INDIA AND GEOPOLITICAL DEVELOPMENTS

Context

• A number of important developments has taken place over the past several weeks. They may appear disconnected but in fact add up to a significant shift in regional and global geopolitics.

What are the Geopolitical Developments?

1. withdrawal of US and NATO forces from Afghanistan and the complete takeover of the country by the Taliban
2. significant domestic political changes in China, including the ideological and regulatory assault against its dynamic private high-tech companies and now its real estate companies

   

3. announcement of the Australia-UK and US (AUKUS) alliance
4. convening of the four-nation (India, Australia, Japan and the US) Quad physical summit in Washington

• These four developments, taken together, present India with both risks but also with opportunities.

These developments and implications on India are:

1. Withdrawal of US and NATO forces from Afghanistan 

• • The Afghan situation is a setback for India in the short run. The political capital and economic presence it had built up in the country over the past two decades has been substantially eroded.
  • In the longer run, it seems unlikely that the Taliban will give up its extremist agenda and severe its links with Jihadist groups. This increases regional and international fears over cross-border terrorism may be revived.
  • This would deny both Pakistan and China the anticipated payoff from the US withdrawal.
  • India’s response should be to
    • Wait for its time
    • Strengthen its defences against an increase in cross-border terrorism
    • Keep its faith with the ordinary people of Afghanistan
    • Provide shelter to those who have sought refuge
    • Join in any international effort to deliver humanitarian assistance to the people of Afghanistan.

1. Domestic political changes in China 

• • China’s vibrant private sector is being reined in while the State Owned Enterprises (SOE) are back in a central role.
  • This has increased risk perception among international businesses who had seen China as a huge commercial opportunity.
  • If India plays its cards well, this time round there could be significant capital and technology flows from the US, Japan and Europe diverted towards India because it offers scale comparable to China.
  • The constraints are policy unpredictability, regulatory rigidities and bureaucratic red tape in India. Some of these issues are being addressed, such as dropping of retrospective taxation. But there is still a long way to go.
  • In this context, India should consider rejoining the Regional Comprehensive Economic Partnership (RCEP), Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and Asia-Pacific Economic Cooperation (APEC)

1. Australia-UK and US (AUKUS) alliance. 

• • The alliance reflects a clear strategic choice by Australia that it will be firmly on the US side of the fence despite its considerable economic and commercial equities in China.
  • This raises the level of deterrence against China.
  • As a result, China becomes more preoccupied with threats on its eastern flank, it could move to reduce tensions on its western flank, chiefly with India.
  • China may advance its forcible takeover of Taiwan before the AUKUS gets consolidated.

1. Development of QUAD

• • The convening of the four-nation (India, Australia, Japan and the US) Quad physical summit in Washington, reflects a major step towards its formalisation as an influential grouping in the Indo-Pacific going beyond security.
  • We may be entering a period of enhanced danger and tensions in the Indo-Pacific. India should be aware about this uncertain time and be prepared accordingly.

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