India held back by wall of instability

http://www.atimes.com/atimes/South_Asia/HF01Df01.html

By Chietigj Bajpaee

While much of the world's attention is on the "rise" of China in the political, economic and military spheres, there remains a relative lack of attention on Asia's other rising power - India, as highlighted by the fact that India has attracted a tenth of the foreign direct investment of China.

Corruption, India's infrastructure bottlenecks, bureaucracy referred to as the infamous "License Raj" and India's unpredictable democracy, which creates precarious coalition governments and changes in policy every time there is a change of administration has led India to becoming subordinate to China among the emerging economies.

However, another factor that has the potential to deter India's rise is the plethora of conflicts and instabilities on its periphery. WhileChina has resolved or shelved most such conflicts, India has active disputes along most of its borders. This "wall of instability" has prevented India from gaining access to vital resources and markets, deterred regional economic integration and security cooperation, and may even undermine investor confidence.

Limits to India's 'Look East' policy
India's poor relations with Bangladesh and instabilities in Bangladesh, Myanmar, Nepal and in India's northeast have limited direct land access to the markets of China and Southeast Asia. Progress on plans for Myanmar to supply India with natural gas from its Shwe field off the coast of Arakan state has been held up by tensions between India and Bangladesh and Myanmar's close relationship with China.

While a gas pipeline transiting Bangladesh would be the shortest route for an overland pipeline between India and Myanmar, frictions between Delhi and Dhaka have forced India to look into more expensive options such as constructing a deep-sea pipeline, transporting gas by tanker or through India's northeastern states.

Relations between India and Bangladesh have deteriorated in recent years as the goodwill generated from India's support for Bangladesh in its war of independence in 1971 has given way to Bangladesh's emergence as a potential new source of Islamic extremism in South Asia.

Internally, confrontations between Sheikh Hasina's Awami League and Begum Khaleda Zia's Bangladesh National Party and its ally, the Jamaat-e-Islami, are turning increasingly violent. Meanwhile, groups such as the Jamaat-ul-Mujahideen Bangladesh (JMB), Harkat-ul-Jihad-al Islami, Bangladesh (HuJI-B) and Jagrata Muslim Janata Bangladesh continue to call for the implementation of sharia law in Bangladesh and have been held responsible for a series of bomb attacks in Bangladesh over the past few months.

Externally, Bangladesh has been accused of fueling the insurgencies in northeast India with arms, aid and training, providing a haven for al-Qaeda terrorists and emerging as a hub for arms trafficking. Bangladesh has emerged as a sanctuary for Islamic extremist groups in the region, including the Pakistan-based Lashkar-e-Toiba and Myanmar-based insurgent groups such as the Arakan Rohingya Organization (ARNO) and the Rohingya Solidarity Organization (RSO).

India's concern over the deteriorating security situation in Bangladesh was demonstrated in 2005 when the 13th summit of the South Asian Association for Regional Cooperation (SAARC) was postponed after the Indian delegation led by Prime Minister Manmohan Singh refused to attend following a series of bomb blasts in Bangladesh.

Tensions between India and Bangladesh have been further fueled by a series of disputes over illegal Bangladeshi immigration into India's northeast, disagreement over water-sharing across the 54 rivers that traverse the two states and India's decision to fence its 4,000 kilometer border with Bangladesh.

The plans for a Myanmar-Bangladesh-India gas pipeline have been further soured by Myanmar's signing of a memorandum with the Chinese energy company, PetroChina, in December for the sale of 6.5 trillion cubic feet of gas to China over the next 30 years from the Shwe field.

India has been playing catch-up with China in cultivating relations with Myanmar. In the past, relations between the two countries were marred as a result of India voicing its opposition to the military junta's crackdown on pro-democracy activists and the house arrest of Aung San Suu Kyi, the leader of the National League for Democracy.

India's more pragmatic, non-interventionist policy with regard to Myanmar has been prompted by numerous factors, including its need to gain access to energy resources in the region; garner the support of Myanmar's government, the State Peace and Development Council (SPDC), in tackling Indian insurgent groups that have claimed sanctuary in Myanmar; Delhi's desire to access the vast markets of Southeast Asia under its "Look East" policy; and balance the growing influence of China in the region.

Finally, India's own insurgencies in the seven states of the northeast commonly referred to as the "seven sisters" (Assam, Arunachel Pradesh, Nagaland, Manipur, Meghalaya, Mizoram, Tripura) where over 100 militant groups operate, have delayed plans for direct energy, trade and transport links between India and Southeast Asia.

The geographic separation of the northeast states from the rest of India, with only a 20 kilometer pass known as the Siliguri corridor linking the states to the rest of the country has often led to fears that outside powers could fuel the northeast insurgencies in order to "cut the chicken's neck". The fact that China claims 90,000 square kilometers of India's northeastern state of Arunuchel Pradesh has also been a cause of concern in the region.

The Indian government itself has been preoccupied by its northern insurgency in Kashmir, even though the economic gains from resolving the northeast insurgencies are greater given the importance of the region as a potential trade route between South and Southeast Asia as well as plans for a pipeline transporting natural gas from Myanmar and Bangladesh to India.

The region's proximity to the Maoist insurgency in Nepal, increasingly Islamic extremist Bangladesh and separatist movements and authoritarian rule in Myanmar have made the northeast insurgencies the final piece in an "arc" of instability stretching from Myanmar to Nepal.

Nepal and the Naxalites
While Nepal's King Gyanendra ended his 14 months of direct rule in April, the security situation in Nepal remains precarious as almost half the country remains under the rule of the Maoist militants (Communist Party of Nepal (Maoist) ( CPN-M). Although the Maoists have entered into a 12-point agreement with the Seven-Party Alliance (SPA), the Maoists and the SPA do not see eye-to-eye on Nepal's future. The SPA does not appear ready to give up on the monarchy altogether while the Maoists want to turn Nepal into a republic as well as calling for one-partyl authoritarian communist rule.

The Maoists are also unwilling to disarm as sporadic violence and abductions continue. This conflict has spilled over into India as the Maoists have often sought sanctuary in India and maintain links with India's militant Maoists, known as Naxalites. More than 13 states in India have experienced Naxalite attacks, which have grown increasingly bold in recent months.

The Indian Naxalites and Nepalese Maoists continue to grant each other moral and material support and sanctuary and have even espoused creating a "compact revolutionary zone" from Nepal to Andhra Pradesh. Any strengthening of the Maoist position in Nepal is likely to invigorate the Naxalites in India.

The prospect of Nepal emerging as a failed state would have negative repercussions for India in the form of refugees and Nepal's emergence as a hub for terrorism and illicit activities.

Sri Lanka - a 'ceasefire' only in name
The Norwegian-brokered ceasefire, which was implemented in 2002 between the Sri Lankan government and the Liberation Tigers of the Tamil Ealem (LTTE), appears to be a ceasefire only in name. The suicide attack on the army headquarters in Colombo at the end of April and a naval clash in May add to a long list of violations of the ceasefire, including the assassination of foreign minister Lakshman Kardigamar in 2005 and hostilities between the Northern Prabakaran faction of the Tamil Tigers and the eastern Karuna faction in 2004.

While India doesn't crave the prospect of involvement in Sri Lanka, given its bitter experience from deploying peacekeepers to the country in 1987-90, which left it with a bloody nose, Delhi is also unlikely to sit on the sidelines as the Tigers and government become increasingly trigger-happy.

The resurgent violence is already increasing refugee flows into India and has the potential to enflame emotions among India's Tamil populous in the south. The LTTE has also been a catalyst for arms trafficking in the region, which has fueled conflicts in India's northeast and in Southeast Asia.

Pakistan: Denying India in the 'New Great Game'
Tensions have declined between India and Pakistan in recent years as a result of increasing people-to-people contacts brought on by direct road and rail links, military confidence-building measures, sport and growing trade.

Nevertheless, attacks by Pakistan-based terrorist groups, which have traditionally focused on Kashmir, have spilled over into the rest of India, as illustrated by bomb attacks this year in Varanasi and Jama Masjid in New Delhi, attacks in Ayodhya and the Indian Institute of Science in Bangalore in 2005, and an attack on the Indian parliament in December 2001, which came close to sparking another war between India and Pakistan. These attacks have been aimed at igniting communal violence and undermining confidence in India's economy.

Furthermore, India's fluctuating relations with Pakistan have prevented access to energy resources and markets in Iran and the Central Asian republics. India has expressed interest in both the Iran-Pakistan-India (IPI) natural gas pipeline and the US-backed Turkmenistan-Afghanistan-Pakistan or Trans-Afghan gas pipeline.

India's plans to import Iranian gas, which have been in the works since 1993, have been delayed by tensions between India and Pakistan. This has led India to look to the option of transporting gas by LNG (liquefied natural gas) carriers and building a deep-sea pipeline that bypasses Pakistan.

In recent years, as India-Pakistan relations have thawed, other security considerations have delayed the project, such as the insurgency in Pakistan's Balochistan province through which the IPI pipeline would have to transit and ongoing frictions between Iran and the international community over Tehran's nuclear ambitions.

Meanwhile, the Trans-Afghan pipeline has been held hostage to instabilities in Afghanistan, from the Afghan civil war to Taliban rule and most recently the spring offensive by the Taliban and Gulbuddin Hekmatyar's Hizb-i-Islami.

Questions over whether Turkmenistan has enough gas to meet India's appetite, given its commitments to Russia and China, have also dampened the Trans-Afghan pipeline project. While these deals continue to be discussed, on May 25 crude oil began flowing through the Kazakhstan-China pipeline from Atasu to Alataw Pass in Xinjiang province, with the potential of the pipeline being extended to the Caspian Sea.

The US-backed Baku-Tbilisi-Ceyhan (BTC) pipeline is up and running with discussions on extending it to Kazakhstan, and Russia retains its pipeline network with the Central Asian republics from the Cold War. While India discusses its options in the "New Great Game" for energy resources, other states such as China, Russia and the United States are already full-fledged players.

China: Filling the void
While India continues to tackle insurgencies and active conflicts within its borders and on its periphery, China has either resolved or "shelved" all conflicts internally, with all 14 states along its border and with states in the region, with the possible exception of Japan.

Security and energy cooperation between China and Russia continues to deepen, while China engages in joint oil and gas exploration of disputed territory in the South China Sea with Vietnam and the Philippines. China's improving relationship with South Korea has even called into question Seoul's alliance with the United States.

Even on the Taiwan issue, which is the most likely source of conflict for China, Beijing has developed a more nuanced policy with its rapprochement with opposition "pan-Blue" parties in the face of separatist tendencies by the ruling "pan-Green" coalition led by President Chen Shui-bian.

China is also major player in numerous regional economic and security forums, including the Association of Southeast Asian Nations (ASEAN) +3, ASEAN Regional Forum (ARF), the Asia-Pacific Economic Cooperation (APEC) and the recently inaugurated East Asia Summit, as well as being a leader in numerous forums such as the Boao Forum, the Shanghai Cooperation Organization and the six-party talks to bring about a nuclear weapons-free Korean peninsula.

Finally, Beijing has successfully projected its principle of "peaceful rise" or "peaceful development" to reassure the international community of China's non-threatening intentions.

While numerous states on China's periphery remain suspicious of China and regard its "peaceful development" slogan as more rhetoric than reality, Beijing's achievements far outweigh those of India. While India's relations with Pakistan have gone from open hostility to limited cooperation and mutual suspicion, India's relations with its other neighbors have continued to deteriorate.

This has limited progress by regional bodies such as the SAARC and BIMSTEC (Bangladesh-India-Myanmar-Sri Lanka-Thailand Economic Cooperation) in forging a regional identity, creating a regional security structure and developing intra-regional trade and economic integration.

Intra-regional trade in South Asia accounts for a mere 4% of the region's total trade, even though the South Asia Preferential Trading Arrangement (SAPTA) has been in place since 1995. In contrast, in 2004, intra-regional trade in ASEAN amounted to 49%; in NAFTA this figure was 44% and in the European Union this was 67%. Progress on the South Asia Free Trade Area (SAFTA) has been slow, which has been fueled in part by political frictions between states in the region.

Furthermore, India's poor relations with its periphery have created a vacuum in power and influence, which has been filled by extra-regional powers, such as China. China has taken advantage of India's poor relations with its neighbors to expand its naval presence in the Indian ocean, as seen by the development of port facilities in Gwader in Pakistan and on the Coco islands in Myanmar and in Chittagong in Bangladesh.

These initiatives have been driven by China's desire to secure the Malacca Strait and the Strait of Hormuz through which as much as 80% of China's oil imports flow, as well as bypassing these chokepoints with overland "energy corridors" from Pakistan, Myanmar, Bangladesh or Thailand.

Beijing's presence on the Coco islands has also allowed it to monitor India's naval presence in the Andaman and Nicobar islands. In 2005, China also conducted its first joint naval exercises in the Indian Ocean with Pakistan, the first outside its territorial waters. India's transfer of the INS Tilanchang to the Maldives in April and desire to gain exclusive access to the naval base in the eastern town of Trincomalee in Sri Lanka has been regarded by some as a response to Beijing's increasing interests in the Indian Ocean.

China's observer status at the SAARC, much to the consternation of India, is also a sign of China's encroachment into its backyard. China continues to assist Pakistan in augmenting its military with the joint development of the F-22P frigate and JF-17 Thunder fighter. China is also assisting Pakistan with strategic infrastructure projects, such as widening the Karakorum Highway linking both countries and increasing cooperation in the energy sphere, including developing Pakistan's oil refining, storage and exploration capabilities.

China has also agreed to increase nuclear-power cooperation with Pakistan, which some regard as a reaction to the US-India nuclear deal that was reached during President George W Bush's visit to India in March. China has also made inroads in improving relations with other South Asian states, including Bangladesh, Nepal and Sri Lanka, as seen by the number of high-level visits between China and these states in recent years.

China's strengthening of direct road links with Nepal and support for King Gyanendra during his suspension of democracy, regarding it as an "internal matter", while India, Britain and the US criticized his actions and suspended military aid, led some to believe that China may attempt to fill the void left by India.

China has also emerged as Bangladesh's leading trade partner and arms supplier and agreed to assist Bangladesh with its civilian nuclear program as well as expressing interest in the country's natural gas reserves.

Troublesome neighbors
India possesses numerous advantages over China, such as a strong bottom-up entrepreneurial spirit and English-language skills, and strong managerial and information technology skills. India has also raised its profile on the world stage in recent months, as illustrated by its prominent role at the Davos World Economic Forum in January and the US-India nuclear deal.

Furthermore, much of the limelight on China is negative, such as China's violation of intellectual property rights, undervalued exchange rate, growing trade surplus with the US, poor human-rights record, perceived aggressive policy toward Taiwan and Tibet, support for pariah regimes, growing oil imports, and potential to challenge US global predominance.

Over the long run, China's authoritarian system has the potential to create more instability than India's democratic government. The record number of protests across China in 2005 demonstrated that in the absence of a safety value offered by a democratic system, frustrations can only be vented through increasingly violent clashes with the authorities.

Nonetheless, India continues to be held back by instabilities on its periphery, which are preventing its access to markets and raw materials, deterring the emergence of regional economic and security structures and may even deter investors to the region.

Chietigj Bajpaee is a research associate at the Center for Strategic and International Studies in Washington DC. He has been a researcher for the London-based International Institute for Strategic Studies and a risk analyst for a New York-based risk management company. His areas of interest are energy security and macroeconomic, geopolitical and security developments in the Asia-Pacific region. The views expressed here are his own. He can be reached at c.bajpaee-alumni@lse.ac.uk