General Electric CEO: China to Replace U.S. as Top Economic Power
For Jeff Immelt, the CEO of General Electric (GE.N), the 130 year-old American industrial behemoth, the financial crisis marked the end of the age of America’s economic dominance.
Reuters | January 20, 2011
Crouching Dollar, Floating Yuan
The Chinese President Hu Jintao is enjoying the red-carpet treatment in Washington DC against a backdrop of increasing tension between his country and the US.
As the two leaders meet, a number of US lawmakers are demanding again that China allow its currency to float against the dollar – arguing that a weak yuan is hurting American business.
But is China really listening? Its global expansion takes in every corner of the globe. And its influence is growing. Will this be China’s century? Will the US have to live in China’s shadow? Inside Story, with presenter David Foster, discusses.
Al Jazeera English | January 20, 2011
Brazil: The World’s Next Economic Superpower?
Steve Kroft Reports on the Country That is Poised to Become the Fifth-Largest Economy in the World.For decades, the joke about Brazil has been that it’s the country of the future – and always will be. Despite enormous natural resources, it has long displayed an uncanny ability to squander its vast potential. Now it’s beginning to look like Brazil may have the last laugh.
CBS News | December 12, 2010
Economic Growth and Financial Activity in South America
Paraguay tops the list as the region’s winner, with almost 10 percent of economic growth, followed closely by Uruguay, Argentina, Brazil, Mexico, Chile and Venezuela, according to the United Nations Economic Report, a recently released document detailing world financial activity over the past year. Press TV’s Melissa Abalo reporting from Buenos Aires.
Press TV | January 7, 2011
Jordan, Syria, Lebanon and Turkey Steering their Way towards Economic Integration
A Jordanian official says Jordan, Syria, Lebanon and Turkey have moved closer to economic integration.
The official Petra agency said Thursday that the countries signed an agreement establishing a committee to unify their legislation to enhance economic integration.
It quoted Transport Minister Alaa Batayneh as saying Jordan has been tasked to draw up joint plans to develop the transport sector. Syria is to work on energy, Lebanon on tourism and Turkey on industry.
Batayneh also says the ministers want to draw up a regional transport plan, involving road and railway links.
Cumhuriyet | January 6, 2011
Rising Fuel and Food Prices in India
Rising fuel and food prices in India are reviving inflation fears. During the past year, the nation’s food price index rose 12.13 percent. Basic vegetables are of main concern as consumers complain about being unable to afford certain dietary staples. The price of onions, for example, has risen by 350%. Up-scale restaurants have also seen a steady increase in prices these last six months, effecting their profit margins. Although they are able to absorb the price hike right now, the question that remains is: for how long? In an effort to ease the sting, India’s embattled government banned onion exports and scrapped import duties. High food inflation has dislodged state governments in the past. India’s Congress party that leads the ruling coalition has to come up with a solution before the partial state elections later this year.
AlJazeera English | January 2, 2011
Israel’s Giant Gas Field
Israel has announced the discovery of a massive natural gas field off its northern coast, worth tens of billions of dollars. The company behind the exploration of the “Leviathan 1″ field says it is the world’s biggest gas discovery in decades. It could free Israel from relying on foreign energy sources and could also affect the politics of the region.
AlJazeera English | December 31, 2010
Japan Economy Continues to Slide
The Christmas shopping season has arrived in Tokyo, but there is little good news to be heard when it comes to the Japanese economy. Two new economic surveys paint a picture of weakening growth: Core machinery orders fell a greater-than-expected 1.4% in October; and bank loans to companies fell 2.0% in November. And Slower growth in key overseas markets has cooled export demand.
Press TV | December 8, 2010
Importance of the Koreas’ Northern Limit Line
Analyst Rodger Baker explains the history of the Korean Peninsula’s Northern Limit Line and how it relates to North Korea’s economic and strategic goals.
Stratfor | November 24, 2010
Russia, Belarus, Kazakhstan abolish customs barriers
Russia, Belarus and Kazakhstan are abolishing the customs clearance of their citizens within the boundaries of their Customs Union, says the Kazakh Prime Minister Karim Masimov.
According to him, the three countries have reached agreement that customs clearance will have been altogether abolished in the framework of the Customs Union as of July 1st 2011.
So far it is only functionaries that have been exempted from customs clearance on the borders of the Customs Union member-nations.
The Voice of Russia | November 22, 2010
South Africa signs new trade pacts with China
South Africa and China inked a series of energy and trade deals Wednesday as the Asian economic power sought to secure minerals needed to fuel its booming economy.
The agreements were announced during a bilateral trade commission co-chaired by Chinese Vice President Xi Jinping and South African Deputy President Kgalema Motlanthe.
“For the growth path to be a success we require the support of partners such as China,” Motlanthe told reporters.
“We see the future destiny of our two countries as inextricably linked with the African continent.”
Xi, who is expected to be China’s next president, is on a three-day tour of South Africa to secure mineral rights and boost trade relations.
China, which last year overtook the United States to become South Africa’s largest export destination, mainly imports raw materials such as iron ore, as well as refined iron and steel, to fuel its booming economy.
Trade between the two countries last year totalled about 16 billion dollars. But the relationship was uneven, with South Africa posting a trade deficit of 2.7 billion dollars with China.
In August, South African President Jacob Zuma visited Beijing, signing a slate of cooperation deals on mineral resources, investment in railways, power transmission, construction, mining and nuclear power.
China has assembled an expansive investment portfolio in southern Africa, particularly in Zambia, Angola and Zimbabwe.
Xi is also expected travel to oil-rich Angola and Botswana in visits seen as securing China’s energy and resource deals there.
China has unveiled billions of dollars in loans and investment to African governments, which analysts have described as the second scramble for African resources after Western colonisation.
South Africa has lobbied extensively to join China in the BRIC group of countries, a coalition of emerging economies that also includes Brazil, Russia and India.
The countries are not officially linked but hold summits in an effort to bolster economic cooperation among them.
AFP | November 18, 2010
Russia Considers Biggest Population Redistribution since Stalin
The Kremlin is considering pushing ahead with the biggest geographical redistribution of its population since Josef Stalin’s forced deportations of entire nationalities in the 1940s.
Under the plans, which were leaked to the daily Vedomosti newspaper, the majority of Russia’s 141 million-strong population would be concentrated in just twenty urban centres rather than sparsely spread out over one fifth of the earth’s surface as is now the case.
At the moment, ninety per cent of Russia’s towns are relatively small with a population of 100,000 people or less, many of them in remote locations. The leaked plan said such places had “no future” and were not worth developing.
Instead, it proposed relocating people to twenty giant agglomerations where Russia’s main natural resources such as oil and gas were located.
Unlike in Stalin’s day, when people were forced to move at gunpoint on the often spurious grounds that they were ‘enemies of the people’ or Nazi collaborators, relocating would be optional and encouraged on economic grounds alone.
Much of rural Russia is dying as young people move to towns and cities anyway and entire Soviet-era settlements which were built around just one or two factories are no longer economically viable.
“There is no need to fight against the current and we need to develop big cities and urban centres,” the plan said according to the newspaper.
Saddled by an obsession for central planning, the Soviets decreed that many towns and settlements be built in areas where the climate was too harsh and where the expense of providing basic utilities was unjustifiably expensive.
Analysts said the plan, which would roll back the Soviet idea of urbanising the entire country, is likely to be heavily touted by President Dmitry Medvedev as part of his agenda to modernise Russia.
“Changing the map of the country is a necessary but not simple task which needs to be done very carefully as any overreaction could lead to a fight for urban resources,” a government official was quoted as saying.
With speculation mounting about whether Mr Medvedev or Vladimir Putin, the prime minister, will run for the Russian presidency in 2012, the plan could be a useful electoral tool for Mr Medvedev according to analysts.
The Daily Telegraph | November 16, 2010
Currency War and the G-20
Analyst Peter Zeihan examines the potential for currency war between the United States and China and what is expected to emerge from the G-20 summit.
Stratfor | November 10, 2010
China’s economy to overtake US in two years
Just ahead of the G20 summit, there is a new report which came out recently stating the United States’ economy will be overtaken by China in the next two years. Should the American people be worried about their livelihoods? Economist Max Fraad Wolff says Americans should take a look at their clothes and see where they are made, that should give people an idea of what is happening.
RT America | November 10, 2010
Brazil’s Prospects for Growth
Paulo Leme, Goldman Sachs’ emerging markets chief, says his native Brazil should seize a historic opportunity for growth as a new President takes over.
Goldman Sachs’ (GS) emerging markets chief says his native Brazil should seize a historic opportunity for growth as a new President takes over
How do you see Brazil right now?
The economy is growing at almost twice the rate that it has in the last 10 years. Brazil is experiencing a fairly healthy increase in employment and wages, and an improvement in income distribution, so there is a feel-good factor. I would say this is a once-in-a-century kind of opportunity to accelerate growth to 6 or 6.5 percent and unleash all of this upward mobility.
How can Brazil make that happen?
The key is structural reform—for example, a reduction in the tax burden, which would make exports more competitive. Also things that would boost productivity, like better education and a better health system.
Is Brazil growing too fast?
Domestic demand is outstripping supply. The appreciation of the real also makes it cheaper to import from the rest of the world. Brazil would benefit enormously from some containment in fiscal spending and public credit growth and moderation in public-sector wage hikes.
Is that the direction you expect from President-elect Dilma Rousseff?
She has the awareness and possibly the inclination to do some rebalancing of macroeconomic policies. We are on the eve of another significant monetary easing by central banks in advanced economies. However, at some point they will tighten significantly. The question is, will that lead to a sudden stop of capital flows or even a reversal? Brazil’s macro policy should be prepared for that eventuality.
Bloomberg Businessweek | November 4, 2010
India’s Strategic Future
Why India needs to move from “strategic autonomy” to strategic cooperation with the United States.
Unlike in Washington, where governments are noisy in articulating their worldviews, for the permanent bureaucracy that runs New Delhi’s foreign policy, silence is golden. But Delhi’s reluctance to articulate a grand strategy does not necessarily mean it does not have one. Since India embraced globalization at the turn of the 1990s, many of its traditional strategic objectives have evolved, and the pace of that evolution has gathered momentum as India’s economic growth has accelerated in recent years.
Yet the United States remains unclear about its potential ally’s goals and objectives. Despite significant advances in Indo-U.S. relations during George W. Bush’s presidency and bipartisan agreement in Washington to support India’s rise, Barack Obama’s administration has found it hard to make big strategic advances. U.S. officials dealing with Afghanistan and Pakistan seem to find India — and particularly its reluctance to offer concessions on Kashmir that might presumably encourage Pakistan to cooperate more thoroughly in Afghanistan — part of the problem. American negotiators on climate change and trade find the notorious prickliness of the old non aligned India alive and well. And the Pentagon is frustrated in its efforts to build a partnership with a New Delhi that resists cooperation on U.S. terms. But American strategists should take heart: If Washington can be patient, endure an extended courtship, and above all take a longer-term view of the relationship with Delhi, it will find much to like about India’s foreign policy.
The problem for India’s top strategists is not that they don’t seek a grand bargain with the United States. It is about negotiating equitable terms. It is also about bringing along a political elite and bureaucracy that are adapting too slowly to the new imperatives of a stronger partnership with Washington. But make no mistake: Engagement with the United States has been the Indian establishment’s highest foreign-policy priority over the last decade and a half.
India’s grand strategy has four broad objectives. In all four areas, strategic cooperation with the United States is critical.
India’s first objective is to pacify the northwestern part of the subcontinent, or the AfPak region, as it is known in Washington. All of India’s great empire-states throughout the last 2,500 years, from the Mauryans to the British Raj, have had trouble controlling these turbulent lands across the Indus River that frame the subcontinent’s western frontier.
Indeed, ever since Alexander the Great and his army first arrived on the banks of the Indus, most foreign forces and alien ideologies have come to what is now India through the northwestern route. In the past, India managed to absorb the invaders and modify their ideologies. All it needed was sufficient time. But weakened by the subcontinent’s partition in 1947 and faced with U.S. and Chinese support for Pakistan during the Cold War, India has had little time and space to manage the conflict with its troublesome sibling to the northwest.
American commentators often discount the threat that Pakistan’s military poses to India. Indian strategists don’t have that luxury. Armed with nuclear weapons and allied with radical Islam, the Pakistani Army remains extremely dangerous — a situation compounded by America’s current dependence on Islamabad to pursue its objectives in Afghanistan and in the tribal areas across the border.
The challenge for India is not just about managing its differences with U.S. policies in Afghanistan and Pakistan. New Delhi has no choice but to work with Washington to stabilize its northwest. That in turn involves encouraging the United States to think very differently about Pakistan and its relations with Afghanistan and India. And that demands getting the United States to pressure the Pakistani Army to end its promotion of extremism in Afghanistan and India.
Both New Delhi and Washington want to move the AfPak region toward political moderation, economic modernization, and regional integration. Neither can achieve these objectives on their own. But they have so far failed to have an honest discussion about how to move forward together, let alone begin coordinating their policies.
India’s second objective is to become an indispensable power in the littorals of the Indian Ocean and southwestern Pacific. For nearly two centuries until partition, the British Raj was the source of stability and the main provider of security in these regions. But after independence in 1947, India chose an inward economic orientation and focused on the global mobilization of the Third World during the Cold War. Not surprisingly, India resented the dominance of the Anglo-American powers in its strategic backyard.
As the power of a rising China today radiates across the subcontinent, the Indian Ocean, and the western Pacific, balancing Beijing has become an urgent matter — especially given the relative decline of the United States. In the past, India balanced Beijing through a de facto alliance with the Soviet Union. Today, it needs a strategic partnership with the United States to ensure that China’s rise will continue to be peaceful. With Washington yet to make up its mind on how best to deal with Beijing, India has no option but to hedge against growing Chinese power as well as the dangers of a potential Sino-American condominium. This necessarily involves nuanced bilateral economic and political engagement with China, albeit with eyes wide open.
Meanwhile, New Delhi’s focus is on China’s neighbors. India is holding on to its old partnership with Moscow, stepping up its economic and security cooperation with Japan, South Korea, and Mongolia, and raising its economic and strategic profile in Southeast Asia and Australasia.
India’s third objective is to increase its weight in global governance and eventually emerge as a “rule-maker” in the international system. In that sense, India’s civil nuclear initiative with the Bush administration was as much about producing electric power as it was about redefining India’s position in the global nonproliferation regime. But U.S. support for India’s bid to become a permanent member of the U.N. Security Council has been elusive. The United States, instead, wants to test whether India is a “responsible stakeholder” in the negotiations on issues ranging from climate change to international trade. From India’s perspective, these American benchmarks have tended to be self-serving and defined by the latest intellectual fashion in Washington. India is prepared to engage on these issues and participate more fully in global decision-making bodies on the basis of its own enlightened self-interest, but is not prepared to take tests from anyone.
India’s fourth objective is to strengthen the factors that are critical for becoming a credible power on the regional and global stages. This involves sustaining its current high economic growth rate, consolidating its advantages in knowledge industries, providing education and skills to its younger population, and modernizing its armed forces and security agencies. On all these fronts, India needs deeper and more open cooperation with the United States through the integration of their advanced technology sectors, trade liberalization, opening the Indian education system to American universities and community colleges, U.S. investments in the Indian defense industry, and American expertise to upgrade Indian intelligence gathering and processing. New Delhi is already engaged with Washington on all these fronts, but the results remain way below potential.
Most of all, the United States needs to recognize that it is dealing with a new India. For too long, India saw itself as a weak, developing country unwilling to unlearn its anti-colonial grievances. Only in recent years has India begun to inch away from its previous focus on the chimera of “strategic autonomy” to emphasize its own role in shaping the regional and global environments.
In the past, India’s internal identity as a liberal democracy was in tension with its external image as the leader of the global south against the West. A rising India — with its robust democracy, thriving entrepreneurial capitalism, and expanding global interests — is bound to acquire a new identity as a champion of liberal international order.
What remains to be seen is whether the Obama administration can seize this moment. Obama has certainly talked the talk, but it is not clear whether his administration is ready to walk the walk to accommodate India’s rise. That might require a leap into the unknown — a historic revision of the international hierarchy of power — that so far, the United States has been unwilling or unable to take.
C. Raja Mohan
Foreign Policy | November 4, 2010
Iraq Banks Told to Raise $7 Billion
The Central Bank of Iraq has instructed private banks to raise at least $7 billion in fresh capital over the next three years to be able to handle an expected oil-fueled construction boom, a top bank official said Wednesday.
The Wall Street Journal | October 26, 2010
Chinese investment soars in Brazil
Chinese investment in Brazil is expected to reach 30 billion dollars this year, according to observers — a sum aimed at securing access to the Latin American nation’s oil and other resources.
The inflow has been sudden, and dramatic.
“Up to the end of last year, the amount of Chinese investment in Brazil was tiny, less than 400 million dollars. Over the first half of 2010, it’s gone over 20 billion dollars — and it should hit 30 billion dollars this year,” Charles Tang, head of the Brazil-China Chamber of Commerce and Industry in Sao Paulo, told AFP.
Two-thirds of the total coming into Brazil this year will be invested in the oil sector, to which China has privileged access after extending a 10-billion-dollar credit line to Brazil’s state-owned Petrobras, and after China’s Sinopec bought the Brazilian subsidiary of Spain’s Repsol for seven billion dollars.
“China is investing everywhere in the world to ensure it gets the strategic resources it needs. And Brazil, obviously, is important,” Tang said.
In return, Brazil gets “capital for its growth and job-creation,” he explained.
“China needs the mineral resources, oil and land that Brazil has in abundance,” Tang added before predicting that the relationship between the two BRIC economies “has only just begun.”
In 2009, China became Brazil’s top trading partner, overtaking the United States. Bilateral exchanges topped 36 billion dollars last year.
This year, they will amount to even more, based on Brazilian central bank figures showing trade reached 35 billion dollars in just the first eight months of this year.
Ricardo Anhesini, spokesman for the KPMG consulting firm in Brazil that has helped Chinese companies entering the Latin American nation’s market, said there was “a large number of companies interested in selling primary resources, equipment and infrastructure.”
The cities of Sao Paulo and Rio de Janeiro drew most of the companies, while others set up in other southern states which also have good transportation systems.
The approaching 2014 World Cup and 2016 Olympic Games in Brazil also were spurring Chinese investment.
“Several companies are here wanting to address the needs for the Olympics and the World Cup,” seeking to profit from Beijing’s experience in hosting the Olympic Games in 2008, Tang said.
Anhesini said a Chinese delegation was to visit in December to explore investment opportunities in that area.
“We’re recommending they come as early as possible so they can adapt to the Brazilian way of doing business,” he said.
KPMG reckons that the interest in supplying the sporting events with equipment will boost Chinese investment in Brazil between 2011 and 2013 to 223 billion dollars.
AFP | October 26, 2010
Europe’s Center Drifting East
The world as a system may be battling a crisis, but crises – with all the pains that accompany them – do open up opportunities. In the current settings, Russia is presented with a choice of niches in the emerging global configuration, and its searches clearly meet with a measure of understanding in Americas, Europe, and Asia.
For Moscow, eying Europe is natural in the context. The resumption of Germany-Russia-France summits and the arrival of the participants of the Munich security conference at Moscow to meet the Russian president (notably, convening in Russia was their own idea) signal the West’s serious interest in the partnership with Moscow. The “old Europe” countries tend to be particularly courteous with Russia, and there must be profound reasons behind the approach.
First, the EU failed to evolve into a tightly knit organization over the years of its existence and remains a conglomerate of heterogeneous elements with widely varying potentials, diverging interests, and unharmonized value systems.
Secondly, Europe lacks a vision of the future of NATO, the most centralized and hierarchic organization of the epoch, and, consequently, is unsure what role the US as the global leader is to take.As a result, debates over an integrated European security architecture in the run-up to the November 19-20 Lisbon summit echo with concerns in Washington. At the same time, it may be true that the trilateral discussions of the European security were initiated to probe into Russia’s unannounced agenda.
Thirdly, Russia as a Eurasian giant remains an important player in the struggle over global dominance which will breed – and is already breeding – a conflict between the West (the EU and the US) and the East (China and generally the Asia Pacific region). Anyway you look at it, it still holds true these days that, as H. Mackinder wrote: “Who rules East Europe commands the Heartland; Who rules the Heartland commands the World Island; Who rules the World Island commands the World”.
Russia, the Heartland country, was dealt a severe blow in 1991 but survived it, and its very existence denies other global politics players chances to gain full control over the post-Soviet space. Prevailing in the struggle over Eurasia takes either integrating Russia into Europe (economically, for the most part) or dissolving Russia in NATO (by political and military means). Both scenarios are materializing as parallel processes.
It also factors into the situation that the crisis which initially erupted in the US had a shattering impact on the EU. The protests and strikes which are paralyzing France are symptoms of unsustainability of the economy based on neoliberal models. The development of capitalism which owed the initial accumulation of wealth to ruthless colonial policies is contingent on the exploitation of the periphery. The second half of the XX century saw the rise of a neocolonial system which continues to exist in the form of a myriad of protectorates and quasi-states. The West continues to regard Russia, the country with huge territory, vast natural resources, and a population receptive to manipulations as a periphery. Rivalries over the right to exploit the periphery and over the corresponding instruments of control notwithstanding, the approach is uniformly adopted in the ranks of the Western countries.
The West’s interest in access to Russia’s natural resources is of course an open secret. The EU dependence on Russia for energy and various other commodities is a recurrent theme in the Western media, but the situation may have additional dimensions. Well-known French commentator Jean-Pierre Thomas said more than Western politicians normally do when he expressed the view that France and Germany are also interested in Russia’s financial resources. At least, the current deficits are eating considerably into France’s reserves, while those owned by Russia already count several hundred billion dollars and could catalyze economic growth across the continent. Europe hopes to benefit from the funds and therefore assists Russia in becoming a major financial center that would fit perfectly into the space between Hong Kong, Shanghai, London, and Paris and – as many in Europe expect – balance the influence of the US and Asian stock markets.
This must be the reason why European experts are so enthusiastic about the Deauville summit which, as they believe, can become the starting point of a financial alliance between the EU and Russia, mobilize financial resources, and even open a new era for the Old World. In fact, this is Europe’s new model of economic growth. In the light of the above, Moscow should be careful to avoid the situation whereby Russia’s financial resources are diverted to nourish the economic recovery in Europe while its own modernization plans lack the necessary financial backing.
In my view, the widespread perception of the Deauville summit attended by A. Merkel, N. Sarkozy, and D. Medvedev as an attempt to deepen Europe’s efforts aimed at creating a center of influence rivaling the US represents an overstatement. There is an impression that the alternative center would be powerless without Russia and that Russia would gladly join in, but I recall an excerpt from Through the Looking Glass: “How I wish I was one of them! I wouldn’t mind being a Pawn, if only I might join — though of course I should like to be a Queen, best”.
Personally, I deem the creation of such a center unlikely due to the following reasons.
First, the US and the EU interests are interwoven in the NATO framework and, moreover, the European countries depend economically and militarily on the US. Consequently they should not be expected to steer an overly independent political course, least to be ready to shoulder the economic burden associated with it.
Secondly, since 2008 Europe stubbornly ignores Russian president D. Medvedev’s proposal for a new European security architecture but is involved in the common European missile defense program which is fully attributable to NATO and can in the long run erode Russia’s control over its own air space.
Thirdly, the intensifying activity around the Russia–NATO council shows that in this regard the intentions are serious. Symptomatically, as soon as Russian president D. Medvedev said he would partake in the coming NATO summit in Lisbon, the Institute of Contemporary Development, a well-connected Russian think tank, promptly posted the notorious Yurgens report on its web site calling Russia to maximize the partnership with NATO or even seek membership in it.
The truth, though, is that Russia does have a choice and that Moscow’s decision is going to define the future – for us and for the rest of the world. By the way, the visa requirements reveal Europe’s actual attitude towards Russia and Russians which references to various technicalities cannot disguise. As the shadow in E. Schwartz’s fairytale, we are told to remember where we belong and not to trespass the limitations.
Strategic Culture Foundation | October 23, 2010
China Driving India, Russia Together
At the end of the Cold War, India had a choice either to remain isolated and strengthen the nonalignment movement or join hands with the United States to ultimately balance the growing influence of China. India opted for the latter in light of its own geopolitics.
As part of its strategy to keep South Asia clear of Chinese interference and extend its own influence into the greater part of the Asia-Pacific region, India began courting allies in Southeast Asia with a “Look East” policy. Now, if India has to be reckoned as a great power, it needs to look westward. It needs to spread its influence into Central Asia.
If that’s to happen, India has to find a stable and reliable partner to the north. Russia, an old friend of India’s from the days of the Cold War, will welcome India’s presence in Central Asia to counter China’s ambitions in the region. India’s booming economy moreover can act as a major attraction to Russian industry. Defense contracts serve India’s ambition to continue and improve relations with the Russian Bear.
For quite some time, India and Russia have been moving in that direction. For instance, the two powers have been conducting annual discussions on defense cooperation. This year’s talks centered on Russia’s fifth generation fighter aircraft, a deal worth some $25 billion, and the leasing of the Akula submarine. India plans to get 250 of the fighter jets for its air force while the nuclear submarine will be leased by the Indian Navy for ten years to train personnel before the INS Arihant, the first submarine developed and built in India, joins the fleet. India and Russia have already had developed the BrahMos supersonic cruise missile together.
There has been something of a seesaw in the relation recently, at least when it comes to the procurement of arms with India actively turning to Uncle Sam for weapons. India’s defense spending is set to mount considerably over the next twenty to twenty-five years as the Indian military is modernizing its systems. New Delhi expects to spend nearly $120 billion over a period of five years starting in 2012. This represents a golden opportunity for Russia’s weakened economy to recover.
India would curse itself for allowing a golden opportunity to be missed. China has previously taken advantage of Russian experience and expertise when it recruited former Soviet defense specialist after the Wall came down. India has to make up for this Chinese advantage and speed up the process of cooperating with the Russians.
There are also important geostrategic reasons for improving relations with Russia from the Indian perspective. With the United States preparing to pull out of Afghanistan, there is already talk in Moscow of expanding Russia’s role in Afghanistan. It’s likely that India will also get on board. India and Iran used to be the main supporters of Afghanistan’s Northern Alliance against the largely Sunni and Pashtun Taliban before the American led coalition toppled the regime in 2001.
Russia, which last year allowed the US to ship weapons across its territory to Afghanistan, has been wary of the Taliban insurgency destabilizing Central Asian republics and spilling over into its Caucasus region. At the same time, Russia doesn’t believe in the doctrine of former foreign minister Yevgeny Maksimovich Primakov anymore who once championed the forging of a strategic partnership among Beijing, Moscow and New Delhi to counter Washington’s presence in Eurasia. Instead, Moscow and Delhi are more likely to team up with the Americans to try to counter the extension of the Chinese sphere of interest.
It is against this background that Russian President Dmitry Medvedev is expected visit New Delhi in December for the annual India-Russia summit. Russia shares India’s concern over China’s rise. The last thing it wants is to have a Chinese hegemony spread around the Caucasus and Central Asia once American troops are out. Medvedev’s visit to New Delhi will be preceded by President Barack Obama’s own trip to India in November and there is no prize for guessing that there could be a revision of Primakov’s doctrine aimed at Beijing.
In conclusion, the wheel has come full circle from the time when India in its infancy as a nation newly independent after 1947 used to court the Soviet Union by following a socialist economy with national planning very much in line with the Stalinist model to Russia courting India for economic purposes today and in order to regain international influence and prestige.
Balaji Chandramoha is a member of the Institute of Defense and Strategic Analysis in New Delhi, India, a correspondent of World News Forecast and Editor Asia with World Security Network. For the Atlantic Sentinel he covers South Asia and related greater power politics.
Atlantic Sentinel | October 12, 2010
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