- Jan 29 2018
Given its proximity to India and its importance in global value chains, ASEAN is in a vital zone of India’s strategic interests.
When he is not tied up in winning elections, Prime Minister Narendra Modi uses his considerable energy to push the boundaries of India’s foreign policy. In the past weeks, there have been two important aspects of this — the visit to attend the World Economic Forum in Davos and the hosting of 10 ASEAN leaders as chief guests for the Republic Day.
Both were important in their own ways. The Davos timing was not a day too late. In the past year, the world economy has seen a distinct uptick, even while the foremost economy in the world, the US has sought to undermine globalisation. Modi’s strong assertion of the virtues of globalisation comes a year after Chinese premier Xi Jinping made the same point at Davos.
South China dispute
India and China upholding globalisation will impart stability to the global system, something neither can do without. Not to be left behind, US President Donald Trump, too, has shown up at Davos to declare that even he could live with a selective America First approach to the issue.
Equally important was the Modi move towards the ASEAN. With China ignoring the verdict of the arbitration tribunal on the South China Sea, there was not much evidence of any effort to push back against China’s brazen tactics. The few weak freedom of navigation operations did little to assuage ASEAN fears and the US' withdrawal from the Trans-Pacific Partnership (TPP) undercut whatever hope there was of a coherent policy response to China in 2017.
The net result was an effective breakdown of the ASEAN into countries that were openly pro-Chinese, such as Cambodia and Laos; others leaning to China, such as Malaysia, the Philippines, Thailand and Myanmar; and a few wary of Beijing, such as Vietnam, Singapore and Indonesia. There is no doubt that economically, China has deeper relations with the ASEAN.
As of now, ASEAN is India’s fourth largest trading partner; India is ASEAN’s seventh. It is also a major destination for outbound investments, with some 20 per cent going to ASEAN, mainly Singapore, with whom India has its deepest ties.
ASEAN has been China’s third largest trading partner for the past six years and China has been the ASEAN’s biggest trade partner for the past eight years in a row. More important, many Chinese companies are linked to ASEAN production centres through global value chains.
The trade factor
Modi’s efforts to woo the ASEAN may not have immediate economic consequences, but it will definitely be a signal to the ASEAN that India is willing to play the role envisaged by Singapore’s Lee Kuan Yew in the early 1980s maintaining an effective balance of power vis-à-vis China. In an oped he wrote for 27 newspapers, Modi emphasised the cultural and civilisational links between India and the region, and more importantly stressed the fact that though we share land and maritime boundaries with three ASEAN nations, we do not have disputes with any.
This is in contrast to China which has disputes with Vietnam, the Philippines, Brunei, Malaysia and Indonesia. The last named had been somewhat restrained in getting involved in the South China Sea issue but has now decided to make formal declaration that no part of its waters are in the South China Sea. This is in relation to the Natuna islands which the Chinese recognise as part of Indonesia but insists that the two countries have overlapping claims to maritime rights there.
India, of course, has an important trade and investment agenda in the ASEAN region. But given its larger ambitions, it needs to draw in ASEAN into its connectivity plans. India has a $1 billion (₹6,359 crore) credit facility for infrastructure development in ASEAN region as well as a ₹500 crore project development facility for the poorest ASEAN countries. The Japan-India sponsored Asia-Africa Growth Corridor will have a meaning only if the ASEAN acts as its eastern anchor. There is need to push ahead and actually implement some of the schemes.
Given its proximity to India and its importance in global value chains, ASEAN is in a vital zone of India’s strategic interests. After speaking of Look East, New Delhi now says we are Acting East. So far, India’s performance has been below par. But there is little time to lose. As China’s Belt and Road Initiative advances, there is a need for countries of the region to provide an effective riposte.
Relations with ASEAN are not an easy job. It is one thing to have good ties with individual countries like Vietnam, Indonesia and Singapore, and quite another to synchronise ties with the regional association with a significant history. India has not been too good in working outfits like ASEAN or, for that matter, the European Union.
This commentary originally appeared in DailyO.