Lines on a Map: Five Examples Worse Than Sykes-Picot

The centennial of the Sykes-Picot Agreement has flooded the better-informed parts of the Internet with everything from the depressingly familiar (blaming the treaty for all the Middle East’s problems) to the refreshingly critical. There seems to be more and more of the latter, which is heartening.

Sykes-Picot was after all not the only plan to partition the Ottoman Empire after World War I, as Middle East expert Adam Garfinkle writes in The American Interest. And blaming it, or any Western design, for imposing “artificial borders” on the region is a dangerous proposition, as the Atlantic Sentinel has argued. Taken to its logical conclusion, the idea that only borders that perfectly encompass certain ethnic groups are legitimate invites more conflict, not less.

The Middle East is not the only part of the world that can attest to that. Here are five examples where drawing lines on the map caused even bigger problems. Read more

Why India Still Can’t Let Go of Its Cold War Friend

Presidents Pranab Mukherjee of India and Vladimir Putin of Russia speak in Moscow, May 9
Presidents Pranab Mukherjee of India and Vladimir Putin of Russia speak in Moscow, May 9 (Presidential Press and Information Office)

Indian president Pranab Mukherjee was in Moscow this weekend to join the grand parade marking the seventieth anniversary of the Allied victory over Nazi Germany in the Second World War. This high-profile visit was both timely and significant. India demonstrated a camaraderie with Russia at a time when most Western leaders boycotted Vladimir Putin on account of what they consider his aggressive, destabilizing policies toward Ukraine.

Since the end of the Cold War, when India, despite professing nonalignment, leaned more toward the Soviet Union, the country has gradually shaken off its ideological inhibitions in favor of better relations with the United States. The last two decades have witnessed a cooling in Indo-Russian relations. From India’s point of view, there is no downgrading of its traditional ties with Russia and there are significant overlapping interests that bind the two countries regionally as well globally. But Russia’s inability to alleviate India’s security challenges vis-à-vis China and Pakistan has been one of the crucial factors in moving the latter closer toward the United States.

The imminent American withdrawal from Afghanistan has given China a powerful incentive to seek opportunities in Central Asia at the United States’ expense. The relationship between India, Pakistan and Russia is getting more complex with China emerging as the crucial factor. China’s appetite for energy resources and political influence in Central Asia is evident in its geopolitical calculations. As Russia’s own energy-driven economic prosperity is coming under stress due to Putin’s diplomatic and military gambles in Europe, the momentum in Sino-Russian relations is shifting in China’s favor. To illustrate China’s growing importance to Russia, President Xi Jinping and his wife were seated next to Putin during the Moscow Victory Day parade.

The tension in relations between India and Russia is reflected in their diverging priorities. Although Russia remains a central player in sustaining the Indian armed forces — it provided up to 75 percent of India’s imported weapons from 2009 to 2013 — its outreach to Pakistan has alarmed policymakers in New Delhi.

Late last year, Russian defense minister Sergei Shoigu traveled to Islamabad to sign a first-ever military cooperation pact that paved the way for the sale of military equipment to Pakistan. Shoigu was the first Russian defense chief to visit Pakistan in more than four decades. The latest example of improving bilateral relations is a planned $2 billion Russian investment in a Pakistani gas pipeline.

Broader geopolitical dynamics have pushed Russia to enhance its commercial and military cooperation with Pakistan. Shunned and punished by the West, Russia is desperately looking for new friends and markets. The fate of Afghanistan is also inextricably linked to Pakistan and cooperation with Pakistan would serve Russia’s strategic interest in terms of making Afghanistan less hospitable to Islamic terrorism.

Another argument advanced by Russia for the paradigm shift in its policy is that if India can buy defense equipment from Israel and the United States, why should it not sell to Pakistan?

Does this signify the emergence of a China-Russia-Pakistan synergy? If so, it is time for India to realize that its increasing proximity to the United States will reduce its leverage over Russia. As does Russia’s increasing tilt toward China. The negative fallout of the China-Pakistan relationship, the sole feature of which is to undermine India, certainly weighs immensely on the strategic debate in New Delhi. The difficulty of resolving territorial disputes with China, the anti-India nature of the China-Pakistan alliance and China’s attempts to dominate the Indian Ocean region are matters India cannot hope to manage without the help of a friendly Russia.

Engaging an isolated Russia will certainly draw criticism from India’s new friends in Washington. But its ability to shape the future of Asia depends on it.

Former Ruling Party Blocks India Tax Overhaul

Government buildings in New Delhi, India, October 28, 2011
Government buildings in New Delhi, India, October 28, 2011 (Chrissy H)

India’s former ruling party on Tuesday blocked tax reforms that would have made business easier in the country of 1.2 billion. The delay is the first major setback for the conservative prime minister, Narendra Modi, since he won the election last year.

Modi’s Bharatiya Janata Party commands an overall majority in the lower house of parliament but not in the upper chamber where the leftist Congress has most seats.

On Tuesday, the upper house referred back legislation that would have merged various local and state-level taxes into one national goods and services levy — an overhaul Congress previously supported.

Economists say the change could boost India’s economic output by up to 2 percent per year. It would reduce compliance costs for companies and make the transit of goods across the country easier. Now trucks must be stopped and taxed whenever they cross state lines.

The Bharatiya Janata Party has long championed tax reform but refused to support it when Congress was last in power. Now the roles are reversed.

Modi was elected in May last year on promises to liberalize the world’s tenth largest economy and raise living standards. He has made some headway but also run into strong opposition to measures that would weaken workers’ rights and leave national industries more vulnerable to competition from abroad.

T.T. Ram Mohan argues at The Wire that Modi can’t yet take credit for what seems to be an improving economy. Growth is expected to come in at 7.4 percent this fiscal year but only seems higher because the statistics agency recently switched to using 2011-2012 as the base year for its projections instead of 2004-2005.

Inflation is down but that is at least partially due to falling oil prices over which India has no control.

The government has continued fiscal consolidation to bring the deficit under 3 percent of economic output by 2017 while the current account deficit is closing. It has also deregulated diesel prices, substituted cooking gas subsidies with direct cash transfers and raised foreign investment caps in the defense and insurance industries.

But Mohan points out that many other measures investors want remain elusive, including changes in the labor code to make it easier to dismiss workers, a liberalization of land acquisitions and the privatization of state-owned banks and industries.

India to Rationalize Taxes, Boost Infrastructure Spending

Varanasi, India seen from the River Ganges, February 25
Varanasi, India seen from the River Ganges, February 25 (Kian McKellar)

Arun Jaitley, India’s finance minister, unveiled a series of tax reforms and infrastructure initiatives on Saturday in the conservative government’s first full budget since Narendra Modi came to power last year.

Jaitley said a national sales tax would be in place by April next year to replace a complex regime of local fees that hampers business growth.

He also announced a reduction in the corporate income tax rate from 30 to 25 percent and a simplification of the code.

Both measures should help Modi meet his campaign promises to liberalize the world’s tenth largest economy and boost growth rates. Read more

Obama Needs India to Make His Asia “Pivot” a Success

American president Barack Obama and Prime Minister Modi of India walk in the garden of Hyderabad House in New Delhi, January 25
American president Barack Obama and Prime Minister Modi of India walk in the garden of Hyderabad House in New Delhi, January 25 (White House/Pete Souza)

If Narendra Modi can convince India to break with its nonaligned past and ally with the Pacific’s democracies instead, American president Barack Obama may yet succeed in counterbalancing China’s rise.

Since it was announced in 2011, the American “pivot” to Asia appears to have done little to affect Chinese behavior. Rather, the military component of what was later renamed a “rebalancing” strategy exacerbated China’s fears of encirclement. By raising troop deployments in the Western Pacific, the United States inadvertently confirmed the Chinese in their worst fears: that America intended to block their reemergence as a great power.

China has since pressed its revisionist maritime border claims in the East and South China Seas and bullied its neighbors.

Last year alone, China moved a deepwater drilling rig into waters that are disputed by Vietnam, rammed Vietnamese fishing boats in the South China Sea and deployed three nuclear missile submarines to the area, engaged in a standoff with the Philippine navy over the Scarborough Shoal and declared an Air Defense Identification Zone over Japan’s Senkaku Islands — which America immediately exposed as useless by flying two bombers through it unannounced.

Beyond the military standoff — where, in spite of China’s army modernization and rising defense spending, America still has an overwhelming advantage — China’s more structural challenge to American preponderance in the Pacific is institutional. It pushes alternative rule-making forums that exclude the United States and continues to cooperate with Russia in spite of President Vladimir Putin’s isolation in the West as a result of his aggression in Ukraine.

Late last year, China seemed to walk back on that challenge when it entered into agreements with the United States on climate change and technology tariffs and signed a code to avert clashes with American planes and warships off its coast.

The Council on Foreign Relations’ Michael Levi argued at the time that China’s move away from unilateralism showed it was “increasingly comfortable being seen to act as part of an international effort.”

The American Interest‘s Walter Russell Mead similarly hailed the agreements as good news, “except perhaps for Vladimir Putin.” They made clear, he wrote, that China was “not going to join forces with him in an attack on the foundations of the post-1945 world order again.”

Getting China to accept international codes of conduct that the Chinese complain they had no part in writing and a liberal world order many Chinese see as serving the interests of America alone is the hardest part of Obama’s “rebalancing” effort. But it is also far more important than merely containing China if America is to keep the peace in Asia and raise prosperity on both sides of the Pacific Ocean.

Mead cautioned that last year’s diplomatic breakthroughs should not be taken as proof that China has come round altogether.

China believes that given peace and quiet in the region, it will continue to grow and that, if it chooses, it can challenge the world order and American primacy at a later, more convenient time when China is stronger and, perhaps, its potential adversaries are weaker.

To convince China that time will never come, the German Marshall Fund’s Daniel Twining argues in Foreign Policy magazine that the United States should form a “triple alliance” with Asia’s biggest democracies, India and Japan.

Twining laments Obama’s lack of emphasis on democracy in foreign affairs but believes that as a result of the “values-based diplomacy” of the nationalist prime ministers of India and Japan, Modi and Shinzō Abe, all three powers now “recognize that unsentimental national interest and shared political ideals require closer strategic collaboration to shape the Pacific century.”

Last September, after talks with Abe in Tokyo, Modi publicly condemned what he called an “eighteenth-century expansionist mindset: encroaching in other countries, intruding in others’ waters, invading other countries and capturing territory.” It was a rebuke to the sort of “might makes right” mentality that Putin’s Russia has embraced and that the rest of Asia desperately wants China to stay away from.

Although Japan is still the world’s third largest economy, overtaken by China only five years ago, it lacks the military wherewithal to resist Chinese hostility. “India,” according to Twining, “is the only Asian country with the weight and scale to offset China’s power and influence.”

Abhijit Iyer-Mitra cautioned at the Atlantic Sentinel earlier this month that an Indo-American alliance faces many obstacles. Whatever Modi’s interest in deepening ties with the United States, his bureaucracy “remains deeply anti-American and is ingrained in leftist nonaligned thought,” he wrote, while military interoperability is complicated by the fact that many of India’s tanks and warplanes are Russian-made.

Twining argues that to sustain India’s rise — which primarily hinges on Modi’s ability to liberalize his economy — Japan and the United States need to provide it with more capital, defense hardware and technology.

India has the advantage that other countries in the region will “view its emergence as an opportunity, even as they hedge against China’s resurgence.” If Modi is able to move India toward an alliance with the United States, it would be a “strong challenge to Beijing’s belief in its own preeminence,” Twining writes — “and its attempts to forge a ‘new type of major power relations’ with the United States over the heads of its allies.” If India, Japan, the United States and the smaller democracies of East Asia all share the same political values and priorities in international relations, it would be extremely difficult for China to try to work around them.

There is the risk that an Indo-American alliance could end up making Russia more belligerent, as former American national security advisor Zbigniew Brzezinski warned in Strategic Vision (2012).

In fact, such an alliance would be inimical in two significant ways to long-term American interests in Eurasia: it would reduce Russian fears of China and thus diminish Russian self-interest in becoming more closely tied to the West and it would increase Moscow’s temptation to take advantage of a distracted America drawn into wider Asian conflicts to assert Russian imperial interests more firmly in Central Asia and in Central Europe.

Then again, under Putin, Russia has already broken with the West and reasserted itself in the former Soviet sphere of influence anyway.

Structural Impediments to Closer Indo-American Relations

American president Barack Obama and Prime Minister Modi of India attend a state dinner at the presidential palace in New Delhi, January 25
American president Barack Obama and Prime Minister Modi of India attend a state dinner at the presidential palace in New Delhi, January 25 (White House/Pete Souza)

American president Barack Obama’s recent visit to India supposedly saw the conclusion of some far-reaching agreements, including on defense cooperation, specifically missile defense, technology transfer and the operationalization of the dormant nuclear agreement Obama’s predecessor, George W. Bush, negotiated with India in 2005.

All of this cements the image of India’s new prime minister, Narendra Modi, of being both a strategic thinker and a doer.

But this is at the political level. At the operational level, things are controlled by a bureaucracy that remains deeply anti-American and is ingrained in leftist nonaligned thought. It may well fail to implement or even block the implementation of the latest agreements.

The clearest sign of the Indian bureaucracy’s ingrained anti-Americanism came from the visible euphoria of officials who were part of the negotiations. This in spite of the fact that no public announcements were made.

The Delhi diplomatic grapevine indicates that the Americans had never met an Indian leader who was so willing to “talk business” and help contain China.

India is a country with an acute governance deficit. Its bureaucracy that has no inkling of modern economic thought and zero experience with information age technologies. This may ultimately prove to be the biggest roadblock to a brave new era in Indo-American relations.

Take, for example, the purported agreement on building American nuclear reactors in India. India’s goal has been to get a first dozen or so reactors from abroad, gradually absorb the technology and then produce the same designs domestically at a fraction of the cost with some of the technological knowledge gained migrating into the military nuclear program.

The issue is that every Western-designed reactor depends on reactor vessels fabricated by Mitsubishi heavy industries in Japan, a country that has a similarly strong bureaucracy ingrained in nonproliferation and is unwilling to conclude a nuclear deal with India for this very reason.

This is not to say that the United States or France would be incapable of independently designing and milling a reactor vessel. But given the miniscule number of new reactors commissioned each year, the economics simply don’t support the creation of industrial facilities to produce, at best, ten to fifteen reactor vessels. As a result, even if General Electric and Westinghouse — the two American energy companies looking to export reactors to India — agree to the compromise reached with India on liability, going forward is an extremely difficult proposition.

The second set of agreements signed had to do with India slowly making its weapons systems more interoperable with NATO standards and transfers of American military technology. Here again the Indian bureaucracy’s lack of economic training could greatly impede operationalization.

Much of what India has invested in is NATO incompatible, specifically its fleet of Russian tanks and warplanes. Indigenous destroyers and frigates are also equipped with Russian sensors and weapons.

As a result, the kind of seamless interoperability that would bring serious synergies to play is largely either out of reach for around 70 percent of India’s armed forces. The remaining 30 percent is too small in terms of quantity to make a major difference, especially now the deal for the French Dassault Rafale fighter plane is now on the brink of collapse.

Moreover, India’s foggy ideas about nonalignment means that interoperability is both “undesirable and unnecessary,” as one senior military officer put it.

The net result is that future Indo-American cooperation at the strategic level is held hostage at three levels — all structural.

The first is the bureaucracy. The second is a largely non-NATO compatible military that does not wish to be NATO compatible. The third is the fact that India is a third-world economy. Its demographic bulge and collapsing education system mean it will have to focus on quantity manufacturing rather that high-value addition, quality manufacturing that Western technology represents.

This, combined with a chronic lack of civil-military integration in the manufacturing sector, means that Indian industry cannot sustain the manufacture of low volumes exclusively for military purposes when it is not properly integrated into global civilian supply chains.

Signs of change in at least one of these sectors, the bureaucracy, are visible. The new government has not hesitated to transfer or sack obstructionist or underperforming bureaucrats and officials who do not agree with its policy. But this represents a change on only one of the three structural plains that will determine the operationalization of meaningful Indo-American relations with the other two seemingly untouched.

Irrespective of Modi’s willingness to cooperate with the United States, his country’s reputation as one failing in terms of governance will likely act as check on meaningful cooperation for the foreseeable future.

India’s Modi Relaxes Labor Inspections, Reduces Compliance

Prime Minister Narendra Modi of India meets Republican House speaker John Boehner in Washington DC, September 30
Prime Minister Narendra Modi of India meets Republican House speaker John Boehner in Washington DC, September 30 (Caleb Smith)

India’s conservative prime minister, Narendra Modi, introduced a new system for labor inspections on Thursday that he said would be the first step in liberalizing the country’s notoriously inflexible jobs market.

Under the new regime, a computerized system will randomly select companies for inspections. Labor monitors will no longer be allowed to check on businesses at their own discretion, a procedure that is vulnerable to favoritism and abuse.

Inspectors, moreover, will have to upload their reports within three days and will not longer be able to modify their findings thereafter.

Companies should also soon be able to submit a single compliance form for sixteen separate labor laws — online.

“Let’s start with trust,” said Modi in New Delhi where he unveiled the measures. “Ease of business is the first and foremost requirement if ‘Make in India’ has to be made successful.”

With ten million Indians joining the jobs market every year, the country can ill afford to stifle business growth.

High compliance costs also deter small companies from formally employing workers. Estimates are just 8 percent of India’s workers have a formal job with benefits and security. The vast majority is employed informally.

Modi, a Hindu nationalist, was elected in May on promises to restore high growth rates and liberalize the world’s tenth largest economy.