India-China Cooperation

The twists and turns in China-India relationship show no signs of disappearing in the near future. It is, however, equally necessary not to let these complications exceed a certain limit. Some progress might be made in this direction with the meeting between Prime Minister Dr Manmohan Singh and his Chinese counterpart Wen Jiabao on the sidelines of the ASEAN Summit in Hanoi on 29 October.

Dr Singh and Jiabao have met 10 times in the last six years, as the Chinese leader observed when the two met. That is a high metric even for top leaders of neighboring countries. On each occasion there has been a degree of feel-good, considering that relations between Asia’s two biggest countries and fastest rising economies -- which also leave a mark on the world stage -- are not wrinkle-free. And yet, it is apparent to all that the frequency of contact hasn’t lent itself to the two countries moving to a stage of easy give-and-take in ties.

Common Interests
The Chinese prime minister will visit India in December. In order to make this visit a success, it is important to reduce the misgivings of the two countries. India and China are neighbors. Both are members of alliances like BRIC (Brazil, Russia, India and China). They have common interests in matters like environment and world trade. They also work together in these fields. At the same time, it is also true that the two countries compete in economic and several foreign affairs, especially in spreading their influence in areas like East Asia and Africa. The old border dispute between India and China is yet to be solved. This often creates bitterness.

Dr Singh went ahead and raised all the troubling questions in the bilateral relationship that have surfaced of late -- China’s adopting a forward position in respect of Pakistan-occupied Kashmir (PoK), its questioning of India’s sovereignty in Kashmir suggested by stapling -- not stamping, which is the international norm -- of visas for Jammu and Kashmir residents, Beijing’s offer of a stapled visa for a general who commands India’s Northern Army, (which had the effect of scuttling the military officer’s visit to China on a goodwill defense visit earlier this year), and the revival by Beijing of its claims over Arunachal Pradesh (after the Indian state had been officially shown as being part of India during the term of Prime Minister Atal Behari Vajpayee).

Exploring Possibilities
India intends to explore these possibilities as much as it can. Such joint efforts will help all countries to overcome poverty and backwardness quickly. Distrust and suspicion between India and China obstruct any progress in this direction. Even the dispute between India and Pakistan has been kept alive to a large extent on China's support.

China certainly completes with India in the economic field, but it also has problems with Indian democracy. Modern China has had a dictatorial form of government for more than 60 years. Having adopted a liberal economy, it is now going through difficulties of introducing a liberal political system. Prime Minister Jiabao had to face severe criticism from conservative forces for advocating such a system.

Lack of Equilibrium
Chinese are afraid that a close friendship with a big democratic country like India might create an urge for democracy in the country. Suppressed dissatisfaction and lack of equilibrium might come out in the open.

The other problem faced by China is that democratic Western countries and Japan pin hopes on India rather than on China's monopolistic economic strength. India is trying not to let these issues come in the way of mutual relationship, but China has its own reasons for being apprehensive.

Advance in Multilateralism, Socialism

The changes as the world enters the second decade of the 21st century have surprised many people. The global financial crisis in 2008 has created a new international situation. The world of the 21st century is taking a new shape. A new era is beginning.

New Beginning
1. Multilateralism is taking the increasingly decisive position in international affairs. At the 64th session of the UN General Assembly in Sept 2009 with the theme "Effective responses to global crises, strengthening multilateralism and dialogue among civilizations for international peace, security and development," more than 120 heads of state from around the world discussed a number of other important issues such as a nuclear-free world, the effort against terrorism, and solutions for the an increase in poverty that is a consequence of the financial crisis.

Even America, the leading power, has had to ask for help from other countries to solve problems that previously they had solved unilaterally. Multilateral cooperation on the regional and global scale is moving forward. Countries are studying and applying the trend to form regional associations like the European Union (EU). Africa and more recently East Asia and ASEAN are moving in that direction.

In politics and international security, like it or not, the global power game is still controlled by powerful countries. The political turf battle among the superpowers continues. NATO and the United States have gradually encroached into areas close to Russia, forcing Russia to stay on the alert. Newly-emerging countries are reaching into Africa, Latin America, and even Asian to find materials to fuel their development.

2. One remembers that at the end of 2008, the American National Intelligence Council (NIC) issued a report "Global Trends 2025" which forecast that the leading status of America would gradually decrease and the world would take on an increasingly multi-polar form.

In fact, the situation forecasted for the coming 15 years is happening right now. Global power transfer is accelerating. The new multi-polar world order that people have been talking about for a while is moving faster as American power declines. In 2009, China rose up to become the world's second largest economy after the US, surpassing Japan and Germany, and became a real power on the international political chessboard. And Brazil, Russia, India, and China (BRIC), the emerging economies of Brazil, Russia, India and China, have affirmed their role in the world instead of waiting for the two decades that had been forecast by the NIC. Even the G20 has risen to surpass the status of the G7-G8.

3. The present financial crisis and economic recession show that the modern capitalist model is facing serious challenges, and its innate defects are exposed. As they deal with the crisis, many countries have adopted the primary methods of socialism, such as strengthening state intervention in economic and social management which have become a topic for many researchers.

The development of Latin American left wing movements with the aim of establishing socialist countries in 21st century shows that the road to socialism did not completely disappear after the collapse of Soviet Union and system change in Eastern Europe, as some people thought. Nostalgia for a stable, peaceful, and secure society is a notable ideological current in Russia and Eastern Europe.

4. With the end of the cold war, and with no confrontations in the bipolar world, people had the illusion that international affairs would demilitarize. But the brief period of a mono-polar world led into a worldwide arms race. America is the leading country, accounting for more than a half of global military expenses. The American military budget continues to break records; in 2010 it will be more than $600 billion. The possibility of the spread of nuclear weapons is on the horizon. Crises on nuclear issues in Iran and the Democratic People's Republic of Korea (DPRK) continue to run hot and cold in unpredictable ways.

No western country approved the Treaty on Conventional Armed Forces in Europe, nuclear deterrence has reappeared, and more countries have nuclear weapons. These developments make the nuclear disarmament process more urgent than ever.

5. Wars in Iraq and Afghanistan, bloody conflicts in the Middle East, Southern Asia, and Africa have not stopped. Peace in Middle East is still a dream of the Arabs and the Jews, but inexplicably they have not found a common voice. The final peace agreement between Palestine and Israel is still far away. The dark continent is still in a state of confusion, with numerous conflicts and consequences of civil wars. Somalia and Congo are still sunk in violence. The fight against terrorism continues. Extremism and breakaway movements are dark forces that cause trauma for many countries.

6. Economic, communications, environmental, and food security are getting more attention from the world. The climate change summit in Copenhagen in December 2009 expressed the concern and aspiration of the whole world for a more secure and peaceful living environment.

7. In the coming years, America will still be determined to protect its superpower status in the challenging context, and it will not be easy. The EU, China, Russia, Japan, India, and others do not hide their ambitions, and do not hesitate to take actions for a share of power in the world. People think that by 2020, three of the four largest economies in the world will be in Asia including China, India and Japan. The Asia-Pacific century is taking shape more clearly than ever.

Current International System
The transfer of wealth and power from west to east will take place on an unprecedented scale and speed that will determine the direction of modern history.

These great changes will not completely break the current international system, but the re-shaping process of the 21st century is happening now. New races will start on different levels and scales, with new risks and challenges.

Pakistan-China Currency Swap Agreement

Negotiations over swap currency agreement between Pakistan and China, with a view to conduct mutual trade in Pakistani rupees and Chinese Yuan instead of dollars, are underway. The governor of the State Bank would shortly visit China to give final shape to this agreement. The sources have learned that diplomatic talks between both countries in this regard have been completed. Now the governor of the State Bank would visit China to discuss technical issues in this regard, in which implementation of the agreement would be reviewed.

Impact of Economic Recession
The United States is witnessing recession these days. Several major companies are running into losses and several banks have also defaulted. Therefore, the credibility of dollar at global level has been damaged. This is the reason that the prices of gold are on the rise in the international market.

Some economic experts have voiced their opinion that if such situation continues, the economic situation of the United States would get worse by 2015; rather it is likely to take a dangerous turn. According to a Russian economic expert, the United States would disintegrate into 15 states at that time around.

BRIC's Trade and Economic
Four countries are progressing in the economic field very fast at this time. The US investment bank, Goldman Sachs, has used the term BRIC (Brazil, Russia, India, and China) for these four countries. The reason is that these four countries have made a strong group in the field of trade and economic progress. The growth ratio of national product of Brazil is more than 5 percent.

Russia is the only country where most of the billionaires are residing now. The population of Russia is gradually decreasing and its per capita income is on the rise. India has increased its contacts with Europe, the United States, and China. Its trade volume is increasing with BRIC group. The trade volume between India and China is around $52 billion, while between China and the United States it is $333 billion. The foreign exchange reserves of China are around $ 1.9 trillion.

World Bank Report
A statement by the Chinese prime minister has been published in the US journal the Newsweek in its 30 March edition, in which he has expressed concern over recession in the United States and decline in its economic situation. He further added that China has lent loans to the United States and it is worried over the payment. The growth rate of the Chinese national product is around 7 percent, while that of the United States and Japan is 3 percent, respectively.

Moreover, the United States, which stood first in the World Bank, now stands at No 5; whereas, China that used to be on No 10, now stands at No 1. The said group of four countries is increasing trade and prefers local currencies instead of dollars for the trade business. Therefore, the mutual trade of the currency group of these countries has been detached from dollar, which has very healthy effects, while the future of dollar seems to be in jeopardy.

Long-Term Cooperation
Now China has conducted negotiations regarding a trade agreement to conduct trade in local currencies. If the currency swap agreement is inked between China and Pakistan, it would prove helpful for Pakistan in saving its foreign exchange reserves. The European Union countries are already trading in local currencies through euro. Pakistan should also increase its trade links with BRIC group. Pakistan has a trade agreement with China at this time around. However, the trade ratio between both countries is far less than that of between India and China. Similarly, the trade could not be increased with Russia as well. Therefore, currency swap agreement would prove useful for regional countries.

Dollar was badly defeated in the currency market on 10 September, while the value of euro was witnessed increasing from 1 to 3 percent. The countries dealing in euro currency are strengthening credibility of euro in the world for their business credibility. The United State is playing with gold market to keep dollar intact and developing countries are experiencing its adverse effects. The offer to ink swap currency agreement is a result of Pakistan-China friendship agreement, which would play an important role in Pakistan's economic and financial stability. This is also an open proof that China is a true friend of Pakistan.

Shanghai Cooperation Organisation Summit

The Shanghai Cooperation Organisation (SCO) Summit was held recently in Yektarinburg (Russia). The summit coincided with Prime Minister Dr Manmohan Singh’s participation in the Brazil-Russia-India-China (BRIC) meeting as also the SCO meeting. Six countries are included in the SCO, i.e. Russia, China, Kyrgyzstan, Kazakhstan, Tajikistan, and Uzbekistan. Terrorism and defense are the main focus of their attention. India, Pakistan, Iran, and Mongolia have been invited to the meeting as mere observers. Apart from Russia and China, the other four countries are in Central Asia. A large part of Russia is confronting terrorism. So is Sinkiang in China, which is adjacent to the troubled region in Russia. Therefore, these countries bear special relevance in the matter. India had already received the status of an observer in 2005. It is, however, participating for the first time so actively and strongly. At their annual summit in Dushanbe in August 2008 the SCO leaders accepted Russian President Dmitry Medvedev’s proposal to invite the heads of state and government of the observer nations to SCO close-door meetings in order “to allow their views to weigh in.”

It is for the first time that the Indian Prime Minister participated in the SCO meeting where India enjoys only an observer status. In the past, India sent only ministers to attend SCO meetings.

The SCO summit provided an opportunity to Dr. Singh not only to interact with the SCO members, but also with Pakistan President Asif Ali Zardari, Afghanistan President Hamid Karzai and other leaders. This is suggestive of two things. First, it is a reflection of importance that India attaches to Russia, the host country. Second, it also signifies India’s priority to Central Asia.

Powerful Regional Organisation
The SCO essentially remains a grouping of Russia, most of the former Muslim republics of the ersrwhile Soviet Union, and China. These are countries that are contiguous or in very close proximity with one another — in terms of history, politics, and current threat perceptions. The formation of SCO possibly helps the former Soviet republics to maintain a positive neutrality between Russia and China, and help each other as well as these two giants in the context of fighting Islamist terrorism in SCO’s home terrain, the Central Asia theatre. The SCO countries are also hydrocarbon-rich as producers, and some of them — notably India and China — are massive consumers of energy. On paper, at least, the SCO can make it possible for energy to be available to member-states on favourable terms.

Over the years the SCO has evolved as one of the most potentially powerful regional organisations to appear in post-cold war Asia. The regional grouping came into being in April 1996, when Russia, China, Kazakhstan, Kyrgizstan and Tajikistan met in Shanghai. In June 2004, Mongolia was granted observer status. A year later, India, Iran and Pakistan were granted the rank of observers.

The inclusion of observer members resulted from the confidence that the SCO would expand its strategic and economic interest beyond Central Asia. Choosing which states to admit was the result of delicate political maneuvering and compromise between Beijing and Moscow, with former pushing for admission of India and Pakistan as observers and the latter refusing to consider the question of observers unless Iran was included.

The SCO ever since its inception has emerged as an important forum for strategic cooperation between the former Soviet Central Asian states as well as essential conduit between East and Central Asia. The SCO’s members have repeatedly insisted that it would be considered as a community based on mutual cooperation rather than alliance against any specific adversary.

Security Problems
The SCO security agenda has recently shifted from counter-balancing the US and North Atlantic Treaty Organisation (NATO) in Central Asia towards dealing with growing security threats from Afghanistan. India took part in the SCO conference on Afghanistan held in Moscow in March and welcomed its plan for the SCO to increase its role in international efforts to combat terrorism, drug trafficking and organised crime in the region in close collaboration with Kabul through the SCO-Afghanistan contact group.

The Central Asian region currently faces a host of traditional and non- traditional security problems including terrorism and political extremism, weak and sometimes porous states in the region. There is also the concern over the role of West in Eurasia, especially following the events of 9/11 and development of American and other international forces in Afghanistan.

The Organisation’s official Charter was unveiled at its second conference in St. Pettersburg in June 2002, which confirmed the SCO’s mandate to build mutual trust, friendship and good neighborliness.

The other key elements of the document included the confirmation that a Regional Anti-terrorism Structure (RTS) would be created as an information nexus for the regional security and that decision would be based on consensus. As an acknowledgement of the growing influence of Uzbekistan within Central Asian regional dynamics as well as the need to keep Tashkent engaged in SCO’s affairs, the Tashkent based Centre on Anti-terrorism, which was originally planned to open in Bishkek, was instead opened in Tashkent in June 2004.

On security side, India favours exchanging information with the SCO member countries. Besides, issues like the menace of terrorism and energy requirement are important consideration for India’s engagement with the SCO.

India has avoided high profile engagement with the SCO and has calibrated its relationship with the organisation on trade and economic issues. India is not inclined to align with the six-nation grouping in military, strategic and political terms. As an observer, India wants to be a hands-on participant, especially in improving trade and development related forum set up by SCO.

Other Initiatives
India also offers to share its experiences as well as learn from the SCO about opening up of the banking sector and deepening capital market. It is only after recent developments in the region and particularly after the US President Barak Obama, initiated his proactive policy of engagement in Afghanistan in which India has a great stake, that New Delhi has evinced greater interest in the regional grouping.

Although India has a low key engagement with the SCO, the Afghanistan issue has, however, added a further impetus to India’s engagement with the SCO. It is against this backdrop that India’s Special Envoy Satinder Lamba directly appealed for granting SCO membership to Afghanistan at the last meeting of the SCO on Afghanistan in March 2009.

Afghanistan joined SAARC in 2007 but it is neither a member nor observer in the SCO, though it is part of the SCO-Afghanistan Contact Group established in November 2005 to provide a mechanism for SCO member-states to jointly contribute to re-construction and stability in Afghanistan.