This essay was originally published in The Arena, the foreign affairs and diplomacy magazine of the Abba Eban Institute for International Diplomacy.
In his 2006 book, Towards a Beautiful Country: My Vision for Japan (“Utsukushii Kuni E”), Shinzo Abe, then Japan’s Chief Cabinet Secretary, envisioned a democratically dominated future for the Indo-Pacific region. According to Abe, alongside the U.S., Japan, and Australia, India would play a leading role in this newly-shaped regional order.
A year later, as Japan’s Prime Minister, he would address the Indian parliament to talk about a “broader Asia” breaking away from geographical boundaries and pursuing a “dynamic coupling” of the Pacific and the Indian oceans as “seas of freedom and of prosperity.” Over time, this notion of a broader Asia has evolved into the concept of the Indo-Pacific as a region.
This article argues that changes in the global balance of power — which are largely products of the decline of American unipolarity, the rise of China, and a shift in the global economy’s center of gravity from the West to the East — are shaping the geopolitics of the Indo-Pacific region. In pursuing its political and developmental goals, Indian policy has been adapting to these changes. This has entailed adjustments in relations with the U.S. and China, while exploring new modes of issue-based cooperation with like-minded partners. The effectiveness of these new cooperative platforms, however, will depend primarily on maintaining high levels of trust between participating states.
Three broad geo-political and geo-economic currents are animating the emergence of the Indo-Pacific as a strategic concept:
Shifting Economic Power: Implicit in the notion of the Indo-Pacific is an acknowledgement of the shifting gravity of global economic power, from the geopolitical West towards the East. The Indo-Pacific region stretches from the western shores of the U.S. to western Africa. It is home to 65% of the world’s population and accounts for over 60% of global GDP and 46% of the world’s merchandise trade.
Also implicit in this concept is a recognition of the significance of the Indian Ocean as a strategic waterway, connecting the resource-rich regions of Africa and West Asia to the labor, capital, and consumer markets across the Indian subcontinent and East Asia. It is, therefore, unsurprising that the Indo-Pacific is a hub for key supply chains – from automobiles, electronics, electrical machinery, semiconductors, and pharmaceuticals to telecommunications equipment. Paradoxically, these interlinkages have of late coincided with the currents of disruption and de-globalization.
Beijing’s increased tolerance to risk in its exercise of power has provided greater impetus for a closer India-U.S. relationship
Chinese Assertion: The rise of China as a major power has fostered a deeper security linkage between states operating in the Indo-Pacific region. In 2010, China surpassed Japan and became the world’s second-largest economy. This coincided with what has been termed as an assertive turn in its foreign policy, as evident in Beijing’s hardening stance on territorial disputes and its use of coercive methods, including the use of force (e.g., on the Indian-Chinese border), to achieve political and economic objectives.
While China’s close neighbors have primarily been in the proverbial firing line, this assertion is also evident in policies towards Australia, and more recently even Lithuania. These are but a few examples of Beijing demonstrating both its capability and political will to project its power far beyond its shores.
That said, it is important to note that although Beijing has demonstrated increased risk-tolerance in its exercise of power, the strategic gains of its approach are questionable. In fact, Chinese assertion has often proved strategically counter-productive. For instance, it has provided greater impetus for a closer India-U.S. relationship. Nevertheless, China’s centrality to the trade and technology ecosystems of the Indo-Pacific has complicated the responses of countries in the region.
U.S. Realignment: The final trend concerns America’s global position. U.S. foreign policy has undergone a gradual reassessment over the past decade. Ever since Barack Obama’s presidency, there has been a recalibration of America’s interests and commitments abroad. This process has been accompanied by a deeper, and perhaps discomforting, realization in Washington of the limitations of American power in addressing global challenges and future competition.
At a policy level, the Obama administration’s “Pivot to Asia” was an early manifestation of this effort. It was the precursor to the Donald Trump administration’s rather blunt acknowledgement of the Indo-Pacific as the domain where “geopolitical competition between free and repressive visions of world order” was taking place.
Under the Biden administration, there have been elements of continuity coupled with substantive and stylistic adjustments in U.S. policy towards shaping a “free and open” Indo-Pacific. A key component of this shift has been a greater appreciation of working with allies and like-minded partners, without being limited by traditional institutional architectures. In a sense, there is clarity on the direction of the Biden administration’s policy. Yet, it is limited by a lack of specifics, particularly when it comes to the future of the U.S.’ economic engagement in the Indo-Pacific.
A World Between Orders
As the previous section discussed, the trend lines indicate that the world is undergoing a transition between orders, with developments in the Indo-Pacific likely to have a deep influence on the future architecture of world order. Consequently, instability, volatility and flux are likely to be the norm in India’s periphery, since it lies at the center of this strategic geography.
India’s outlook towards the Indo-Pacific is primarily driven by a desire to ensure that the extended neighborhood remains conducive to its developmental goals – both in terms of economic relationships and political orientation. As such, more than anything, it remains acutely attentive to the deepening tensions in U.S.-China relations. However, the future direction of the Sino-American relationship remains open and should not necessarily be interpreted as a definite zero-sum game. As a recent report by a group of Indian analysts and policymakers argued, “the balance between cooperation and contention in China-U.S. relations is likely to keep shifting, not just with changes in their leaderships but with changes in their relative power.” In other words, while competition is likely to be the dominant feature of the U.S.-China relationship, this is not Cold War 2.0.
The uncertainty concerning China-U.S. relations presents not only challenges for middle powers, but also opportunities
There are three primary reasons for this difference. The first is capabilities (or lack thereof): while the U.S. and China both view the other as a revisionist force, when it comes to shaping a new world order, they are limited by their own resources, capacities, and domestic politics. Second, the nature and complexity of current global challenges, like climate change, extremism and terrorism, or effective governance of emerging technologies, cannot be tackled without global cooperation, even between rival powers. Third, unlike the Soviet Union, China is deeply interlinked with the global economy. It is the world’s largest trading nation, ranks second in terms of trade in services and consumer market, and remains a major investment hub, attracting Western capital.
While this uncertainty around the China-U.S. dynamic presents challenges for middle powers like India, France, Brazil, Russia, Turkey, and Israel, it also presents opportunities. On the one hand, Sino-American competition will likely increase the bargaining power of middle powers. With both China and the U.S. seeking to expand their circles of influence, middle powers will enjoy opportunities to strike bargains that serve their interests. On the other hand, in domains where China-U.S. competition escalates into zero-sum contests, such as the case with 5G technologies, these bargains are unlikely to come cheap, and will potentially impinge upon the strategic autonomy of middle powers.
Each of these shades are evident in India’s recent policy actions. In responding to the fluidity in U.S.-China ties, New Delhi has primarily worked to deepen its ties with Washington while adjusting to a new, factious relationship with Beijing. This approach is likely to persist, primarily due to the nature of the evolving external environment, India’s political and capacity constraints, and its more proactive quest to sustain and expand its strategic autonomy.
India’s Ties with the United States and China
There has been tremendous progress in India-U.S. cooperation over the past two decades, as is evident in the expanding breadth and depth of the relationship. The United States is among India’s biggest trading partners. Security ties have also deepened, particularly picking up pace after the signing of foundational defense agreements. For instance, the U.S. designated India as a Major Defense Partner in 2016. As per the U.S. Department of State, defense trade with India has expanded “from near zero in 2008 to over $20 billion in 2020.”
More significantly, there is an increasing congruence over strategic interests. India’s willingness to strengthen maritime cooperation with the U.S. in the Indian Ocean region and effort to deepen collaboration for delivering public goods across the Indo-Pacific are examples of this trend. Despite concerns among some in India over the potential vulnerabilities that greater dependencies on the U.S. can bring, bilateral cooperation is likely to remain robust. This is because, in part, this engagement is driven by India’s developmental imperatives, and in part, it is a result of Beijing’s changing attitude towards New Delhi.
Over the past decade, despite growing trade and investment along with cooperation at multilateral forums like BRICS and the Shanghai Cooperation Organization (SCO), India-China ties have soured. During this time, Chinese policies have shifted from being unaccommodating of India’s interests and rise to adversarial and hostile. The former was evident in Beijing’s decade-long obstruction on the designation of Pakistan-based Masood Azhar as a UN sanctioned terrorist (to which it finally relented in 2019), as it has been in its unwillingness to accept India’s membership of the Nuclear Suppliers Group. It was also clear in China’s lack of regard for India’s concerns over the China-Pakistan Economic Corridor violating Indian sovereignty.
The hostility, meanwhile, has been witnessed in developments along the disputed India-China boundary (“Line of Actual Control”), which in 2020 saw the conflict’s first casualties in 45 years. Consequently, any future India-China engagement is likely to be encumbered by low levels of political trust, tensions along what is likely to remain a live border, and Beijing’s anxieties regarding the India-U.S. relationship.
Amid these developments, Indian policymakers have sought to adjust to the new dynamics through a mix of external and internal balancing — such as engaging with the Quad countries and expanding defense procurement — and efforts to reduce economic dependencies on China. Given the nature of Sino-Indian trade, addressing economic vulnerabilities will be a long-term process. In the interim, this orientation to reduce dependence has resulted in restrictions on Chinese investment and was key to the Indian government’s decision to exit the Regional Comprehensive Economic Partnership agreement.
At the same time, India has also sought engagement with China bilaterally and at multilateral forums in the hope of arriving at a new modus vivendi with Beijing. This has been evident in the informal summits that were held between Prime Minister Narendra Modi and President Xi Jinping, the 14 rounds of talks between military commanders along the LAC, and engagements at groupings like BRICS and the SCO.
Values, Interests, and Trust
Another strand of Indian policy to navigate the choppy waters of the emerging world order has been through “minilateral” arrangements, or issue-based coalitions. This is in line with the traditional Indian approach of seeking opportunities for multipolarity to preserve strategic autonomy. Speaking at the Fifth Indian Ocean Conference, in December 2021, Indian External Affairs Minister S. Jaishankar argued that “we are now entering a world of greater plurilateralism.” The key aspect of this dynamic, he said, would be the emergence of “greater localization and arrangements of pragmatism.”
The evolution of such arrangements is partly a product of the frustrating limitations of established multilateral institutions to deliver effective outcomes, accommodate the rise of emerging powers like India, and evolve to adapt to new geopolitical realities. The WHO’s response to the COVID-19 pandemic or the controversy around the U.S. blocking of the appointment of members to the WTO’s Appellate Body, are cases in point. In part, the trend towards “minilateralism” is a product of the structural advantages of such arrangements. These ad hoc groupings bring together states to devise common policy responses that are unencumbered by legacy or institutional structures. In that sense, they are theoretically more goal-oriented and products of shared values and interests.
A shift from free to strategic trade is likely to limit the potential for rapid, broad-based growth, which is required for India’s developmental needs
India’s involvement in the Quad framework with the U.S., Japan, and Australia, or the recent “new Quad” dialogue with the U.S., Israel, and the UAE are examples of such arrangements. While the latter is still in a nascent stage, the former has reached a certain level of maturity. This is reflected in the expansive agenda, covering health, climate, infrastructure, and critical technologies, that was announced at the September 2021 leaders’ summit.
In addition, India is engaged in several issue-based trilateral dialogues. For instance, the dialogue between India, France, and Australia focuses on the three pillars of maritime safety and security, marine and environmental cooperation, and multilateral engagement. Another example is the Supply Chain Resilience Initiative launched by India, Japan, and Australia or the new trilateral conversation between India, Japan, and Italy on partnering for a “free, open, inclusive Indo-Pacific.”
Given the novelty of some of these formations, their effectiveness in delivering desired outcomes remains to be seen. However, what is clear is that high levels of political trust between the partners is sine qua non for their success. This is because in an economically interconnected yet politically fragmented world, economic engagements of the future will likely be far more subservient to the logic of politics and security. The nature of China’s rise, competition over emerging technologies, and the populist backlash against economic globalization are shaping the phenomenon of strategic trade. In other words, comparative advantage or economic priorities are unlikely to remain the key determinants of decisions on trade; instead, political factors and national security imperatives will have a greater sway on countries’ trade policies.
At one level, this new environment creates fresh opportunities for India to attract investment, address vulnerabilities, enhance resilience, and explore development in sectors critical to national security through bubbles of trust with like-minded partners. On the flip side, however, a philosophical shift from free to strategic trade is likely to limit the potential for rapid, broad-based growth, which is required for India’s developmental needs. Consequently, it is essential for India to persist with and encourage economic opening, while balancing security concerns. This is a dilemma that Indian policy will have to contend with in the years ahead.
In doing so, democracies like the U.S., Israel, Australia, Japan, the European Union, and countries in East Asia will be vital partners. However, for collaboration among these partners to succeed, it is imperative that political trust be preserved and deepened. This requires greater alignment on strategic interests, particularly when pursuing beneficial relations with China. Engagement with Beijing – whether on trade, technology, or politics – must not undermine the strategic raison d’etre of these groupings of trust. Such a situation will invariably render these groupings ineffective, and bilateral relationships with these countries transactional.
India’s outlook towards the Indo-Pacific has been primarily driven by the need to ensure the extended neighborhood remains conducive to India’s developmental goals. However, three factors impinge on India’s policies. First, China’s rise as a major power and its increasingly hostile approach to India’s rise; second, the changing nature of great power relations between China and the U.S.; and third, the emergence of the phenomenon of strategic trade, with political and security concerns emerging as key variables in decisions on economic policy. Nurturing circles of trust with like-minded partners, therefore, is likely to be a key component of Indian policy going ahead.
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