Prime Minister Narendra Modi’s second Brics summit, now in Ufa, Russia, on July 8-9, 2015, will take place amidst a changed global situation, economic crises of some members and testy domestic developments compared to his Brazil visit immediately on assuming office.
Firstly, only the second time after 2009 is the Brics summit being clubbed with that of the Shanghai Cooperation Organisation (SCO). Last time the justification was the international financial crisis. Secondly, both Russia and China have looming stand-offs with the US and its allies, the former over Ukraine and the latter in the South China Sea. Both wish to redefine the Asian power structure and diminish America’s role. Central Asia, at the centre of the Eurasian land mass, assumes importance as a source for oil and gas.
Thirdly, though a mutual trust deficit persists, Russia’s proposed Eurasian Economic Union can mesh with China’s “One Belt, One Road”. While Russia wants to restore with its erstwhile Asian provinces an economic linkage, China desires overland connectivity via the region to West Asia and Europe. Along the new channels will flow energy and primary products into China and finished goods the other way.
The two organisations have disparate origins. The SCO was founded in 2001, which, coincidently, was also when the acronym Bric was coined by Jim O’Neill of Goldman Sachs, predicting Brazil, Russia, India and China as pre-eminent emerging economies. The SCO originated to stabilise the borders of China and Russia with Central Asian nations, excluding Turkmenistan, and to regulate troop deployment after the Soviet Union collapse. Over time its focus is beginning to shift to economic issues.
Bric, on the other hand, was founded to take up economic and development issues of interest to the four nations. South Africa was added later for representation from all major continents. They constituted major commodity exporters, i.e. Brazil, Russia and South Africa, and importers — China as the world’s workshop and India as a potential manufacturing hub. China and Russia were permanent members of the United Nations Security Council and the other three aspirants to similar positions in a reformed UNSC. All hoped for a reform of the Bretton Woods financial institutions to reflect the contemporary economic strengths of nations.
Today, however, the reality is different. Russia, a bridge between Brics and G-7, finds itself barred from that group and sanctioned by the US and Europe over its unilateralism in settling the Ukraine imbroglio. The economies of Brazil and South Africa have stalled due to the global economic slowdown and the fall in demand for commodities as well as poor governance. Only India and China are fuelling Asian growth, albeit the former with suspect growth figures and the latter undergoing a perceptible drop in growth momentum.
The two factors that will condition the Indian approach to the two summits will be Sino-Indian and Indo-US relations. China is adopting a dual approach towards India, offering wider engagement and yet taking other steps antithetical to India. For instance, the Chinese announcement of a $46-billion corridor linking the Pakistani port of Gwadar to Xinjiang, passing through Gilgit-Baltistan in Kashmir, is a deliberate provocation considering the sensitivity China displays to the smallest move by India in areas like Arunachal Pradesh that Beijing dubiously claims.
Unfortunately, India has since Independence allowed Pakistan to define the Kashmir issue as not including what it originally called Northern Areas and has now re-christened as Gilgit-Baltistan. These were in the possession of Maharaja Ranjit Singh, the ruler of Punjab till his death, and then passed on to the Dogra rulers of Kashmir.
The British, fearing a Russian advance into those areas, set up the Gilgit Agency in 1877, assuming direct control though not questioning the ownership. In 1935, they leased them for 60 years, reverting them to the Maharaja of Jammu and Kashmir’s control two weeks before Indian Independence. The British commandant of the Gilgit Scouts then allowed the troops to raise the Pakistani flag.
The Indian government, when vacating the Valley of intruders in 1947-48 or in the complaint to the United Nations, seemed to focus only on the Valley and Jammu. This was strategic short-sightedness as Indian possession of Shia-dominated Northern Kashmir, which has ethnic commonality with Leh, would have given India connectivity to Central Asia besides breaking China’s land link to Pakistan. Today, acquiescence in Chinese infrastructure development would be compounding that mistake. The Chinese are trying to sweeten the deal by offering India and Pakistan membership of the SCO. The signal is that Chinese munificence is based on India accepting their vision of future Asian integration with China as the hub, like China of the Middle Kingdom, with spokes emanating to tributary nations.
The US Senate on June 24 finally approved the Trade Promotion Authority to enable President Barack Obama to finalise the Trans-Pacific Partnerships with 11 nations on the Pacific Rim. The planned group will have 40 per cent of global gross domestic product and one third of the world’s trade. On paper it has an open architecture allowing other nations to join later. The exclusion of China links it to the US “rebalance” in Asia.
Prime Minister Narendra Modi, in Ufa, will have to balance China’s shepherding of new institutions like the Brics Bank (New Development Bank), the Asian Infrastructure Investment Bank, and perhaps now a SCO bank and the US defence of existing international law and treaty-based order, besides upholding Indian interests. Like his political skills being tested at home, his diplomatic prowess will be under scrutiny as Brics’ internal balance has been upset by Sino-Russian convergence and the economic weakness of Brazil and South Africa. The time has come for India to have a clear voice, deft tactics and grand strategy shorn of theatrics.
The writer is a former secretary in the external affairs ministry. He tweets at @ambkcsingh
