2013 To Be a Busy Year for Diplomacy

To create an enabling environment for increased economic exchanges, the US will continue to advocate more economic reforms, increased liberalization of the financial sector, improved regulatory framework and a more predictable tax code. Progress on these issues, of interest to all our economic partners and not the US alone, will be determined largely by the dynamics of our domestic debate, not external expectations, and will therefore be slow. With president Obama’s re-election India’s concerns about outsourcing and the hike in fees for H1B and L1 visas for its professionals will persist in 2013.

In the larger backdrop of the stalled recovery of the US economy, the Eurozone crisis and lower growth rates in India itself, India’s image, which lost lustre in 2012, will not recover it in 2013 either. For India to play a role in reforming the global economic and financial architecture, geting back to the trajectory of 8 to 9% growth is required, but this is unlikely to be achieved soon.

This has a bearing on foreign policy as India has gathered external strength from its high growth rates and the rising attractiveness of its market. While the medium to longer term outlook on India remains positive, in the shorter term declining growth rates, coupled with poor governance, affect India’s image as an investment destination and weakens its hand in international dealings.

Beyond this, our western partners, especially the US, feel stultified by the lack of capacity on our side to handle our expanded engagement with them. India’s bureaucratic paraphernalia is seen as inadequate for the global role the country seeks. The problem is linked to the larger issue of improved governance and will not be remedied in 2013.

Our relations with Russia need more economic content, especially in the energy field. Some wrinkles have appeared in the relationship with Russia seeing its flagship investment in India’s telecom sector being jeopardized by the Supreme Court’s 2G judgment, some defence contracts being lost, nuclear cooperation has stalled and India is perceived to be tiliting towards the US. President Putin’s visit in December 2012 was an occasion to remove misapprehensions. Russia remains important for a better balance in global affairs, apart from providing a balance in India’s own foreign policy. 2013 should see mutual efforts to impart more dynamism to the bilateral relationship.

China

China continues to present a very complicated challenge, with our economic relationship expanding phenomenonally and the two finding common ground on climate change and WTO issues, even as China’s provocations on territorial issues have not ceased. India should find a way to respond firmly to Chinese needling while pragmatically exploring a better relationship.

This challenge will go well beyond 2013 as the new Chinese leadership is hardly likely to change course if its position on sovereignty over the South China Sea is any indicator. India should set the tone of exchanges with the new leadership more confidently at the earliest stages. As part of this India needs to intelligently leverage US’s pivot towards Asia to its advantage without losing its capacity to act autonomously.

The strategic impact of the India-US civilian nuclear deal and the subsequent NSG waiver for India has not been matched by commercial results. The main obstacle has been our nuclear liability act as US companies are opposed to accepting any supplier liability. The French are willing to work within the rules framed under our liability law. The Russians want Kudankulam 3 and 4 to be exempted from this law as the intergovernmental agreement on them preceded it. The issue has been further complicated by the Fukushima disaster that has fuelled the public agitation against the commissioning of Kudankulam 1and 2. We should try to finalize the agreement on Kudankulam 3 and 4 in 2013 and make some progress with France in the wake of president Hollande’s visit to india in February this year. Canada and Australia have been successfully engaged on nuclear matters by us. A nuclear agreement with Japan, with Shinzo Abe back in power, should be slated as an objective in 2013.

Other issues

The issue of terrorism will haunt India in 2013 even if no major terrorist attack has occurred in 2012. With the spread of terrorism in Pakistan, the source of jihadi attacks against us, our vulnerability has not ended. So long as religious extremism and accompanying terrorism are not controlled in our region, India remains under threat. The prospect of the Taliban sharing power in Afghanistan with Pakistan’s facilitatory role, as is being currently attempted by the west, will be to India’s discomfiture. Indian diplomacy will have to deal with this challenge in 2013. We will also need to find a balance between preserving our ties with Iran and adjusting to US policy of squeeezing it with sanctions and threats of military action, a prospect that would severely damage India’s multi-fold interests in the Gulf region.

With instability in Nepal, defiance in the Maldives, prevarication in Sri Lanka on the Tamilian issue, inability to deliver on Teesta to Bangladesh, monitoring Chinese moves in Bhutan and boosting our Look East policy after the recent India-Asean summit in New Delhi, 2013 will keep India’s diplomacy rather busy.