World's captivation with Asia at its zenith

by Philip Fernando

World powers are enamoured by Asia's growing economic bounty. Influence pedalling due to such captivation is at its peak. It would be harrowing to get pulled into any confrontation and be forced to choose sides. It is more vexing when India is in the midst of all that. India-China-US-Sri Lanka axis is something to behold. There is a surfeit of excess investment dollars seeking greener pastures. The pushing and shoving to gain an early foothold is a fascinating to watch. Analysed below is how China, India and USA play their hands in Asia.

The guiding principle in international affairs is that there are no perpetual friends or enemies.

Sri Lanka so far has played it right, being pragmatic to the core. The effort is Machiavellian by definition due to the haziness of the underlying dynamics.

China has shown a nimble hand in pursuing her goals in Asia with firmness, investing billions establishing a beach head in maritime affairs. China's ambitious trading strategy in South Asia is reshaping the region and forcing India to rethink relations with its neighbours.

China has been developing port facilities in Pakistan, Bangladesh, Myanmar and Sri Lanka, and it is planning to build railroad lines in Nepal: a concerted effort by Chinese leaders and companies to open and expand markets for their goods and services in some areas of Asia that has lagged behind the rest of the continent in trade and economic development.

China's expanding sphere of regional influence surrounding India with a "string of pearls" that could eventually undermine India's pre-eminence and potentially rise to an economic and security threat is viewed seriously by India.

"There is a method in the madness in terms of where they are locating their ports and staging points," Kanwal Sibal, a former Indian Foreign secretary said. "This kind of effort is aimed at counterbalancing and undermining India's natural influence in these areas."

Countries coming within the immediate radar of both India and China are fully aware of the tensions: India and China contested Himalayan border over which they fought a war in 1962, India giving given shelter to the Dalai Lama, who fled Tibet as China exerted control over it and China has close military ties with Pakistan, with which India has fought three wars.

Indo-China trade

But the two countries also do an increasingly booming business with each other. China recently became India's largest trading partner and both have worked together to advance similar positions in global trade and climate change negotiations.

Chinese officials deny ulterior motives for their projects in South Asia. And top Indian leaders have tried to play down talk of a rivalry with China, saying there is enough room in the world for both economies to rise simultaneously.

China's and India's trade with four South Asian nations - Sri Lanka, Bangladesh, Nepal and Pakistan were roughly equal. But over the last decade, China has outpaced India in deepening ties. For China, these countries provide both new markets and alternative routes to the Indian Ocean, which its ships now reach through a narrow channel between Indonesia and Malaysia known as the Strait of Malacca.

India's steady hand

India has leveraged its long-standing historical ties to her advantage. In Sri Lanka it has established trade and business contacts, two Consulates, several contracts to build Yal Devi, housing for war-affected families and virtually unlimited access to investment opportunities. One weak link is chauvinism articulated by Tamil Nadu leaders. New Delhi has so far played it straight.

India has had some success in establishing closer ties with Sri Lanka, with which it has a strong bilateral trade agreement. But China has become a partner of choice for big projects here like the Hambantota port. 80 percent financed by China's Export-Import Bank, and China Harbour Engineering, which is part of a state-owned company. Similar arrangements have been struck for an international airport being built in the South.

It is safe to say that China is a game-changer. Chinese investments in Sri Lanka are over $ 6 billion - more than any other country, including India and Japan, which have historically been big donors and investors in Sri Lanka. Chinese companies offer lower costs. They are also competitive because they have acquired a lot of expertise in building large infrastructure projects in China, according to Jerry Lou, Morgan Stanley's China strategist. In 10 years, Chinese companies have become the biggest suppliers to ports of cranes used to move shipping containers, displacing South Korean and Japanese companies, he said. "They are running at very high efficiency and at the lowest costs," Lou said. "China is a game-changer, rather than a new player in the world's construction industry."

India has some catching up to do to respond to China's growing influence by becoming more aggressive in courting trade partners. India recently signed a free-trade deal with the Association of Southeast Asian Nations and South Korea. India's chief trade negotiator, D. K. Mittal, acknowledged that the country's economic ties with its neighbours were not as strong as they should be and blamed political distrust between the countries. But he said leaders were now determined to improve economic relations, something he said was highlighted in a recent agreement with Bangladesh.

In that deal, India agreed to sell electricity to Bangladesh, provide it with a $1 billion line of credit for infrastructure projects and reduce tariffs on imports. Bangladesh agreed to allow Indian ships to use a port that is being redeveloped by China. "The political leaders have to rise above and say, 'I want this to happen,' " Mittal said in an interview. "That's what the leaders are realizing."

Tom Donilon, a top US national security adviser in USA has stated that it would be catalytic "to develop and deepen the broadest possible relationship US can have with India as a cornerstone of our Asia policy." He was focusing the need for --counter-terrorism against Islamic extremists, broadening economic ties and strengthening America's overall presence in Asia. The idea of encircling China was vehemently denied by American administration. Indian investors were bent on getting a chunk of the expected economic boom in the years ahead. The Business and Entrepreneurial Summit in Mumbai organized by the US-India Business Council in partnership with the Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry during Obama's visit to India was called a good success. One of the business deals was the sale of Boeing C-17 aircraft to the Indian military-prying open the Indian market for US investments.

Nirupama Rao as the Indian Ambassador is a seasoned veteran running things for India-her parties are magnets for many business contacts. Secretary of State Hillary Clinton did a super human job getting Myanmar to ease the half a century long military rule and Obama just paid a visit there.

Finally, many things point to Obama administration marshaling a global effort to ward off the growing Chinese influence in Asia. Indonesia, Myanmar and Japan are special points of interest. India is being wooed with a great zeal.

President Obama has already visited more countries during his first year in office than any other president. Most Indian analysts believe that there is a flowering relationship between the United States and India. Said one of them "Now, it's a mistake to think that we have identical interests -- we don't -- but I think we have very strong parallel interests." -

Courtesy: Asian Tribune