How India can use economic ties as tactical weapon to disturb China-Pakistan bonhomie

Why does Pakistan resort to asymmetric war against India?
It’s more cost-effective than conventional warfare.

Why would India be reluctant to launch headlong into a conventional war against Pakistan?
Again, it’s about costs.

File image of Chinese president Xi Jinping and Indian prime minister Narendra Modi. Reuters

File image of Chinese president Xi Jinping and Indian prime minister Narendra Modi. Reuters

The gains for India would not be worth the investment in such a war. In modern wars, the consideration of collateral damage is critical. This is particularly true of countries that are focussed on the well-being — economic and otherwise — of their people and nurture the vision of greatness. That is the reason India’s war against Pakistan, a rogue country by many descriptions, has to be war by other means; low-cost means, that is.

Diplomatic isolation and the international shaming of Pakistan is one way to go about it. But it is not likely to make much of a difference to a country that already has a poor reputation. Sanctions have not been of much consequence earlier. Perhaps a better option is to target its biggest source of strength — China, which has been Pakistan’s all-weather friend. This friendship gives the latter the delusion of strength, and invincibility when it comes to India. It would help us if we analyse the nature of the relationship between the two and leverage our economic equations with China to make Pakistan irrelevant.

China’s interest in Pakistan is as much about its geostrategic requirements as its economic objectives.

The control over the deep sea port in Gwadar in Balochistan will allow it a strategic presence in the world’s most important oil trade and shipping routes besides connecting it to West Asia and South and Central Asian countries. Moreover, it brings in close proximity to the world’s biggest oil reserve. The Xinjiang-Gwadar economic corridor through Pakistan is more critical to China’s economic interests than those of the former. That explains why it announced a massive investment of $46 billion in projects in Pakistan not long ago. The cost-benefit analysis works overwhelmingly in its favour.

China’s economic involvement with India is not small either. The latter is among India’s biggest bilateral trade partners, the volume of transactions being worth more than $70 billion. In the case of Pakistan, it is a meagre $12 billion or thereabouts. However, the balance of trade is massively against India. According to information provided in Parliament, it stood at close to $45 billion in 2015-16 with India’s exports amounting to only around $8 billion.

The unequal trade means India provides a healthy market for China to export its goods while the reciprocation from the latter’s side has not been healthy. With the Chinese economy already on slow growth mode, India can hurt it more by limiting the market for it by setting up barriers to its exports. In any case, India has a valid reason to do so. Cheap Chinese goods such as toys, mobile phones, other electronic gadgets and clothes, produced at very low labour costs in China, make it difficult for Indian companies to compete. The government’s 'Make in India' initiative won’t be a success in these commodities if there’s no restraint on Chinese goods.

Can India make it look like a punitive measure to China for its total support to Pakistan? It can. It can make it plain to China: “Don’t expect us to be charitable to your business if you keep hobnobbing with our enemy. Don’t take access to our markets for granted.” However, it’s difficult to gauge what the reaction would be like, given the ties between the two countries have been tenuous over the decades.

China’s interest in Pakistan is as much about its geostrategic requirements as its economic objectives

A better option for India would be to deepen economic engagement with China. A lot of Chinese firms have invested big in India over the last decade. The latter can invite investments from China for its projects. The more the country stays invested in us, the lesser the possibility of it extending blanket support to Pakistan in case of a situation of war. It’s more likely to play a neutral role to protect its interests in both countries. That would virtually mean Pakistan standing alone or on a much weaker footing than before vis-à-vis India.

In the final analysis, it’s the consideration of economy that could separate allies China and Pakistan just as it could bring them closer. Mature countries seek to maximise their economic self-interest, not get involved in wasteful engagements such as war.

India should give it a thought while dealing with China.

Updated Date: Sep 28, 2016 13:23 PM

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