Covid-19 has accelerated the global political and economic rebalancing that had been underway for the last two decades. New power equations are emerging. China’s confidence has increased many folds while the West is struggling to find answers to its external and domestic problems. The West’s unity, a constant fixture of international relations since 1945 has been fractured. The transatlantic alliance is a pale shadow of its former self. Trump’s America First policy has challenged the assumptions underlying the US alliance system. China is taking advantage of the disarray in the west and making inroads.

New geopolitics centring around the rise of China, the future of US hegemony, the fate of the post-world war alliance system, the efficacy of the multilateral institutions, the churn in Europe, the rising salience of the Indo-Pacific, the reshaping of the Middle East, the growing salience of technology in trade and politics and the fears of pandemics and viruses is shaping up. The trends that unfolded in 2020 will gather pace in 2021. India has been deeply affected by these changes. India-China standoff was unexpected. The pandemic is not over yet. New, more infectious virus strains have been noticed.

The Shifting Landscape

The stark contrast between Trump’s America and Xi’s China could not be greater. The US withdrew from Trans-Pacific Partnership (TPP) while China joined the Regional Economic Comprehensive Partnership (RCEP) mega trade deal and reached a landmark investment agreement with the EU after seven long years of negotiations; this will drive a wedge between US and EU. The US withdrew from the Paris Climate Change Accord while China declared that it would become carbon neutral by 2060. The US pulled out of the WHO even as China promised a USD 2 billion contribution to the organisation. The US left the Human Rights Council while China was elected to it despite its questionable human rights record. While the US was struggling with its infrastructure initiatives, China was expanding the Belt and Road initiative (BRI) to include a Digital Silk Route and a Health Silk Road. The US continued to spurn Russia, China was strengthening its alliance with it. The US has lost nearly half a million lives to coronavirus in less than a year while China advertised its efficient handling of the coronavirus crisis. China happily filled the global space that the US was vacating under Trump. The message from China was that the US is weakening and China is strengthening.

Arguably, the US-China impacts the entire world. Both the US and China are in the process of recalibrating their policies. Biden victory has produced new uncertainties in US-China relations. Biden has promised to restore American supremacy in the world. His broad strategy seems to be to repair the US alliance system, restore US hegemony, reassure the allies, deal with the covid mess at home and restore the economy to health. Each of these tasks is difficult though not impossible. The nature of the China challenge is well understood by Biden. But his strategy to deal with it will be different from that of Trump. Trump adopted a confrontationist approach to China and sought to impose massive tariffs on imports from China. In contrast, Biden is likely to engage China and even cooperate in some areas like Climate Change.

In China’s estimation, the US is hell-bent to block its rise. China would not like this to happen. China, which has been rattled by Trump’s hard-line approach, will be looking forward to Biden easing the pressure somewhat by moving to engagement from confrontation. For China, the substantial decoupling from the West is a nightmare scenario. China is trying its best to keep the American companies and their investment within China. So far, the decoupling has been only limited. Nevertheless, China has announced a ‘dual circulation’ strategy which aims to capitalise on global engagement as well as domestic market. In short, China is also bringing in the elements of self-reliance in its strategy. To ward off any US efforts to change the Chinese political and economic system, President Xi Jinping has hardened the domestic line and everyone is being made to follow the party ideology strictly. Jack Ma, the iconic Chinese private entrepreneur, the founder of Chinese global giant company Alibaba, a darling of the west, has been punished by the Chinse government for perceived deviation from the party line.

A new Cold War is beginning to take shape although its character is likely to be different from the US-USSR Cold War of the 20th century because of the close intertwining of US and China relations. The role of Europe in the emerging China-US confrontation is ambiguous. Russia is firmly with China. Japan is in alliance with the US and is under great pressure from China but it maintains close trade links with it. ASEAN looks towards the US for security but is tied to China economically and commercially. Thus, the contest between the two major powers will not be a straightforward one yet some loose camps may be formed with some countries finding themselves on both sides. Non-alignment is unlikely but neutrality is possible as a strategy.

China and the US are likely to compete and confront each other in political, economic, commercial, technological, military and information domains. Due to the complexity of their interactions, the nature of the contest will not be clear-cut. They are likely to grapple with each other like well-matched wrestlers with both trying to get the better of the other. The contest will be long and there would be many twists and turns in the saga. The world will be watching with great interest what policies Biden adopts to contain the China challenge at a time when the American society is polarised and US influence in the world has weakened. Will the US follow a China containment policy to stave off the China challenge to its supremacy?

The world is also seeing regional rebalancing at a massive scale. With the signing of Abraham accords, the Middle East is being transformed. More and more countries are trying to normalise relations with Israel in the hope of dealing with Iran challenge. At some point in time, Saudi Arabia may normalise its relations with Israel. The net result is that Iran-Saudi rivalry is becoming more acute.

Turkey is trying to regain the glory of the Ottoman Empire. Its role in regional conflicts is increasing. A new axis of Turkey-Iran-Russia-Pakistan is in the making. The rivalry between Turkey and Israel, between Turkey and Saudi Arabia is also sharpening. Tensions in the Mediterranean region have increased. Although Turkey is a member of NATO, its relations with the West are highly strained. The US has sanctioned Turkey for the purchase of S 400 missile defence system from Russia. New hotspots are emerging in North Africa. The ISIS may have been defeated militarily, its radical ideology continues to exert influence across the region and beyond.

During the Covid year, global oil demandfell sharply. This has put tremendous pressure on the revenues of the Midddle East countries. Saudi Arabia is trying to diversify its economy and it has sought to seek a role for itself in G20. Trump had walked out of the JCPOA. It remains to be seen whether Biden will re-engage with Iran on the letters nuclear program and so on what terms and conditions. As usual, the Middle East will remain in churn and continue to throw surprises.

China sees the geostrategic concept of the Indo-Pacific and the Quad as a US attempt to contain China. With Biden’s victory doubts are being expressed whether the new administration’s commitment to the concept of Indo-Pacific will remain as strong as that of Trump. It remains to be seen whether some momentum which the Quad got in 2020 will continue in 2021.

Technology is playing an increasingly important role in global rebalancing that is underway. Technology underpins the US-China contest. Having realised the importance of technology, China is racing ahead to achieve supremacy in emerging strategic technologies. It has made substantial and impressive gains in artificial intelligence, space, quantum computing, drones and deep sea bed mining technologies. It also dominates the global value chains for critical materials. The recently concluded trade agreement between the EU and China will facilitate greater cooperation between the two sides. It remains to be seen how China gains by greater access to Europe in high-technology.

In addition to information and data, the mastery of heath and food issues is being strategised. China is preparing itself for likely global food shortages in 2030. That is advance thinking. Vaccines have emerged as a new tool of domination. During the pandemic crisis, technology was harnessed to invent the vaccines against the pandemic. While on the one hand, the race for vaccines brought forth international cooperation in a scientific and technical field, vaccine nationalism also rose its head. Those countries which did not pay heed to the advice of scientists had to pay a higher price in dealing with the pandemic. Apart from health, the advances in artificial intelligence, space technology, renewable energies et cetera are destined to change the shape of the world.

The global economy took a hard knock during the year due to the Covid. The global recovery is likely to be a slow process. The pandemic has brought forth the shortcomings of globalisation. Hundreds of millions of jobs were lost and the poverty alleviation gains of several decades have been wiped out in many countries. Trade, tourism, entertainment, sports and many other sectors benefited immensely from globalisation have suffered acutely during the crisis. Countries closed borders and put severe restrictions on the movement of goods and people. Yet, this was the year when the RCEP, the world’s biggest comprehensive economic partnership agreement was signed. The US is not a part of the RCEP. China would be the major gainer of the agreement.

During the present time of great churn, it is a matter of concern that the threat to mankind from wepons of mass destruction has been underplayed. Most arms control agreements between Russia and the US have expired. The Biden administration will have to take a view on whether or not to extend the new Strategic Arms Reduction Treaty (START) with Russia. The growing military and missiles arsenal of China is outside any international agreements. That is a matter of concern.

Multilateralism has suffered a hadblow and a call for reformed multilateralism has been sounded by many countries. The covid crisis showed that the world needs not less but more of multilateralism but this must be based on caring and sharing principles rather than validating the multilateralism based on Power.

India

The process of adjusting to new realities and looking for new opportunities which assist its rise in will be the task for Indian foreign policymakers. US-China rebalancing and the emergence of an assertive China will have a major impact on India. Already India has forged close defence ties with the US. With the signing of the foundational agreements, the interoperability between the Indian and US forces has improved. India has also become less hesitant in engaging with the Quad. Analysts in China and Russia are interpreting these developments as a definite tilt in the Indian policy towards the US. With the unfolding of an ambitious vision for Indian Ocean, India is positioning itself in the Great Power Game that is unfolding in the region of great strategic importance.

Managing the multifaceted consequences of China’s rise, sustaining the key strategic partnerships with major powers like the US, Russia, Japan, Europe; deepening the all-round engagement with the immediate neighbours; filling the Act East Policy, Neighbourhood First, Security and Growth for All (SAGAR), the Indo-Pacific, the Quad etc initiatives with strategic content; using the market and data potential of India to its benefit; reviving the economy and returning to high growth trajectory are some of the major tasks for policymakers. India is hoping that the bipartisan consensus in the US on India will not break down under Biden administration and the salience of the Indo Pacific in US policies would be upheld.

While maintaining strategic ties with the US, India cannot afford to neglect Russia. The US pressure on India not to buy Russian S 400 ballistic missile defence system continues. India is following the policy of engagement with Russia bilaterally as also in the BRICS, RIC and SCO formats. To reassure Russia, India needs to quickly follow on its Act Far East Policy which was announced with much fanfare during Prime Minister Modi’s visit to Vladivostok in 2019. India needs to watch the trends in Russian foreign policies carefully. It was well that the Indian Defence Minister and the External Affairs Minister travelled to Russia during 2020. Russia must be engaged comprehensively. The International North South transport Corridor (INSTC) must be operationalised to improve trade with Russia. Russia remains the top defence supplier for India. The joint production of defence systems with Russia mist be considered. Russia and China already have a very strong strategic partnership. Pakistan would try to drive a wedge between India and Russia. The withdrawal of US troops from Afghanistan will leave the Afghans at the mercy of the Taliban and Pakistan. Russia does not seem to mind. Russia-Pakistan relations are growing. These trends must be watched carefully and factored into India’s Russia policy.

Europe is being transformed. Britain has exited the European Union but the two have been able to sign a landmark trade deal which is good news for both. India has done well to invite the British Prime Minister Boris Johnson to the Republic Day parade as the chief guest. India needs to work out a trade deal with the EU and Britain as soon as possible.

India’s decision not to join the RCEP has mixed consequences. While the deal may have been justified on the concerns of Indian industry’s competitiveness and the apprehensions of the floodgates being open to China, the fact remains that ASEAN countries, who have been looking at India as a counter balance to China, have been disappointed. Moreover, India is not part of any new generation Free Trade Agreements (FTAs). This can have consequences for India’s ambition to increase its share in global trade. India needs to move ahead with FTAs with the European Union and other countries as soon as possible, making sure that its interests are not jeopardised.

India’s policy agenda and actions in 2020 were dictated by three serious overlapping crisis namely the Covid-19 health crisis, security crisis and an economic crisis. This situation is likely to continue in much of 2021. Indian diplomacy broke new grounds as it used the pandemic to activate the SAARC cooperation in covid matters. India supplied medicine and equipment to over 150 countries and evacuated over a million Indian and foreign stranded nationals.

Undoubtedly, China will remain the most serious security challenge for India in 2021. Deeper security cooperation with the US and other countries is justified in face of the growing pressures from China. China has shown no sensitivity to India’s security concerns. The several rounds of talks between the diplomats and the military officials of the two countries have produced no appreciable results towards lessening of tensions. India will need to adopt short-term and medium-term and long-term measures to deal with the consequences of China’s rise. While resolving the tensions on the border, India will have to ensure that China does not take advantage of the situation and create facts on the ground on the Line of Actual Control (LAC). India-China relations may need a reset in keeping with new realities. India could consider deepening its economic relations with Taiwan like so many other countries are doing. It could also state publicly that the reincarnation of the Dalai Lama is a matter for the Buddhists to resolve as per their religious practices. The US has recently passed a law on its Tibet policy. India could engage with the US to understand the implications of the new law.

India will have to be wary that Pak-China nexus does not create further security complications for India. CPEC, passing through the Gilgit Baltistan is a security threat. India’s defence preparedness must be top class to deal with a possible two-front situation. Indigenisation of defence production must be given the highest priority.

Pakistan can be expected to foment trouble for India as it has done over the years. India needs to watch the developments in Pakistan carefully as it is likely to remain politically unstable. The opposition is building pressure on the Imran government, having organised several successful rallies across the country. The civil-military relations will also need to be watched as these have implications for India.

India’s neighbours are carefully watching the outcome of the Sino-Indian standoff. China has already increased political influence in Nepal which is currently in a phase of political turmoil. There is a need to invest in India and Nepal relations. India will need to step up its economic engagement and connectivity with the neighbours.

India begins its two-year tenure at the UN Security Council for the 8th time. The Prime Minister has called for reformed multilateralism. As India engages with the contemporary issues of international security, it needs to come out with specific initiatives on how to implement its agenda for reformed multilateralism. The reform of the UN Security Council looks distant but India can certainly initiate discussion and debate on key issues like UN peacekeeping, Sustainable Development Goals, health security, climate change, peace and stability. India should reach out to the developing countries and raise the issues of concern to them.

India has begun to pursue a policy of self-reliance as encapsulated in the Atmanirbhar Bharat framework. This is the need of time. The government has initiated far-reaching labour and agriculture reforms. Some of these have created anxieties. Their impact will be visible in the coming years. The path to economic recovery and growth will be a long one. There could be more surprises in 2021. India needs to build its inherent capabilities and strengths for effective diplomacy and foreign policy.

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