The "crisis" in India's relations with Bhutan did not begin with New Delhi's bungled withdrawal of petroleum subsidies in the middle of the recent elections. Nor has it ended with the claim that the next government in Bhutan will be "pro-India". Recent developments in Bhutan reflect India's growing foreign policy challenges in the Neighbourhood. They are a reminder that many of the traditional assumptions of India's regional policy are no longer sustainable.
For one, Delhi must come to terms with the reality that paternalism, however benign it might appear from India's perspective, is no longer a sensible approach towards its smaller neighbours. For paternalism breeds resentment. Put simply, India can no longer afford to treat Bhutan as a protectorate, in the manner that the British Raj and independent India dealt with it for more than a century and a half.
The British Raj had propped up a ring of weak states around the subcontinent as buffers against intrusion by other powers. The rulers of these small states traded the freedom to conduct their own foreign policy for political support and economic subsidies from the Raj. India's first prime minister, Jawaharlal Nehru, did not abandon this framework when he signed a series of friendship treaties with Bhutan, Sikkim and Nepal during 1949-50 that preserved the essence of the special relationship structured under the Raj.
But India's protectorate system quickly broke down amidst a number of factors. As the Kathmandu elite learnt to play the China card against Delhi, it undermined much of the 1950 treaty. The games that Sikkim's Chogyal played with Delhi forced Indira Gandhi to integrate the kingdom into India. Bhutan has been a lot slower in asserting its national identity and creating an independent international personality. Until recently, it scrupulously avoided the balancing game between India and China. But the pressures to do so are clearly mounting.
The democratisation of the Kingdom and the new competitive politics within the nation are bound to make Bhutan's relations with India a lot more complicated. To be sure, India did recognise this problem and sought to put relations with Bhutan on a more equitable basis by renegotiating the 1949 treaty of friendship in 2007. The latest turn of events underlines the fact that India will have to go beyond formalism and change the operational basis of its Bhutan policy.
Second, India can no longer delude itself that the subcontinent is its exclusive sphere of influence, as in the days of the Raj. In a globalising world, Delhi can't keep other powers out of the subcontinent. As China's power rises, its influence in the subcontinent has rapidly grown over the last decade, from Bhutan and Nepal in the Himalayas to Sri Lanka and Maldives in the Indian Ocean.
It was outgoing Bhutan PM Jigme Thinley's flirting with China that is said to have triggered the mutual distrust between Delhi and Thimphu over the last year or more. India, however, can't build a great wall around the subcontinent and keep China out of the region. At a time when India itself is expanding its economic and political relations with China, it can't order its neighbours to limit their ties to Beijing.
A smart China policy, then, involves giving our neighbours greater access to our markets, improving connectivity, modernising trade facilitation, letting them benefit from India's economic growth, and resolving longstanding bilateral problems. At the same time, the new approach must also lay down clear red lines on security cooperation between India's smaller neighbours and China. Making sure these red lines are respected will not be easy, but must be part of India's strategy of continuous tending to the Neighbourhood.
Third, India needs to expand the interface of its engagement with the neighbours. At the moment, Delhi's Neighbourhood policy is run by a handful of overworked officials in the ministry of external affairs and our "viceroys" in the Neighbourhood capitals. What India now needs is a more intensive — formal and informal — political interaction between the leaderships of the subcontinent. The lead must necessarily come from Prime Minister Manmohan Singh, who has been remiss in avoiding frequent travel to the neighbouring capitals.
Fourth, while the Union government has sole responsibility of foreign policy, India's current political conditions demand a more active involvement of the opposition parties in engaging the elites across the borders. But our opposition leaders have not been able to resist the temptation of playing politics with foreign policy towards the neighbours. Consider, for example, the BJP's reluctance to support the historic agreements that the UPA government has negotiated with Bangladesh in 2011 and the deafening silence of the CPM, which should be so interested in transforming relations between Kolkata and Dhaka. Worse still, some regional leaders have become spoilers in India's Neighbourhood policy. If Mamata Banerjee undercut India's engagement with Bangladesh, political dynamics in Tamil Nadu have severely circumscribed Delhi's diplomatic room in Colombo. Delhi, then, needs to reassert its primacy in foreign policy while making all efforts to bring the regional parties on board the national consensus on foreign policy.
Finally, Delhi needs to discard the tradition of offering economic subsidies and negotiating project proposals with neighbouring capitals. It should focus instead on enabling agreements and let market forces leverage the existing economic and geographic complementarities.
For its part, most of the Indian private sector has gone haring around the world but has devoted little attention to markets next door. On the other hand, the GMR group, which had invested in the Male airport, has been burnt by the capricious domestic politics of Maldives and lack of sufficient support from Delhi. Structuring greater synergy between Delhi and the private sector must be an important part of a comprehensive mobilisation of the nation's resources in recasting India's Neighbourhood policy.
(The writer is a Distinguished Fellow at Observer Research Foundation, Delhi and a Contributing Editor for The Indian Express)
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