possibilities in all the areas mentioned above, but details are lacking. The US no doubt has strengths in the education and health sectors, in biotechnologies, digital technologies, or what is generally called innovative technologies. Clean technologies is another area of its strength. One could have expected a big announcement during the Modi visit in the R&D sector- in solar energy, for example, for meeting India’s needs and those of other countries too. That would be relevant to climate change concerns too.

On the bitter WTO wrangle, the officials were “directed to consult urgently” along with other WTO members on the next steps. With India now believing that unlike at Bali where it got limited support on food subsidies, the number of countries now supporting India’s position has swelled. Would this make an India-US understanding on the subject easier? The two leaders “committed to work” through the Trade Policy Forum to promote an attractive business environment (how and what are the metrics?) and to establish an annual high-level Intellectual Property (IP) Working Group with appropriate decision-making and technical-level meetings as part of this Forum (will this bridge real differences, especially when the US is too demanding and India insists that our policies are TRIPS compliant?). Already “officials” on our side have made it known that India will not budge from its position and that the Working Group agreed to is not for making concessions to the US.

On civilian nuclear cooperation, the two sides have reaffirmed their commitment to implement fully the U.S-India civilian nuclear deal and establish a Contact Group to advance it. This poses the question whether we are willing to revise our liability act, and if not, is the US willing to work within it and find a mutually acceptable solution that limits the liability in time and in financial terms. On defence cooperation they “stated their intention” to expand it to bolster national, regional, and global security- which in effect would raise such cooperation to an unprecedentedly high level. Defence cooperation to bolster “global security” has far reaching implications, and because of this the scope of such cooperation is difficult to grasp under the present circumstances. What does expanded defence cooperation mean in terms of “regional security”? Is the US ready to change its accommodative policies towards Pakistan, deny it military aid and take steps to curb its nuclear programme. How does its talks with the Taliban fit into this scenario?

The decision to renew for ten more years the 2005 Framework for the U.S.-India Defence Relations is to be welcomed, but directing the defence teams of the two countries “to develop plans” for more ambitious programs and activities means that specific proposals are lacking at this stage. Nonetheless, the intention to be more ambitious in the sector is significant politically, and other partners of India will watch carefully progress in this area. Enhancing technology partnerships for India's Navy, including assessing possible areas of technology co-operation, will be considered, which is important if it can be accomplished. The agreement to upgrade the existing bilateral exercise MALABAR is important in terms of the two sides working closely together in the Indian Ocean to safeguard the sea-lanes of communication. Surprisingly though, there is no mention of the 10 projects US has offered for co-development and co-production.

On terrorism, which is a prime issue for both India and the US and on which there is much convergence in theory but less in terms of priorities and required action, the two leaders reaffirmed “their deep concern over the continued threat posed by terrorism, most recently highlighted by the dangers presented by the ISIL, and underlined the need for continued comprehensive global efforts to combat and defeat terrorism”. This is the only joint public reference to ISIL during the Modi visit. It can be taken for granted that India is strongly opposed to the kind of ideology that animates groups like ISIL. It is not the nature of the ISIL but the forces that have spawned it and allowed it by design or default to rise that account for India’s reticence in joining the US in its fight against it. The mere mention of ISIL in the joint statement is being cited by those pushing for Indian support for the latest version of the Coalition of the Willing, unheedful of the disaster of a similar coalition in West Asia in the past, as a welcome step by India to discard its nonaligned baggage and assume its global responsibilities as a rising power- as advocated by the US. On the other hand, Modi did not mention ISIL in his speech at the UN as many hoped he would. Actually, he obliquely expressed reservations about the combat against terrorism in West Asia as not being inclusive, implying that Iran and Syria were being excluded, when in fact it was a problem for all countries, irrespective of geopolitics. He did not mention ISIL in his speech at the Council on Foreign Relations in a gesture to please Obama before their meeting. The joint statement stresses the need for joint efforts, including the dismantling of safe havens for terrorist and criminal networks, to disrupt all financial and tactical support for networks such as Al Qaeda, Lashkar-e Taiba, Jaish-e-Mohammad, the D-Company, and the Haqqanis. This is to be welcomed, but one must not see in this a new US determination to apply pressure on Pakistan. Notwithstanding a big bounty declared on his head by the US, Pakistan is not deterred from allowing Hafiz Saeed freedom to conduct his provocative activities. The omission of the Taliban from this list is noteworthy and exposes the limitation of what has been agreed to by both sides in combating terrorism.

Obama’s affirmation that India meets MTCR requirements and is ready for membership in the NSG, and his support for India’s early application and eventual membership in all four regimes, is a positive element in the joint statement, though it is not clear when this might happen. He essentially repeated the formulation he used in 2010 on India’s permanent membership of the UN Security Council, indicating no forward movement in the US position in the last four years, which is to be expected.

It is on Asia-Pacific that the joint statement shows a more substantial convergence of interests. Significantly, it makes a subtle link between India’s "Act East” policy and the United States’ rebalance to Asia. The joint commitment to work more closely with other Asia Pacific countries, including through joint exercises, points towards more cooperation with Japan and potentially Australia. The joint concern expressed about rising tensions over maritime territorial disputes, and affirmation of the importance of safeguarding maritime security and ensuring freedom of navigation and over flight throughout the region, especially in the South China Sea are significant in the context of China’s assertive policies in the western Pacific. Exhorting all parties to avoid the use, or threat of use, of force in advancing their claims is a clear allusion to China. In this connection, the importance of the trilateral dialogue with Japan and the decision to explore holding it at Foreign Minister’s level- a formulation used in the Tokyo Declaration during Modi’s Japan visit- assume significance. It is clear that on this subject, President Xi’s visit did not tie Modi’s hands in finding common ground with the US on the challenges China’s rise presents to neighbouring countries.

The scope of the India-US engagement is large and the stated intentions on both sides are always buoyant. The problem resides in the US expecting too much and too quickly, and India being unable to respond to the pace and scope of US demands because of sensitivities over issues of independence and sovereignty, disparity in power, non-identical world-views, different stages of economic development and policy and legislative changes required at the Indian end.

Overall though, despite the fact that the parsing of the joint statement brings out areas where the two sides are not on the same page, Modi’s visit to the US has been a huge publicity success, both for him and India. The rapturous welcome he got from the Indian American community in New York indicates the hopes he has raised about India amongst our people abroad, with his focused approach to making India strong. His appearance at the Central Park event was imaginative and dismissing such unorthodox initiatives as “event management” shows narrow-mindedness. His joint editorial with Obama was a coup as it equated the two politically and conveyed that there was enough convergence of their respective views on bilateral and international affairs to allow them to put their thoughts together in a public text.

The most important outcome of the visit was, in a sense, the self-assured and confident way Modi conducted himself, projecting in the process a new and confident India. He handled Obama as an equal and did not feel obliged to make any unilateral effort to establish the right chemistry with him and convince him of his own credentials and those of India as an eligible strategic partner of the US. This was contrary to the defensive advice proffered by many in the American and Indian strategic communities that Modi should assume the burden of responsibility in winning over Obama.

Resolving problems with the US will remain a challenge, but India should be wise to address that challenge as it needs good, stable relations with America for dealing with a very complex geopolitical chess board on which it must try to win advantageous positions.

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Published Date: 14^th October 2014, Image source: http://www.indiawrites.org/

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the Vivekananda International Foundation)

Indian PM’s China Visit: In Pursuit of Peace Along the Borders

Brig (Retd) Vinod Anand, 

Senior Fellow, VIF

It is rare that a summit between two countries is held twice in the same year. Indian Prime Minister Dr Manmohan Singh’s visit to Beijing came only about five months since their meeting in New Delhi in May this year. What were the compelling circumstances that might have driven Dr. Singh to proceed for another summit? It can be easily perceived that the visit was driven by domestic political factors and his desire to further engage the new political leadership of China. He wanted to have a last shot at improving relations with Pakistan and China before he retires from politics as the case seems to be when India goes for general elections in 2014. He also advanced his summit with Russia that was due in end November or early December. The only possible regional and international context could be that the Emperor of Japan would be visiting India in end November (a very significant visit since it is not common for the Emperor to undertake such visits) and therefore the visit to Beijing, most likely the last one, could also be interpreted as a kind of balancing exercise. It also needs to be remembered that Dr Singh had also a meeting with US President Barack Obama in end September and some of the agreements concluded with Washington especially on defence cooperation may have caused consternation among the Chinese leadership.

The Joint Statements issued at the end of summits are also, in some ways, a good barometer of what transpired during the meeting. What is included in the joint statement could be as important or even more significant as what is left out. This time the joint statement was somewhat pithy compared to the previous one in May. While the May summit covered a broad expanse of the issues, this time it was largely restricted to bilateral issues with limited reference to the regional and international issues. But more than the joint statement, it was Manmohan Singh’s address at the Central Party School in Beijing that underlined the philosophical underpinnings behind mutual Sino-Indian engagement. However, that does not mean that there were no practical considerations for his visit. With an eye on coming elections, Singh was more keen to address some of the contentious bilateral issues like maintaining peace and tranquillity along the LAC, stapled visas, sharing of river waters, and concerns about the ever increasing trade imbalance with China.

From the Indian perspective, the single most important achievement of the visit has been the signing of Border Development Cooperation Agreement (BDCA). There are some thinkers of the conservative school of thought who feel that there are many ambiguities in some of the clauses of BDCA agreement and how will this agreement be of any practical use when the previous agreements of 1993, 1996 and even 2005 have not been able to maintain peace and tranquillity along the LAC. On the other hand, largely the official perspective is that it is a satisfactory agreement and it would be conducive to avoiding incidents between Indian and Chinese armed forces along the border/LAC. It is also being said that the BDCA was signed despite the opposition to it by some quarters of the PLA which is being perceived as becoming somewhat more assertive in the current power configuration in China.

Holding of the much stalled joint counter terrorism exercise between both the militaries in November is another positive step towards building mutual confidence. Regular defence exchanges would also promote military to military relationship.

Other than the BDCA, India could not get much satisfaction from China on remaining issues. Though the MOU on Strengthening Cooperation on Trans-Border Rivers was signed yet it does not really address Indian concerns regarding building of dams on the upper reaches of Brahmaputra/Yarlung Tsangpo River. Yes, the only saving grace was that period of flow of rivers on which hydrological data would be shared has been expanded. Another point on which India can draw limited succour from the MOU is that both sides agreed to ‘exchange views on other issues of mutual interest’. Further, there is recognition by China that ‘trans-border rivers and related natural resources and the environment are assets of immense value to the socio-economic development of all riparian countries’. But so far China has not concluded any agreement with any down-stream nation whether in South East Asia mainland or Central Asian Republics on sharing of river waters. There is a general belief that China is unlikely enter into any river waters sharing agreement with India or for that matter any other country any time soon.

A sore point with India has been the issue of stapled visas to its citizens hailing from Arunachal Pradesh. Raking up of this controversy just before Dr. Singh’s visit also prevented India from reaching an accord with China over liberalised visa regime for Chinese citizens visiting India. Given the past and current trajectory of connected events and issues, there is a general understanding that China is unlikely to change its stance. A measure like disallowing liberal visas to Chinese is unlikely to affect China in any substantial way. However, as a riposte the much ritualised mention of Tibet as part of China or what is referred to as ‘One China policy’ has been absent from the joint statement this time like it was in the May Summit and earlier summits of 2011 and 2010. Though such an omission does not mean that India has fundamentally changed its policy yet the perception is that this could be used as an indirect pressure point.

Also, not much headway was made with China on India’s concerns about rising trade imbalance with Beijing. India has been looking for some major investments by China in India’s infrastructure sector and more access to Indian IT and pharmaceutical sectors exports to Beijing. However, the forthcoming India-China Strategic Economic Dialogue in November/December 2013 is expected to go into the connected issues and promote a balanced growth of trade through ‘specific projects and initiatives’.

Further, the burgeoning trade deficit with China also moves India to look at China’s proposal for a bilateral Regional Trade Arrangement (RTA) very critically as under the current circumstances it is unlikely to benefit India. Similarly, the Regional Comprehensive Economic Partnership (RCEP) is also being viewed as another version of RTA by India though eventually it may join the grouping after some tough negotiations. Another emerging economic grouping in Asia-Pacific is the American-led Trans Pacific Partnership (TPP) which is being offered as alternative or in addition to RCEP. However, some of the clauses of TPP are very stringent and thus it may not be viewed by developing economies like India as growth friendly.

The question of establishing a BCIM (Bangladesh, China, India and Myanmar) Economic Corridor was for the first time discussed in the May 2013. In the earlier years, it was a Track II initiative that did not gain much traction. India has concerns about both security and economic issues as the proposed corridor would pass through some of the sensitive North Eastern states of India. Such a corridor is not expected to be realised in a hurry though the economic benefits especially to Manipur and south Assam may outweigh any perceived security concerns.

The regional issues, especially the evolving situation in Afghanistan was absent from the joint statement this time while in the last summit two paras of the joint statement were devoted to the same. The joint dialogue between China and India on Afghanistan was for the first time started this year with meetings of high level officials and further discussed during the May 2013 summit. Though India and China share many concerns about post-2014 Afghan scenario yet that does not mean that China has stopped looking at Afghanistan through Pakistan’s prism. As mentioned earlier, India hopes to moderate Pakistan’s approach to Afghanistan through its engagement with China. And China is also taking a broader perspective on the evolving scenario in Afghanistan and is engaging many regional powers and Afghanistan’s neighbours for ushering in peace and stability in the war-torn country.

Overall, Singh’s visit could be said to be moderately successful. The visit was perhaps designed to convey a larger political message that without peace along the borders there would be no end to turbulent relationship between the two nations and the prospects of an Asian Century would remain elusive. Therefore, the Prime Minister’s remarks at the Central Party School need to be studied with the above aspects in mind.

India Needs to be Tough on Pakistan

Kanwal Sibal, 

Dean, Centre for International Relations and Diplomacy, VIF

Mentioning toned down expectations from his meeting with his Pakistani counterpart at New York, Shri Manmohan Singh gave an advance signal that nothing substantial would emerge from it.Until almost the last moment, we let uncertainty hang over the decision even to meet, which itself indicated watered down prospects.

Normally, summit meetings serve to boost existing ties and infuse them with new political purpose. They are well prepared with planned positive outcomes. Our troubled relationship with Pakistan makes the management of summit outcomes particularly sensitive. If the circumstances surrounding a planned summit are not propitious and preparatory work has yielded no assurance of notable progress, postponement is preferable. Obama, for instance, cancelled his agreed bilateral summit with Putin just before the September G-20 summit in St Petersburg because continued divergences between the two countries on several issues did not promise success.

Postponing Talks

If the PM’s meeting with Nawaz Sharif had already become controversial because of cease fire violations by Pakistan, the freedom given to extremists like Hafiz Saeed to pursue their anti-Indian crusade, lack of progress on trying those responsible for the Mumbai terror attack and delaying the decision to grant MFN status to India, the advance admission by PM that the New York meeting would be low in results argued strongly in favour of postponement.

The Samba attack immediately before the summit made the case for deferment even stronger. Our position that we will continue talking to Pakistan even if it carries on terror activities against us is not easily comprehensible. We cannot claim zero tolerance of terrorism if we indulge the country sponsoring it against us. By allowing a distinction to be made between state and non-state actors, we have given political room to Pakistan to blame the so-called non-state actors for such activity and distance the Pakistani governmental agencies from it.

Worse, Pakistan no longer admits that even non-state actors are to blame. It pretends they don’t exist and that incidents in India have local origins. Pakistan has feigned ignorance of recent incidents on the LoC and even denied their occurrence. It is unwilling to assume any responsibility for terrorist attacks against India. When pushed, it accuses India of terrorism not only in Balochistan but also in FATA where we are supposedly complicit with the Pakistani Taliban. Nawaz Sharif’s foreign policy Adviser Sartaj Aziz threatens to produce evidence of Indian interference in Balochistan at an appropriate forum, which suggests that Pakistan intends to step up propaganda on this issue in advance of US withdrawal from Afghanistan and create the ground for targeting our consulates in Jalalabad and Kandahar. The Samba incident provided us a timely opportunity to begin reversing our costly policy of delinking dialogue from terror by adjourning the summit to a later date when Nawaz Sharif’s position on terrorism became tangibly aligned with his protestations of friendship with India.

The PM’s reference, in his joint press conference with Obama and his UNGA speech, to Pakistan being the epicenter of terrorism was commendable. The robust affirmation in his UNGA speech that Jammu & Kashmir is an integral part of India and that we will never ever compromise with our territorial integrity was equally praiseworthy. Nawaz Sharif apparently took exception to PM complaining to Obama about Pakistan’s involvement with terrorism, provoking him to compare his conduct allegorically with that of a “village woman”, a slight later denied.

Pak Game

The macho image that Pakistani Muslims have of themselves apart, Nawaz Sharif can hardly cavil at India involving the US as a third party in bilateral India-Pakistan issues, when seeking third party intervention in resolving the Kashmir issue has been the staple of Pakistani foreign policy for decades, not to mention the issue of a strategic balance in South Asia, both to procure more arms from the US and place curbs on India’s nuclear and missile programmes.

Sharif himself tweaked India at New York by asking for UN or third party intervention in investigating the LoC violations, knowing India’s allergy to such interference. He emphasized Kashmir in his UNGA speech in line with his declared intention after assuming power to focus on this issue, even describing Kashmir as the jugular vein of Pakistan. His statement on Kashmir was more expansive than that made by Pakistani leaders in recent years at the UN, which exposes the argument that he needed to pander to domestic lobbies in Pakistan. On terrorism too, in his media interviews, he equated India and Pakistan in terms of answerability for such actions.

Non-State Actors

Indisputably, stabilising the LoC and ending cease fire violations would be essential for resuming India-Pakistan peace talks and hence the agreement at New York that the DGMOs of the two sides will meet and devise mechanisms to restore peace on the LoC. This initiative will produce results only if Pakistan acknowledges the existence and activities of “non-state actors” and its responsibility for controlling them. It should be willing to establish a five kilometre deep anti-infiltration grid on its side to match the Indian disposition so that any hostile movement within this zone is prevented. It should share information on attempts to cross the LoC culled from intercepts. Border meetings even down to brigade level would help to control the sort of destabilising activity on the LoC that the DGMOs have been tasked to do. All this hinges on Pakistan’s sincerity in ending cross border activity, which remains illusory as shown by last week’s infiltration bid in the Keran sector, so soon after New York.

We were right in not agreeing this time to a joint statement after both premiers met. If this signals a more hard-headed approach to Pakistan in the future, it would merit general approbation.

Don’t Hold Up US System as Ideal

Kanwal Sibal

(Advisory Board, VIF)

US elections are a spectacle and attract enormous media attention. Barring countries like China that have no political interest in exposing their public to such a democratic extravanganza, the media in most others revels even in the trivia of this electoral joust in the world’s pre-eminent power. The India media too has been guilty of excess, devoting inordinate space to irrelevant details.

Impact

Whether Indian reporting was proportionate to genuine public interest, or simply reflected spill from the flood of coverage by the US and western media, can be debated. US democracy is admired by many who are fascinated by the long and gruelling public process which candidates undergo to win voter support. For the US, of course, democracy is a valuable product to sell in the global market place for all to buy, an objective that is promoted by the open and transparent pageant of its presidential elections.

Political developments in the US would evidently attract more than ordinary interest abroad because of America’s weight in international affairs. They have some impact, big or small, on most countries because the US grip on global political, economic and security issues remains strong. Of course, US allies and friends would view electoral change there with equanimity, but not those targetted by the US.

The correlation between power and outside attention to internal developments in countries is evident in the extensive coverage the political transition in China is receiving. Unlike the US media which inundates countries with news and views on the presidential election, the Chinese media generates virtually no background or analytical or human interest material. Mystery and conjecture accompany the opaque Chinese process, inviting deciphering rather than applause. Indian elections receive scant attention internationally because Indian policies do not as yet impinge enough on global developments, especially on international security matters, to capture world-wide public attention.

Some Indians, viewing the contrast between Indian and US elections, especially the public grilling of US politicians and the sparring between the presidential candidates in televised debates, vaunt the US process and recommend emulation. Some European democracies like France, which have elements of a presidential system, have adopted the system of primaries- like the Socialist party there- as well as televised debates betwen contestants. In India, unfortunately, party leadership does not emerge through any publicized internal democratic process. In a two party system or even one with more than two national parties a public debate on national issues by party leaders can be organized so that the voters can better understand the content of political platforms, evaluate promises and individual performance. But with the plethora of parties we have in India, with most being regional or caste based, the adoption of such electioneering methods would not be workable.

Defects

In reality, our system needs a deep overhaul and that should be our priority. We need not therefore be too wistful about missing the US style gladiatorial political contests where “zingers” are sometimes more important than substance, and where personality, wit and repartee seem to sway public opinion more than the record of public service and the wisdom and moderation of policies. The US system has its plus points but glossing over its negative features falsifies the debate.

For one, the two party system there is not inherently logical as it constrains political choice and limits the representative nature of the electoral process. After all, the US is a very diverse country too, with blacks, hispanics and others. Wide income disparities that are becoming more acute exist; a sizable portion of the population is without adequate health care; radical ideas cannot be expressed within the system. That ‘socialism” should be a pejorative word in US democracy, while Europe, the original home of western style democracy, has mainstream socialist parties who alternate in power with conservative or right wing parties, is a commentary on the limitations of “pluralism” in American politics. The bad odour around “government” in US politics is also a peculiar restraint on equity in governance. Taxation is a maligned word too. The moorings of US democracy are highly ideological and do not correspond to what is considered normal and acceptable in other genuine democracies, including the Scandinavian which are often praised for finding the right balance between government and the individual.

Assessment

Those indignant about the increasing role of big money in Indian politics should examine its deleterious role in US politics. Health care reform there is difficult because of the huge spending against it by the insurance lobbies. In the just concluded presidential election both candidates spent several billion dollars each. A handful of big donors have contributed phenomenal amounts of money for the pernicious advertisement campaigns of the two candidates. Most major US banks have supported Romney’s campaign. If the kind of lobbying that the US system permits was prevailing in India, even if it is not for personal profit but to influence policies and legislation, when we are already so sensitive about the grip of a few corporate houses on Indian policy making, we would get exhausted exposing scams.

Statistics show that in the recent presidential election the quasi-totality of blacks and a large majority of hispanics voted for Obama, while white Americans from older age groups and rural areas voted for Romney. This increasing racial and economic cleavage as well as the growing partisan nature of political functioning in the US is being seen as dysfunctional by many thoughtful Americans. US leadership and the American dream have a symbiotic relationship. If the dream fades, the US leadership will wane.

Our adulation of US democracy needs to be tempered with realism, though, with all its deficiencies, US democracy remains a powerful inspiration and insurance for individual freedoms the world over.

India’s Myanmar Policy Gains Momentum

Brig Vinod Anand

Senior Fellow, VIF

Indian Prime Minister’s visit to Myanmar after a gap of 25 years was recognition of the fact that the positive changes occurring on Myanmar’s political firmament had created conditions for enabling such a high level visit.

Though India had been engaging Myanmar earlier also for strategic and security reasons, raising the level of political exchanges highlights the fact that the Indo-Myanmar relations have reached a turning point and are poised for an exponential expansion. A dozen Memoranda of Understanding signed after the visit also indicate the diverse fields in which India is engaging Myanmar.

Politically, reestablishment of formal relations with Aung Suu Kyi can be seen as one of the major gains of the visit. While she had close linkages with India in the past including active support by the Indian government to the democracy movement in the 1980’s, there was a break in this relationship due to geopolitics of the region. Though there were informal linkages and India had been pressing both sides, the military junta of the past and Suu Kyi led NLD to reconcile their differences, Suu Kyi had maintained a public distance from New Delhi. She was no doubt encouraged by support that she got from the West including public statements at the highest level, for instance from President Obama who in the Indian parliament had called for support to democratic forces in Myanmar. However, finally it was India’s proposal for reconciliation that possibly led to political rapprochement and transition which is now reasonably well established. This was confirmed during the Prime Minister’s visit and his joint statement with Aung Suu Kyi. The common platform was a strong message to India’s past detractors and this could be seen as the biggest political gain for New Delhi.

Myanmar’s strategic salience as a land bridge to China on the one hand and to the South East Asia on the other hand can not be over emphasised. While approaches from China through Myanmar are important from military, security and economic point of view the connectivity to South East Asia is relevant from the economic point of view. Security and stability in the border areas is an imperative for overall development and establishment of multi-modal corridors linking India and Myanmar and beyond. Both Indian and Myanmar leaders have assured each other that territories of either country would not be allowed to be used for activities inimical to the other, including for training, sanctuary and other operations by terrorist and insurgent organisations and their operatives. This is relevant because recently a ceasefire agreement has been signed between NSCN (K) between the local government of Sangaing division of Myanmar which had been viewed negatively in Indian strategic circles. However, Indian PM gave a positive interpretation to the agreement saying that it would be useful for ushering in peace.

India has also sought to support border regions by providing monetary assistance and open border haats (markets for trade) to develop the area. Evidently, where Indian officialdom needs to pay attention is in implementation of the decisions taken on some of the projects and schemes. The record so far in respect of execution of projects has not been very satisfactory so far.

Strengthening of relations with the Myanmar military particularly in the field of training is another gain in this field though this was not as much reflected in the joint statements.

Major gains were also made on trade and economic front. India is developing major interests in energy, minerals, and iron ore in particular as well as hydro power sector of Myanmar. The target of bilateral trade to $3 billion, by 2015 is modest and achievable. India’s offer of soft loan of $500m could be a driver towards expansion of bilateral trade. Trade and economy related MOUs will add to impetus in this direction and include, Memorandum of Understanding regarding US$ 500 million Line of Credit, Air Services Agreement between India and Myanmar and Memorandum of Understanding on Establishment of Joint Trade and Investment Forum.

The visit will provide impetus to the Look East Policy. It needs to be noted that the year 2012 is being commemorated as two decades of India’s Look East Policy and comprehensive engagement with Myanmar would impart impetus to the realization of such a policy. Further Myanmar is scheduled to take over as the Chairman of ASEAN in 2014 and both leaders reached an understanding to coordinate and cooperate in making the forthcoming ASEAN-India Commemorative Summit successful.

Some of the initiatives in relation to major vectors of Look East policy are as follows:-

(a) Communication Linkages. Agreement to expand road linkages from India to Myanmar and Thailand by 2016 would improve connectivity to South East Asia exponentially. India is also implementing Kaladan multimodal transport project that involves upgrading the Sittwe port and constructing a highway to connect the town of Paletwa in Chin state to the Indian border in Mizoram state by 2015.

(b) Support to Regional Role. Support to Myanmar’s role in ASEAN, Bay of Bengal Initiative for Multi-Sectoral Technical Cooperation (BIMSTEC) and the Mekong Ganga Cooperation (MGC) has been affirmed. Myanmar is the current chairman of BIMSTEC and can play a very useful role in furthering the objectives of this grouping.

(c) Diverse Engagement. India is expanding engagement in diverse sectors, including science & technology, tourism, transport & infrastructure, information communication technology, agriculture and energy.

(d) Tourism. Opening up air service to Myanmar and road linkages would not only promote tourism but would also intensify people-to- people exchanges.

(e) Education. The number of training slots for Myanmar under technical assistance programme has been increased from 250 to 500 every year. An agreement on the setting up of the Myanmar Institute of Information Technology will boost capacity in the ICT sector in Myanmar.

Chinese official reaction to Indian PM’s visit was on expected lines as the Foreign Ministry spokesman Liu Weimin told a press briefing that China welcomes the engagement. "Both India and Myanmar are China's friendly neighbours. China is happy to see the development relations between them. We hope such development of friendly relations is conducive to the stability and prosperity of the whole region". However Chinese media has been less considerate and has clearly stated that India is making up for lost time after it finds itself left out by Chinese and Western initiatives in Myanmar. The truth may however be somewhere in between.

China’s overall policy on Myanmar is likely to remain unaffected by these developments both Indian and Western entry to Myanmar. China’s deep political linkages with Myanmar would be evident by Beijing recently hosting a delegation from Myanmar’s largest political party the Union Solidarity and Development Party (USDP) comprising of military junta loyalists which had an audience with Vice President Xi Jinping.

While there was a setback seen with suspension of work on the Myitsone dam, indications are that this is likely to be limited and some say that on the ground work is continuing. Thus China’s policy of trade routes and transportation corridors to the Indian Ocean through Myanmar is unlikely to be impacted.

India has been one of the last few major states to engage with the new regime in Myanmar including the emerging political order where Aung Suu Kyi despite her official status as only a parliamentary MP has a major role to play in the future. However India could be said to have made up for this lost time by establishing multi dimensional engagement covering all essential facets during the visit of Dr Man Mohan Singh. It is only effective implementation of the MOUs which have been reached with Myanmar that need to be monitored and executed.

President Putin Redux

PP Shukla,
Joint Director, VIF

Even with the North Atlantic orientation of today’s
European policy, we cannot forget that NATO and
Europe are not one and the same thing. And I’ve already
said that Russia is a country of European culture, not
NATO culture.

- Vladimir Putin, First Person

On 7 May, as has been happening every four years since 2000, a President was sworn into office on the Kremlin in Moscow. Vladimir Putin took the oath of office for the third time – actually for the fourth time, since he had been acting President since late 1999. It must have been quite a contrast for him. When he took office duly elected in May 2000, he told the Russian people that his predecessor, Boris Yeltsin, had handed over power to him with one plea: “Save Russia”. And at that time, it was a big ask. Russia was going through fresh convulsions, economic and political, and the ailing Yeltsin was demonstrably unequal to the task.

It is to the credit of Putin that he did indeed save Russia. He did more: he restored it to the level of a great power. He brought stability, he ended the free-for-all that Russia, including even its capital city had been reduced to. And he oversaw a revival of the country’s economy as well. As a result, by the early 2000’s, Goldman Sachs had identified it as part of the BRIC economies whose future was to become one of the major economies in the world. True, not all of this was Putin’s doing, but in large measure it was, and he had created the stability that was so essential for the economy to take advantage of the commodity boom that was to follow. And a grateful populace indicated its recognition of his role by giving him a degree of support that - even after discounting for some exaggeration in the opinion polls – most democratic leaders can only dream of.

But time marches on, new events occur, the stability and other basics begin to be taken for granted. Memories fade, and new ideas emerge. Above all, a new President had to be elected as the Russian Constitution allows only two consecutive terms to an incumbent. Medvedev held the job for four years, starting in 2008, and in both tone and substance, his approach to governance was markedly different. Some degree of popular impatience with the “sovereign democracy” that was the flavour of the Putin-Medvedev era was clearly manifest, especially on the streets of Moscow and St Petersburg. The irony was that these were the cities that had gained the most from the policies of Putin, and he himself is a native of St Petersburg.

This would explain why the return of Putin as President has not been welcomed with the enthusiasm that he certainly feels entitled to. Public opinion has clearly shifted in the four years of the Medvedev Presidency, and this has targeted both the leaders, as well as their Party, the United Russia Party [URP]. This would also explain why there have been street demonstrations against both the Parliamentary elections that were held last December [won by URP of course, though with a diminished mandate], and the Presidential elections in March.

Anyway, Putin is in power now for six years – the term of the Presidency was increased to six years by Medvedev in one of his early acts as President, and it is important to try and understand his [Putin’s] persona and current strategic views. It would be important to recognise that the situation in Russia – indeed all of Europe – is fluid, and there are few certainties, including of politics in the continent.

A look at his views as they have been since his first term as President suggests that he sees Russian interests best served in a strong European tie-up. This is coupled with an understanding [right or wrong] that Europe and America are distinct cultures, as the quote given at the opening of this article indicates. This is coupled with a strong personal German exposure during his career in the KGB, with the result that he speaks fluent German, and is well acquainted with the culture. In his early book – a long interview actually – “First Person”, he describes with feeling how he was impressed by Helmut Kohl of Germany, and observes: “And it was especially gratifying to hear him [Kohl] say that he couldn’t imagine a Europe without Russia”. This view has been only reinforced over the years, and German Chancellors like Schroeder have been particularly close to Russia and to Putin. [It would be fair to say that Medvedev is more exposed, and sympathetic, to the Anglo-Saxon world and culture.]

Putin has revealed his attitude very early in his new stint as President. He blamed the street disturbances on the Americans even before he took office; and he has declined to attend the G8 Summit in America. The message clearly is that America is not to be his first visit outside the CIS. In fairness, President Obama also did not help matters by declaring that Putin had one leg in the Cold War era, and demonstrating a clear preference for dealing with Medvedev. Nonetheless, the fact that Putin has retained Medvedev as Prime Minister and sent him to the G8 Summit, suggests that he [Putin] is pragmatic enough to see that the American relationship is important enough not to be damaged just in order to make a point. Of course, this move to stay away may also play into the American Presidential elections, and Putin would not mind that either, for he is not one to forget a slight.

On present indications, the first country Putin is likely to visit outside the CIS will be China. It is reported that there is to be an SCO [Shanghai Cooperation Organisation] Summit, and he will be going for that. This makes it doubly significant, for he is also signalling the importance he attaches to SCO, in contrast to his attitude towards the G8. In turn, China has welcomed Putin’s return to the Presidency. An article in the People’s Daily, under the title “A stable prosperous Russia under Putin is good for China” hailed his electoral success, adding that he rode “a wave of popularity for his no-nonsense incorruptible image” – just the sort of message that would please him.

It is also instructive to examine Putin’s inaugural speech. It is a short speech, as all his inaugural speeches have been, but there is this significant passage: “We must all understand that the life of our future generations and our prospects as a country and nation depend on us today and on our real achievements in building a new economy and developing modern living standards, on our efforts to look after our people and support our families, on our determination in developing our vast expanses from the Baltic to the Pacific,and on our ability to become a leader and centre of gravity for the whole of Eurasia.” [Emphasis added].

This idea of Eurasia is very much part of Putin’s persona, and embraces both a strong tie-up with Europe and Germany as its anchor, and with China at the other end of the Eurasian land-mass. In the same speech, Putin also praised Medvedev for the work he did as President. The latter also spoke at the inaugural ceremony and hinted that the civil and social changes he introduced need to be preserved. This could contain the seeds of future trouble between the two men.

On the same day that he took office, Putin signed a number of Executive Orders, some five in number; of these, three are of immediate interest, as they also tell us something about the priorities that he will follow. They concern Demographics, the Economy, and Foreign Policy. Each of them is worth considering in some detail. The Russian population has been in steady decline for some decades now, particularly the Slavic part. Despite Governmental efforts, this trend has not been arrested. There is not only the question of maintaining the population growth at a level that would be enough to replenish the labour force, important though that is, there is also the problem of depopulation – over time – of the Siberian region. A very small part of the population lives in these regions, no more than 7 million in the Far East. Facing them across the border is a Chinese population that is some 120 million, if not more. At the moment, the problem has been contained, despite scare stories to the contrary in Russian lore, and the number of Chinese settlers, registered and unregistered, in the area are not more than half a million at the most. But the potential imbalance is too serious to be ignored. The Order issued by Putin calls for more incentives to all families that have three or more babies; nothing really new here. The important element is the suggestion that migration is to become a serious effort to address the labour shortage. Again, this is not entirely new, and there are migrants from the CIS in large numbers. But the intent here appears to be to cast a wider net, something that has been bubbling under the surface for some years now. The document is short on substance, but this is a thought that has found high-level expression, and will need to be followed carefully.

On the foreign policy side, there are a number of important indications of what we may expect. The order in which issues are taken up may be taken to reflect their importance. The list of tasks begins with international issues like terrorism, proliferation, drug-trafficking, etc. Then comes the regional prioritisation, and the first area listed is the CIS. Next comes the European Union, where the most important subject is Energy cooperation and the need to develop a common space in this sector. Asia-Pacific is the next and there is the following formulation used to define priority tasks: “deepening equal, trust-based partnership and strategic cooperation with China, strategic partnership with India and Vietnam, and developing mutually beneficial cooperation with Japan, South Korea, Australia, New Zealand and other key nations in the Asia-Pacific region.”

Until recently, India and China were mentioned on par with each other, but here the standing of China is clearly enhanced. There is a suggestion that the two countries are not only trusted partners, but that they also cooperate at the strategic level. This is a trend in Russian thinking and action that needs to be watched carefully. China is the only major power that has shown some understanding of Russian concerns over Western policies towards it, notably Ballistic Missile Defence deployments in East Europe, and NATO expansion, and this has been well-received in the Russian elite policy circles.

The US is the next to be mentioned, and has the distinction of being only one of four countries mentioned in a stand-alone formulation. There is nothing unexpected in the details of policy priorities but it is important to note that there is an explicit reference to the threat Russia perceives from the American plans for a global missile defence system. This is one of the major Russian concerns, as mentioned above, and will continue to bedevil relations. Obama was overheard asking Medvedev to ask Putin to give him some time to work through this issue after the election, but Russia will clearly not cut any slack on this one.

The other countries that get a stand-alone mention are Afghanistan, Iran, and North Korea – all problem areas that concern Russia deeply. There is nothing remarkable in the formulations, though it is worth noting that on Afghanistan, the Order mentions the importance of SCO and of CSTO [Collective Security Treaty Organisation – a grouping of some former Soviet states], and of the Russia-NATO Council. But there is no direct mention of NATO itself, which is odd considering that the Russians at various times have indicated their desire for ISAF not to pull out prematurely from the country.

The economic policy contains some of the expected targets, such as on ease of doing business. But the most significant hint is that concerning the main State monopolies on aircraft manufacturing and ship building. There is a hint that the monopolies hae not performed as expected, and they are to be audited for their performance. These were monopolies from the Soviet times, which were broken up in the 1990’s, then re-consolidated under Putin himself. They have clearly not performed up to the mark, and it is not surprising that their functioning is to be examined. But the approach is still decidedly statist, and it would be fair to say that this is not the thinking that guided Medvedev in his policies as President.

An important aspect that deserves close attention going forward is the nature of the Defence cooperation between Russia and China. After some serious problems in the mid-2000’s, things appear to have got better lately. A recent statement by one of China’s Deputy Ministers emphasised the importance of this in the bilateral strategic partnership between the two countries. and the financial problems of the Russian Defence industry would make China an attractive partner. There are continuing problems over IPR issues, no doubt, but this is where the dynamic between the financial problems and the overall relationship on the one hand, and the IPR issue on the other will bear watching.

The early personnel changes have also been announced. There are some changes in the Government Ministers though the Ministers for Foreign Affairs, Finance and Defence remain unchanged. The most intriguing aspect of the change is the dropping of the powerful Deputy Prime Minister, Igor Sechin, who controlled the Energy and Fuel complex. It has now been announced that he is to become CEO of the State oil company Rosneft – a clear demotion. There were suspected differences between him and President Medvedev, but this looks like a concerted move by both the leaders in the new tandem, Putin and Medvedev.

The removal of Sechin from the post of Deputy Prime Minister opens the way for a Medvedev protégé – Arkady Dvorkovich – to take his place as the overall in-charge of the Energy and Fuel Complex. The retention of Igor Shuvalov as First Deputy Prime Minister, and the only such [there were two First DPM’s in the outgoing arrangement] is another indicator of a willingness to reach out to the West for deeper economic engagement. It is also worth noting that Vladislav Surkov seems to have been forgiven for the disappointing performance of the United Russia Party at the Parliamentary elections and is now to be the Head of the Government Staff, a powerful post. None of the three has any exposure to India, and this would suggest that we would have to continue to work at the top leadership levels in order to keep the economic relationship healthy.

Many of the Ministers who were in charge of economic and social portfolios in the outgoing Government have been moved to the Kremlin as advisers to Putin. This suggests that he will run the Government with tight control over decision-making, and with the help of the team that he had with him as Prime Minister. But perhaps the most important move from the old Government team is the complete rehabilitation and return to power and trust of Sergei Ivanov, who was earlier the Deputy Prime Minister. He was a candidate for the Presidency and very close to Putin in 2008, but Putin chose Medvedev over him then. Ivanov was brought in as the Head of the Presidential Administration in December last year, while Medvedev was still President. However, it was clearly a preparation for the new President, namely, Putin. The position of Head of the Presidential Administration is effectively the most important position after that of the President himself in the Kremlin. Ivanov, who speaks fluent English, knows India well and will be an important channel for developing ties between the two countries.

For India, it is important to take note of the changing overall outlook in the Russian establishment. Nothing drastic is expected in our bilateral ties, and the relationship is strong and stable, as is shown by the quality of the Defence and Hi-tech cooperation between the two countries. The importance of India is also reflected in the positive reference in the foreign policy priorities, even though it comes below China and the description is of a lesser order.

However, of late, our high-level dialogue has been losing the quality it had during Soviet times, or even early in the 2000’s, and is becoming formal and transactional. There is also the changing Russian attitude towards Pakistan. It is not as yet a cause of concern, but the pace of development of the relationship will bear careful scrutiny in the coming months and years. This is almost a Russian reflex: whenever they fear that India is getting too close to America, they reach out to Pakistan. While it may have been a viable approach in the 1960’s and 1980’s, it would be serious mistake in the current context, and it is to be hoped that those in Moscow who understand South Asia well will see the pitfalls of this policy.

All in all, this adds up to a very ambitious approach to Russian policy and ambitions. The big question is whether this is feasible. The Russian system has atrophied quite a bit since the days of the USSR. The kind of capabilities it had in science and technology, in defence, in space – all this has suffered attrition. Above all, their long-standing weakness in economic thinking and management, especially in the context of a market economy, and a probable slowdown in the commodity boom, is going to prove to be a serious challenge. There is also going to be unprecedented resistance to Putin’s vision and programme – it does not take much to see that. The street demonstrations after the Parliamentary and Presidential elections were among the largest since the fall of the USSR. The public mood is changing, and the media are reflecting a desire for more changes – once again in a liberal direction, after the control they accepted in the early period of this century. If the leadership is up to the challenge of adapting to the new circumstances, economic and social, Russia can look forward to another period of stability and economic growth. As a major power on the global scene, Russia will be an important factor in the emerging shape of the world, one way or another.