In the wake of visit of the German Foreign Minister AnnalenaBaerbock, a few days ago, many observers, and myself in this column, had hinted at Berlin’s attempt to explore and enhance economic opportunities between two countries. The visit came after German Chancellor Olaf Scholz’s much-talked-about dash to China after Xi Jinping was re-elected with greater powers at Chinese Communist Party(CCP) Congress. Apparently, Germany is aspiring to be an interlocutor and an impactful player in world politics. Many would perceive India to be doing so, wanting to be a world power. Berlin considers Russian invasion on Ukraine as a turning point (zeitenwende) in European history. The German Chancellor made this momentous development clear, “with invasion of Ukraine, we are in a new era”.
Germany has taken quite a few significant steps to make its intention of playing an international role clear. The Scholz government has made a massive increase in defence spending earmarking 100 billion Euros for the army in 2022. Germany, as the biggest economic power in Europe, is coming to terms with a growing realisation that the US may not be able to serve as a bulwark for European security. While remaining in NATO, Berlin is planning to spend more than 2 per cent of its GDP in defence from now on.
Germany also has outlined its Indo-Pacific policy in order to diversify Germany’s partnership away from China. There India becomes an obvious and important partner. Along with a shared stake in maintaining democracies, human rights and other international political values, a robust economic partnership is critical. Germany’s economic dependence on China perhaps makes Berlin vulnerable to occasional pressure from Beijing. Berlin would perhaps like to disengage with China if it had an equally attractive alternative.
The world including Germany is expecting India to rise economically to countervail China and to create an alternative supply chain. Many countries in the democratic world would like to reduce their trade dependence on China. The United States identifies China as the systematic rival, as per the National Security Strategy 2022 (NSS 2022). So does Germany.
At the same time, USA designated India as a major defence partner, allowing sale of sophisticated arms to India. The same strategy document recognises a role for India as a member of the Quad, as a part of the West Asian new grouping I2U2 (India, Israel, the United Arab Emirates and the US) and as a member of emerging economies including Argentina, Indonesia, Senegal and South Africa, whose interests are aligned with those of the US. These countries have a close proximity with G-7 as well as the Western alliance.
Does India have the potential to be an alternative market and economic power to China? Can India match the strategic capability, economic heft and technological strength of China? Yes, it can. India has the largest segment of young population in the world, the largest size of workers between the ages of 18 to 64, a potential skill capital of the world with training in science, technology, engineering, mathematics and humanities. India enjoys the goodwill across the world historically.It is already home to the third largest group of native-e-bred unicorns; is a multi-cultural society that embraces multiple faiths, languages and ethnicities. It is the biggest market with a federal structure, allowing each unit to grow creatively simultaneously. All these assets qualify India to emerge as a countervailing force to China.
However, is India willing to counter China! Not really. Few in India perceive or embark this global role. Regardless of India’s rich and unique cultural heritage, there are forces who peddle religious hatred and social schism leading to tragic polarisation of the society and the politics. Political leadership lending patronage to such sectarian and polarising elements in the media, police, civil service and judiciary make the situation grim. Lack of discipline and ethics among large segments of Indian business damages India’s image as they do sub-standards international business. At home, the macro-economic policies prop-up crony capitalism while marginalising vast section of people. Although a micro-economic populist approach does promise to provide the basic needs, it fails to generate demand.
The world is watching and expecting India to grow. At the same time, it is also taking a comparative look at India and China. Let us scan the trade and investment figures of Germany, the reference country forthe formulation in this article. In 2021, Germany’s exports to China were 123.59 billion USD and imports were 115.8 billion USD whereas Germany’s export to India was 13.09 billion USD and imports from India 9.51 billion USD. On investment, Germany put 13.6 billion USD between 2000 and 2022, compared to what it invested in China from 2018 to 2022, in three years only, over 10 billion USD. This is the gap that needs to be bridged. Is India attempting to do so?
Under the leadership of Prime Minister Narendra Modi, India should make in its foreign policy at least two changes. One, India’s foreign policy should have greater clarity on the external dynamics. In the current world, Russia has ‘managed’ to become a minor power as USA and China dominate. China is hostile to India and wants to stunt India’s strategic growth. It has been building up its military garrison along the border. At the time of writing, the PLA and Indian army were clashing, a serious military confrontation in Tawang in Arunachal Pradesh since the Galwan episode.
India was aptly turning to USA and its allies to resist China, buthas suddenly lurched back to Russia in the wake of Ukrainian war. Perhaps frustrated by India’s u-turn as well as reluctance to speak up for a rule-based international order despite the critical realpolitik, the western world is reviving contacts with China which emboldens the latter to pick on India again. New Delhi must realise that Russia is a concern for the western powers as much as China is for India. New Delhi must work fast to dispel the misperception that India is not able to decouple from Russia.
The second shift is to be made at home refocusing on the economic determinism of international politics. At the end of the day, even the western powers, irrespective of their claims to foster democracy and human rights in the world, will prefer their economic interests to any other. In one way, the Chancellor of Germany’s visit to Beijing evidences this hypothesis. Hence, Prime Minister Modi should be spending his energy in building the Indian economy which is the key to national growth and development, and to its international image and power.
Unadvisedly, the Prime Minister seems to be investing more time in campaigning for his party in all the elections focussing more on electoral politics than on economy, the latter determines, at the end of the day, a country’s power and position in international politics which in turn helps the country to grow. New Delhi must reciprocate the international expectation and goodwill for India’s economic growth. —INFA