Shifting
Sands
Two large neighbours, and two substantial shifts in
perception.
Pakistan may continue to harp all it likes on the
centrality of Kashmir in its failed dialogue with India. Yet, like the proverbial one who is last to
know, this is a litany grown stale, more irrelevant than intractable.
The raucousness of the rhetoric on Kashmir made more
sense in years gone by when the largely porous Kashmir front kept the erstwhile
Afghan Taliban and sundry mujahids from Central Asia and North Africa in
employment - and practice.
But today, treating Kashmir as a tenet of faith
without which nothing else matters, just as Pakistan did a decade or more ago,
does not advance the cause of the Pakistani state vis-a-vis India. It smacks
more of an egoist’s mad urge to a duellist’s satisfaction, a kind of vendetta
blood lust, rather than rational, national, policy.
J&K has
made much economic progress in comparison to POK, and this has not been lost on
its people. The Separatists have become marginalized in their own homes, unable
to exploit any large pool of legitimate grievance beyond the surly insistence
that the Indian Army should withdraw, and leave the state to its murder and
mayhem on its own cognisance.
As a consequence, much of their erstwhile support
base has chosen to merge into the mainstream, inclusive of strong participation
in regularly held elections.
But Pakistan keeps reading from a script and notes
on Kashmir written a long time ago, and is yet loathe to update it! The world,
meantime, has changed a great deal.
Parity between the two sub-continental nuclear
powers as an equivalence has long gone from the US lexicon, the only one that
matters - and therefore from that of its Western allies.
And the main disparity, in ground reality terms,
that has come to take its place is economic, a huge domestic consumption story
for its 1.27 billion people, and this is clearly in India’s favour.
Pakistan meanwhile, may have a ruined client-based
and rent-seeking economy, but it has built up a formidable nuclear weapons’
arsenal. One that it refers to frequently to underline its threat
potential.
But the insults and slights are becoming more
pointed nevertheless, as Pakistan’s
international utility has diminished- the
US has bluntly asked for curbs on state-sponsored terrorism and withheld
military aid and even a bilateral visit from Nawaz Sharif to Washington, in order to encourage
compliance.
The UAE and Saudi Arabia too, despite being fellow
Sunni-run nations, have pulled back most of their support for Pakistan in favor
of a growing new warmth towards largely Hindu India.
Savage new players like ISIS have clearly scared
their one time Sunni mentors and
financiers. Pakistan, having become an
institutionalised nuisance, using terrorism to advance its agendas, as well as
being the world’s chief nuclear proliferator, is no longer entertaining to its
erstwhile backers.
And this despite India’s growing closeness to
Israel, particularly in defence and training matters, plus agriculture related
technology. And then there is India’s traditional ability to get along with
Shi’ite Iran too.
But Pakistan’s much flaunted China card, for its
strategic outreach, in replacement of its fading and once lucrative
relationship with the US, is beginning to crumble. China may be Pakistan’s
declared ‘all-weather friend’, but it is in quite a bit of economic trouble of
its own now.
In fact, this is just the beginning. China’s highly
debt-leveraged economy, at several multiples of its $ 12 trillion GDP, is
melting down. It is heading towards a 5% per annum growth rate, not even the 7%
it has been bravely projecting. It has lost a colossal $4 trillion in its stock
market, an amount equivalent to its entire foreign exchange reserves, and twice
what it has invested in US Treasury Bonds. And this, through June and July,
despite its best efforts to stem the tide.
China needs an estimated 8% growth rate at a minimum
to keep its home-fires burning. So, the question is, will all those $ 45 odd
billion in promised investment into Pakistan’s infrastructure, plus another $
10 billion into a mega nuclear power plant etc. actually fructify going
forward?
Will China be able to invest substantially in India
now, after the bonhomie of the Modi- Jinping mutual state visits? In fact, President Xi Jinping’s entire New Silk Road Policy with
its Xanadu-like imaginings is under sudden threat.
China’s
trillions in reserves cold be swallowed up quite quickly, given the size of its
ambitions and gargantuan exposure in Asia, Africa, the Middle East, Europe and
the Americas.
As an example, its nearly $600 billion worth of
pension funds, amongst the biggest in the world, is deployed in its stock
markets now, with a mandate to invest up to 30% of its corpus. But so far, it
hasn’t got much purchase, and is unable to quell the panic. The precipitous
drop in the Chinese bourses continues, with stocks, falling nearly 10% a day. The
stock market is a key source of investible capital because all the Chinese
banks are already vastly over extended.
Even the Chinese currency, the Yuan, has been devalued
4% so far, probably to improve exports and to appeal to the ‘basket of
currencies’ as an international medium of finance, and will most likely continue
to be devalued in stages, up to an expected 10%. Hopefully, this won’t set off
a competitive devaluation of other currencies, either voluntarily or
involuntarily. However, these are uncertain times, when the world’s second biggest
economy is breaking down.
All this is roiling the global currency and
stock/commodity markets alongside though not yet in crisis proportions!
India has seen its 4th biggest fall ever at 1,624
points on the Sensex, and the Rupee has lost 82 paisa in a single day. This,
when Indian fundamentals of the economy are better than most, and in the medium
term, the China crisis should see much higher FII flows into Indian stock
markets.
Similar carnage has been witnessed in every bourse
and currency market around the world. The NASDAQ has dropped 7%, while the
S&P and Dow Jones have lost about 3.5% on opening bell 24th
August 2015. Under these circumstances, it seems unlikely that the US will go
ahead with its plan to raise interest rates anytime soon.
But, even as this heralds the undeniable new
vulnerability of China, it does not do India down, even militarily, including our
own desi strategic outreach.
The age of the US Superman imagery is not yet
extinct by a long chalk, but this time it is Modi’s India that has qualified
for a hotline to the Oval Office. One that will be around much after Modi’s
friend Barack demits office.
However, even apart from these dramatic developments,
the changes in the geopolitical scene of South and South East Asia have been a
long time in the making.
The US outlook changed gradually as the need for
Pakistani cooperation in Afghanistan reduced. And as Pakistan grew into a
full-fledged failed state cum ‘terrorist central,’ particularly after 9/11.
Simultaneously, the US equation with China changed
and became less comfortable after the
demise of the USSR, the fall of the Berlin Wall, and the rise of Chinese
militarism, askew balance of trade cum economic assertiveness.
Today with the new US rapprochement with Iran, an
evaporated dependence on Arab oil, and very low commodity prices all around,
almost every goal-post has shifted beyond recognition.
Pakistan therefore, continuing with the old Zia Ul
Haq policy of a ‘thousand cuts’ to
weaken and harass India, makes little sense now. Particularly, since its
strenuous attempts to radicalize the Indian Muslim have yielded meager results.
The unchanging nature of it seems to be the handiwork of the Pakistan armed
forces and intelligence apparatus, clinging to power and the status quo at the
expense of emasculating the democratically elected representatives.
And this, amidst a deeply troubled security
environment of its own. One that threatens to break up what is left of the
Pakistani state, as the fundamentalist, madrasa indoctrinated Wahhabi radical,
growing in number, competes for mindspace with the under pressure ‘moderate,’ considered
to be ‘impure’ reprobates, if not quite apostate.
And Pakistan, could, in the interim, be in the
process of being truncated once more, disintegrating and retreating this time
into its core, the bit once called West Punjab, located just across the Wagah
border.
This part of Pakistan today dominates its discourse,
particularly after the decline of the Bhuttos of Sindh. And so, Sindh, the NWFP,
and Baluchistan, regions which have been long suffering from Pakistan’s Punjabi
hegemony, are seething below the surface.
Naturally, this sentiment is ripe for the
exploitation, and some Pakistani government moves, like the virtual ceding of
Gwadar and large parts of Baluchistan to Chinese ‘development’, have further
loosened its grip.
Sartaz Aziz, as if on cue, at his recent press
conference, was waving three dossiers citing RAW activity across the border.
The beauty of it is that Indian security establishment does not need to send
doped up manic illiterate killers across like Pakistan does.
Pakistani dissidents from amongst its vast array of
second-class citizens that include ex-Indian ‘Mohajirs’ concentrated mainly in
Karachi, are happy to reach out anywhere in the world. This, rather like the
Tamilians of Sri Lanka, in the heady days of the LTTE ascendancy.
Things are certainly not shaping up even the way
they were, a mere fifteen months ago when the NDA came to power. In these
intervening lucky months, India’s GDP has risen on the back of lower oil and
commodity prices, and the resultant deflation, despite stiff opposition and
blockage of economic reforms.
India’s foreign policy and standing has also benefited
from Narendra Modi’s energetic bridge-building. And now, the dark clouds that
have descended on China’s economy are promising to become a silver lining for
India, in both economic and strategic terms. This, while somewhat degrading the threat from
Pakistan, even if it is in passing.
For:
Swarajyamag
(1,651
words)
August
24, 2015
Gautam
Mukherjee
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