Look North to Connect Central Asia

COVER STORY

Prime Minister Narendra Modi has suggested that India’s foreign policy will be intertwined with trade, and focus more on the immediate neighbourhood. Central Asia also fits comfortably within Modi’s rubric of a co-prosperity sphere for the region and will enhance the stability and security in Central and South Asia. All that is required now is for Modi to ‘Look North’, suggests Jaideep A Prabhu

The Bharatiya Janata Party (BJP) returned to power after a decade in opposition. Led to its highest ever Lok Sabha tally by Narendra Modi, it is the first time since 1984 that the BJP or any party has secured a majority on its own. This will, observers hope, bring a new decisiveness to the Prime Minister’s Office that has been lacking for the past 10 years.

In his election campaign, Modi talked about India’s relations with its neighbours in terms of trade and security. Departing from India’s traditional emphasis on ties with the superpowers, Modi focussed on India’s immediate neighbours in Asia, particularly the members of the South Asian Association for Regional Cooperation, Association of Southeast Asian Nations, and Japan.

Though Central Asia did not feature prominently in Modi’s speech, it would be unwise to read too much into this. The region has geographic proximity and remains vital to Indian trade and security interests.

Both sides have been subdued over the potential for better relations. The Central Asian states - Kazakhstan, Uzbekistan, Tajikistan, Turkmenistan, and Kyrgyzstan - used to see India from the perspective of the Soviet Union, a friendly state which received aid and preferential economic treatment from Moscow.

However, since the economic liberalisation began to bear fruit by the end of the previous millennium, India became a donor state to the Central Asian Republics (CAR).

A Positive View

Central Asian capitals have a generally positive view of India; some of the old hands from the Soviet era still populate the bureaucracy and remember the country fondly. More importantly, India has not used its image as the world’s largest democracy to push for liberalism and democracy in the region. 

India’s tiny footprint in Central Asia is not seen as threatening whereas China’s economic involvement in the region is viewed with suspicion. Russia is not much liked either due to dissatisfaction over its geopolitical domination over the ‘five-Stans’. The United States is also suspect because its commitment to the region, combined with its constant harangues about human rights, is not trusted.

Other smaller players like Iran and Turkey have had limited success because they can’t provide solution to the problems of the region.

India still depends on Russia and other foreign suppliers for an overwhelming portion of its military equipment in Central Asia. However, the rapidly growing economy of India makes it an ideal partner for prosperity.

Shared Interests

Some of Central Asia’s positive view of India is also due to the several common goals they share. All parties are worried about the threat of terrorism which may boil over from Afghanistan and Pakistan. There is eagerness to develop energy infrastructure that can deliver oil and gas to India’s growing economy. The best part is that there is no direct conflict of interest between India and the CARs.

Uncertainty about Indian Policy

Despite the goodwill and potential for a rewarding relationship, the CARs remain uncertain about Indian policy towards them. How will Delhi’s alignment with the United States and the European Union on the one hand and Russia and China on the other affect them? India is proud of its non-alignment, but what would that mean for the region? What is India willing to offer that others cannot? How does India see Central Asia? These questions need clarification from Delhi.

Frustration also mounts from the lethargic pace of Indian business. The perception in Central Asia is that not only are Indian investments paltry compared to Chinese projects, but India is extremely slow in its delivery mechanism. India’s political dilly dallying and sluggish bureaucracy has put in doubt the country’s seriousness and ability to be a reliable partner. While several memoranda of understanding have been signed between India and the CARs, the former is not even in the top ten countries exploring the region for oil and gas. Trade between the two regions at the end of 2012 remained at a paltry $700 million, while that between China and the CARs topped $46 billion. South Block’s ambitious Connect Central Asia initiative and the International North-South Trade Corridor (INSTC) connecting South Asia to Europe by road, ship, rail, and pipeline via Central Asia and the Caucasus has yet not materialised.

Expanding Chinese Footprint

China, on the other hand, has invested tens of billions of dollars in road, rail, and pipeline projects, all linking Central Asia to China. In 2000, China launched the Great Western Development Plan, which has made Xinjiang a vital trade and energy corridor along the New Silk Road. 

Through the Shanghai Cooperation Organisation (SCO) as well as bilateral agreements, China has invested over $30 billion in Kazakhstan to purchase MangistauMunaiGas (MMG). In Kashagan oil field, China has been instrumental in the world’s largest discovery of oil in the last 30 years.

Beijing has signed a $15 billion deal with neighbouring Uzbekistan for oil, gas, and uranium, and has started production at Galkynysh in Turkmenistan, the world’s second-largest gas field. $4 billion has gone from Beijing to Ashgabat for developing the gas field at South Yolotan, and extended $10 billion to the whole region during the international economic recession through the SCO.

China is working on its New Silk Road to connect the Pacific Ocean to the Mediterranean and Baltic Seas. Once completed, it will lower cost of transport, bring Central Asia transit fees, and bypass India in the economic development of the region.

Interestingly, despite the enormous flow of investments from Beijing, there is very little trust of its motives among the Central Asian Republics. The Chinese practice of using its own labour force, for example, has not gone down well with local communities, who are themselves migrant labourers in Russia due to unemployment back home.

In addition, many think it is only a matter of time before Chinese immigrant workers settle in the Central Asian Republics and take away more jobs. China’s brutal repression of the Uighur in Xinjiang has not gone unnoticed; despite its Soviet past, Central Asia remains a tribal society and old loyalties run deep. It is also unlikely that Kazakhstan, Tajikistan, or Kyrgyzstan will soon forget that they ceded land to China to maintain peace, particularly when the ensuing protests removed the Kyrgyz president from office.

Balancing Great Powers

It is in this light that the partnership with India has proven disappointing. Its failure to reap a bonanza so far has pushed Central Asia closer to the Chinese economy, and kept their energy exports vulnerable to Russian transit policies.

However, one must also consider the fractious nature of the region. Rivalry, corruption, social polarisation, poverty, crime, narco-trafficking, and the lack of stable institutions have made Central Asian states politically unstable and daunting to business.

Although India and China are both concerned by terrorism in the region, China would like to curtail Indian influence in Central Asia as it would eventually undermine Beijing’s goals vis-à-vis Pakistan.

Though Russia might prefer India as a partner in Central Asia to balance China, it would be unwilling to share its backyard with anyone. The current Ukraine crisis has made China more useful to Russia while India’s diversification of its weapons suppliers in recent years has irked Moscow. As a result, India can expect little cooperation from either power in the joint development of energy and transportation infrastructure in Central Asia. Similarly, the United States and India cannot see eye-to-eye in Central Asia because of the former’s antipathy towards Iran and its ambiguous position towards Pakistan and its terrorist networks.

Fresh Impetus

With a new prime minister, India has fresh impetus to pursue its mutual interests with Central Asia. A new government with a clear mandate from the people and no baggage is ideally positioned to forge stronger ties with the region. First, India must recognise that it needs individual policies for each of Central Asia’s five states - each have their own priorities, problems, and the rivalries between them must be kept in mind. Second, India has so far played up its historical ties to the region and that is good soft power. However, soft power alone does not build partnerships. If it did, Turkey and Iran would be the dominant powers in Central Asia and not Russia and China. India must acknowledge that Central Asian leaders are pragmatic about security and trade bottom lines in their dealings. Third, India needs to shift focus from mega-projects to smaller, localised projects that will build trade relations across a spectrum of fields.

India can lend its expertise in chemical equipment, electronics, telecommunications, mining, IT services, tourism, environmental technology, education, healthcare, construction, and agriculture. Cooperation in archaeology, space, and the nuclear field is also possible. This is for two reasons. First, it will be difficult to break into oil & gas exploration and development at this late stage without even having a clear idea of how the pipelines from Central Asia will run to India. Second, rivalries between the CARs, such as that between Uzbekistan, Tajikistan, and Kyrgyzstan over hydropower and water, will also delay hydrocarbon transit; early success is important to boost confidence and inspire greater engagement.

The single most important long term project India can undertake in Central Asia is the INSTC. This trade corridor is not dependent on just hydrocarbons for its profitability, but also minerals and manufactured goods. India’s new Prime Minister Modi has campaigned aggressively on infrastructural development within India during campaigning. India undoubtedly has the skills required to build the INSTC but has been lacking the political will to do so. With Iran becoming less of an international pariah, Modi only needs the political will to expand his infrastructural vision beyond India for the benefit of all concerned.

Prime Minister Modi has suggested that India’s foreign policy will be intertwined with trade and focus more on the immediate neighbourhood such as SAARC, ASEAN, Japan, and South Korea. He has prioritised infrastructural development within India as well as with important trading partners such as Myanmar.

Central Asia also fits comfortably within Modi’s rubric of a co-prosperity sphere for the region and will enhance the stability and security in Central and South Asia. All that is required now is for Modi to ‘Look North’.

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Diplomatist Magazine was launched in October of 1996 as the signature magazine of L.B. Associates (Pvt) Ltd, a contract publishing house based in Noida, a satellite town of New Delhi, India, the National Capital.

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