Not Just Another Recession
Why the Global Economy May Never Be the Same
India has cut a sorry figure in recent times. It is ailing internally, wracked by political turmoil, social ferment and economic stagnation. By the end of 1989, after five years in power, the Rajiv Gandhi government had achieved the dubious distinction of being on bad terms with all its neighbors. The successor minority National Front government (1989?90), led by V. P. Singh, managed to destroy Indian society more effectively than any enemy could have dared to hope, by pitting Indian against Indian. And the following transitory government of Chandra Shekhar floundered and flip?flopped embarrassingly in trying to respond to the Persian Gulf crisis. In the process it succeeded in alienating both Baghdad and Washington without winning any friends.
Not many outsiders would shed tears at the sight of a friendless and forlorn India. Indians might receive more sympathy if, instead of forever blaming others, they accepted responsibility for the consequences of their own actions in both domestic and foreign policy. A good beginning would be to recognize that the new revolutionary international times present India with a stark choice. It can persist with an inward-looking policy that marginalizes the country and slides it inexorably into increasing international irrelevance. Or it can take a good hard look at itself and at other former developing countries that have achieved success essentially by dint of their own efforts, and then chart a radically new passage to a brighter India.
It is for India to choose between the comforting familiarity of the old order with its corollary of economic incoherence and international insignificance, or the challenge of exploiting the opportunities opening up in the new world order. The latter choice would entail abandoning the bunker mentality induced by forty years of the Cold War.
A growing and vibrant economy for India requires a radical reorientation of policy away from controls imposed by a heavily interventionist state. Four decades of state?guided development have given India slow growth, rising unemployment and growing dependence on imported capital goods and technology. In international economic exchanges India’s policy failures are reflected in a falling share of world exports, a depreciating currency and an inability to export sophisticated manufactures.
The catalyst for a new economic philosophy for India must be the realization that planned economic development has proven unable to improve its citizens’ living standards and similarly unable to maintain global competition with the Western system of market economics. India’s new economic order will have to rest on three planks: deregulation, liberalization and reduction in government expenditures in defense spending, salaries and subsidies. The combination of democratic populism and bureaucratic elitism has given India the worst of both worlds and anchored it firmly to a Third World status. To lift itself out of the Third World and into the ranks of the First, India needs to establish international investor credibility by unleashing market forces and behaving in a fiscally responsible manner at home.
There was some justification for the philosophy of economic development adopted by India at independence. Keynesian interventionism had triumphed against the adversities of the Great Depression, and the Marshall Plan had reinforced faith in the visible hand of government. India’s economy grew three times as fast in the 1950s and 1960s as during the British Raj, and faster than the rate of British growth during its comparable stage of development in the eighteenth and nineteenth centuries. The public sector was instrumental in transforming an exploited plantation economy into a vibrant and diversified industrial power in remarkably short time.
More recent results, however, include economic stagnation, structural rigidity and backwardness, desperate infusions of international capital to stave off defaults and the persistence of poverty and inequality. Although market forces were allowed to play a greater role in India in the 1980s, the country still has a substantially regulated economy. By 1991 years of budgetary indiscipline by successive governments had brought India’s economy to the brink. Before the International Monetary Fund (IMF) came to the rescue with an emergency transfusion of capital, foreign exchange reserves had fallen in January 1991 to a mere two weeks’ worth of imports. Persistent current account deficits saw foreign debt climb to more than $70 billion, with a third of export earnings going to debt servicing. For the 1991?92 fiscal year the budget deficit is projected to equal almost 8.5 percent of gross domestic product.
The government of P. V. Narasimha Rao, which came to power after the assassination of Rajiv Gandhi during elections in May 1991, announced liberalization measures and a new industrial policy that by Indian standards were quite radical. With an eye to standard?bearers of the socialist tradition within the Congress Party, the prime minister denied that he was jettisoning the public sector entirely, that the policy represented a departure from Nehruvian socialism or that it was externally dictated. The reforms, however, are neither as rapid nor as extensive as the situation requires.
In launching the new economic policy the Rao government emphasized the need to shed any inferiority complex and squeamishness in seeking inflows of foreign capital for investment. The balance?of?payments crisis of 1991, coupled with the dramatic worldwide trend toward market reforms, convinced many Indians that their country had little alternative to modernizing its industrial and export structure and entering the world economy. At a time when other countries were actively pursuing the infusion of new technology, India’s tightly regulated regime perpetuated a noncompetitive environment. Like their former Soviet colleagues, Indian planners were mesmerized by investment targets rather than efficiencies. The collapse of the centrally planned economies of eastern Europe and the Soviet Union—which took one?fourth of India’s exports—has made the international economic environment even frostier for India.
It is time therefore to jettison socialist slogans, to dethrone the state from the commanding heights of the economy, to let loose the price mechanism among the sheltered world of Indian businesses and to subject the Indian economy to the competitive pressures of market forces at home and abroad. The state could provide the indispensable legal context for a stable market, and the private sector could provide the growth and jobs.
If the stifling regulatory regime could be lifted and the dead hand of the state removed, India could then exploit its superb base for rapid and substantial industrial expansion. The country has an enormous pool of sophisticated scientists and technicians and an untapped reservoir of entrepreneurial talent. The policies of self?reliance followed by Jawaharlal Nehru and his successors have provided India with the capacity to grow quickly. The future could yet be vibrant and dynamic, if free market policies are given a chance. If they are, then outsiders would do well to remember that India is bigger than the established (Taiwan, Hong Kong, South Korea and Singapore) and emerging (Malaysia, Thailand and Indonesia) dragons of northeast and southeast Asia combined.
A fresh beginning in India’s foreign policy must start with the country’s strongest neighbor in south Asia. Relations between India and Pakistan have been characterized by a peculiar dualism: official relations are based on a permanent state of paranoia and a zero?sum mentality; yet ordinary people continue to recall past contacts with nostalgia and to hanker for closer cultural relations today. Religious differences notwithstanding, there is an underlying integration that unites the people of northern India with those of Pakistan.
Possibilities for conflict between India and Pakistan existed from the beginning. One of the central concerns of Indian foreign policy was to stress Asian solidarity; the ideology that created Pakistan, however, emphasized profound and irreconcilable differences between Asians. Both sought pan?national unity and identity, but competitively—India in Asianism, Pakistan in Islam. Pakistan has been ruled by the military for most of its history; India has been a functioning democracy almost without interruption.
The fact of secular democracy in a neighboring country often seemed threatening to Pakistani military rulers. They were reluctant to ease travel restrictions for fear their own citizens would be infected by radical democratic sentiments. Similarly they were unhappy with Indian radio and television programs, easily received in Pakistan, which stressed cultural bonds between the two countries and promoted the benefits of democracy.
Territorial and ancillary disputes between India and Pakistan stem directly from the 1948 partition: Which of the two was to be considered the successor state to British India? Kashmir was—and is—the major bone of contention, still a symbol of the Indo?Pakistani conflict. India is the status quo power in the Kashmir dispute, in control of the strategically and emotionally vital valley; Pakistan is the irredentist power, dissatisfied with the status quo but lacking the means to overturn it.
Hostility between India and Pakistan deepened during the 1980s, contrary to international trends toward cooperation and reconciliation. Pakistan had recovered from its defeat by India in 1971, regained confidence in dealing with its neighbor as an equal and showed the ability to exploit windows of opportunity to embarrass and press India; for the calm in India?Pakistan relations in the 1970s had been based on a superior?subordinate relationship rather than on a Pakistani relinquishment of long?held claims.
The Pakistani regime of Muhammed Zia ul?Haq consolidated its hold on power and brought some stability and order to domestic politics. By contrast a number of different separatist movements and insurgencies sprang up and intensified within India, leading to an apparent crisis of governability. Regionally India was embroiled in disputes of varying intensity with Bangladesh, Nepal and Sri Lanka. Internationally the Soviet invasion of Afghanistan and the Vietnamese invasion of Cambodia had a dual effect on India?Pakistan relations. For Pakistan it meant elevation to the status of a frontline state in the superpower rivalry, and hence increased economic aid, military supplies and diplomatic support from the West and the Arab and Islamic blocs. India by contrast was put on the defensive in seeking to explain its continuing close ties to Moscow, Phnom Penh and Kabul.
For domestic as well as bilateral reasons India continued to oppose—and Pakistan to favor—the prospect of a fundamentalist Islamic regime in Kabul after the Soviet withdrawal. The latent convergence of interest between India and the United States on this point has been reinforced by the breakup of the former Soviet Union. Pakistan wants to establish closer ties with the six Muslim republics of the former Soviet Union, but these central Asian republics fear the rise of Islamic fundamentalism within their borders as well as in the vicinity. For this reason, in early 1992 Pakistan finally ceased supplying weapons to the Afghan rebels and instead backed the U.N. peace plan for Afghanistan. At the same time nationalistic ferment in the former Soviet Union has also strengthened separatist sentiment in adjacent Kashmir, to the point where events could easily get out of control. This is why Pakistan thwarted a march by Kashmiri separatists across the international ceasefire line in February 1992; a few militants killed by Pakistani troops was preferable to another war with India.
The biggest obstacle to peace in Kashmir is not an insurgency armed and financed by Islamabad, but a policy vacuum in Delhi. The history of Indian control over Kashmir since 1948 has left several harmful legacies for the country as a whole. Indians take rightful pride in being the world’s largest democracy, but the forcible occupation of Kashmir has damaged the meaning and exercise of democracy. Democratic institutions have been corrupted in Kashmir by repeated vote?rigging and a refusal by the central government in Delhi to accept the province being ruled by anything but a pliant administration. Indian operations in Kashmir in the last two years have been dogged by allegations of police and army brutality. Feeding on earlier allegations leveled at the Indian peacekeeping forces in Sri Lanka, they have served to tarnish the image of the Indian security forces. Whether the charges are eventually substantiated is less important internationally than the fact that they are widely reported in the Western press.
The attempt to retain Kashmir within the Indian union has undermined the meaning and operation of federalism as well. Authorities in Delhi have shown little respect for the wishes of the people of Kashmir. Moreover, by giving special status to Kashmir, the Indian constitution discriminated against other states and fueled demands for matching grants of special status. The effort to integrate Kashmir into the Indian mainstream has been a costly drain on the Indian exchequer: the central government has poured far more money into the province than it gains from it.
In the past two years the moral, political, economic and international costs of India’s Kashmir policy have been only too apparent. The uprising in Kashmir in 1990 saw a near-complete paralysis of the state administration. Initial attempts to treat the uprising simply as a law?and?order problem by the imposition of curfews and strong?arm tactics by police, paramilitary and military personnel were intended to intimidate and coerce the separatists. Instead they produced the opposite effect of strengthening separatist sentiment and recruiting a broader spectrum of adherents to the cause of liberating Kashmir from Indian control.
India has four options in regard to Kashmir. First, it could seek to invade and annex the part of Kashmir occupied by Pakistan. This is impractical. International condemnation of India and support for Pakistan would be massive and decisive. Nor could India exercise "normal" control over a large and hostile Kashmiri population indefinitely. India has enough insurgency and terrorist problems of its own without taking on more.
The second option is to maintain the status quo. This is to persist in a demonstrably unsatisfactory situation. The status quo option will simply eat away at the fabric of Indian society, economy and polity.
The third option is to submit the Kashmir dispute to international adjudication or arbitration. By taking their conflict to the World Court and abiding by its verdict, India and Pakistan would do much for the cause of achieving a world in which international relations were based on law. This would set an invaluable precedent for resolving all of India’s bilateral disputes with smaller and larger neighbors alike and allow India to reclaim the high moral ground in world affairs.
The fourth option is to withdraw troops from Kashmir, stop treating the problem as a law?and?order issue and tackle the political roots of conflict: let the people of Kashmir decide their own fate in an honorable plebiscite. If they wish to be independent or to join Pakistan, then so be it. A resolution on the basis of self?determination would reinforce India’s democratic institutions and principles, strengthen its federal structure and practices and close a financial drain. It would ease the communal tensions internally between Muslims and Hindus. An unequivocal act of self?determination in Kashmir, combined with a proclamation of the supremacy of India’s secular laws and institutions over religious laws in areas such as divorce and maintenance support, would do much to defuse the Hindu backlash that threatens to destroy tolerance and secularism in the country.
In short an honorable democratic solution to Kashmir would strengthen the Indian state, underline its political values and cement the cohesiveness of Indian society.
There would also be external benefits. A popular or juridical solution would shed a major liability in courting relations with Arab and other Islamic states; eliminate the most potent source of tension in relations with Pakistan; remove the basis for an anti?India security cooperation between China and Pakistan; rid India of its biggest international embarrassment; undermine the basis for a strategic partnership between Pakistan and the United States, and so remove a perennial irritant in Indo?U.S. relations.
If the Kashmir dispute could be resolved, India’s regional role would acquire enhanced credibility. India has a national outlook in economic terms, but it has an international outlook in political terms. It has long sought a global leadership role; nonalignment was a foreign policy strategy to this end. But India lacks a coherent strategy for an integrated regional role.
India’s neighbors have tended to view it as overarmed, overweening and hegemonical. Anxious to project itself on the world stage, India has appeared irritated at regional obstacles in its path to the status of a world power. In a remarkable tribute to a fatally flawed foreign policy, India finds itself without a network of useful friendships in its own region. Commentators contrast India’s supercilious attitude to regional neighbors with Indonesia’s finesse in handling smaller neighbors in southeast Asia. Similarly India’s potential lies first and foremost in its neighborhood, but instead of realizing this potential India has frightened all its neighbors.
Indian foreign policy has been similarly myopic in neglecting friendships in the Middle East. Efforts to counter Pakistan’s influence among the Islamic countries of the Arab world have failed to bear fruit—India’s only real friend in the Middle East has been Iraq. Similarly the one genuine friendship with a southeast Asian country, namely Vietnam, was no less of a diplomatic liability in the 1980s.
Of greater bilateral, regional and international import is the India?China relationship. If in India’s relations with Pakistan there is much that unites them, India and China have little in common except a long and disputed border. On the Kashmir dispute the Indian case is strong, and the Pakistani case stronger still. On the Sino?Indian border dispute, the Indian case may be weak, but the Chinese case is still weaker. Since the 1962 war, three obstacles have inhibited normalization of China?India relations: the Soviet factor, Tibet and the border dispute.
With the collapse of communism and the dissolution of the Soviet Union, the Soviet factor has been transformed from an impediment into a spur to improving. Sino?Indian relations. The end of the Cold War and the simultaneous improvement of Moscow’s relations with Beijing and Washington dissipates the geostrategic community of interest between India and Russia and threatens to leave India internationally isolated. Delhi’s own hesitant probes toward a rapprochement with Beijing used to arouse suspicion and unease in Moscow; they now produce smiles of encouragement. China in turn has become more receptive to Indian overtures, for the closeness of the Russian relationship is no longer viewed as a threat to Chinese security interests.
After months of manueuvering by both sides, Li Peng was able to pay a six?day visit to India in December—the first Chinese prime minister to do so since the 1962 war. The Chinese leader said during the visit that neither country wished to see the boundary dispute remain an obstacle to the development of bilateral relations. China and India signed three agreements: one on the opening of consular offices in Bombay and Shanghai, a second on space cooperation and a third on border trade.
The Tibet obstacle, although not easily soluble, is a manageable problem. Both China and India are committed to preventing sentiments over Tibet from damaging their broader relationship. This was evident when Indian police used uncharacteristic force in dealing with Tibetan demonstrators protesting the Chinese prime minister’s visit. In the joint communiqué China expressed concern about the activities of Tibetans living in India, while India reiterated its position that Tibet was a part of China. As one leading newspaper put it in an editorial, the red carpet of welcome for the Chinese prime minister was not stained by expressions of dissent over China’s misdemeanors in Tibet.
The most serious and intractable obstacle remains the border dispute. While India’s approach to the border conflict is historical, China’s is strategic. India finds its whole relationship with China still frozen in the time warp of the 1962 war. A democratic solution to the border dispute is inapplicable because of the sparse population in the inhospitable regions under dispute. A judicial settlement could not cope adequately with the differences in historical and strategic approaches by India and China.
China’s negotiating position is based on the premise that there is a genuine territorial dispute arising out of conflicting interpretations of the authenticity of British Indian claims in the era of imperialism. The benefits to India of a broad compromise are obvious. A settled border with China would facilitate the stabilization of the troubled northeastern region in India’s domestic politics and reduce opportunities for mischief in its external relations with Bhutan and Nepal. It would also ease the task of securing Pakistani agreement to convert the line of control in Kashmir into an international border, thereby resolving India’s most serious foreign policy problem. Yet influential Indians continue to make any accommodation difficult by insisting that the Chinese proposals "will only legitimize aggression or illegal occupation of another nation’s territory."
Since the Second World War the most successful bilateral relationships for India and the Soviet Union had been with each other. Relations between Moscow and Delhi had been dynamic, stable and resilient. The dissolution of the Soviet Union, however, raises important questions.
The Soviet breakup destroyed India’s most important source of defense supplies, took away a major export market, left India more vulnerable to hostile resolutions at the United Nations, introduced fresh instabilities in its northern neighborhood and brought new competitors for foreign aid. The net result is to make links with the West more attractive to India. For example, a high?level U.S. military delegation held talks with Indian counterparts in Delhi in January 1992 and agreed to programs of reciprocal training and participation in regional conferences and seminars.
Efforts will nonetheless continue to preserve friendly ties with the Commonwealth of Independent States. Indian Foreign Minister Madhav Singh Solanki visited Russia last November. India and Russia finalized a new friendship treaty on January 15, 1992, and signed memoranda of understanding on trade and supplies of defense and power generation equipment. President Boris Yeltsin has agreed to visit India, and Delhi agreed to grant 32 billion rupees of credit to Russia to pay for Indian goods as well as 150 million rupees in humanitarian assistance. India has also moved aggressively to establish political ties (the 12 Commonwealth states were granted formal recognition by India on December 16, 1991), military contracts (Ukrainian enterprises are fulfilling long?term agreements between Delhi and Moscow) and economic agreements (a joint venture for building personal computers in Uzbekistan) with the newly independent republics. Last November the Indian deputy commerce minister said that rupee settlements in India’s trade with the Commonwealth states would terminate in 1994?95. After that date India intends to build its economic relations with the sovereign republics on principles of a market economy.
The intimacy of the Indo?Soviet relationship has historically been based on conjunctions of military, economic and political Delhi must deal with the breakup of the Soviet Union and the resulting emergence of an essentially new world order.
Indians are unclear about what the "new world order" means in practice. Some worry that it could even be a cloak for a more intolerable Pax Americana: the eagle spreading its wings. Indians were impressed that the Gulf War was prosecuted through the United Nations, but they are not entirely confident that this will always be the model for U.S. military intervention abroad. Before the Gulf War the new world order was to have encompassed a series of interlocking global partnerships: between America, on the one hand, and a united Germany?led Europe and Japan, on the other. The lackluster performance of Germany and Japan in the gulf crisis, however, raised questions about their role.
India could be even more worried about the prospect of the United States and Russia colluding to impose a joint hegemonism upon the rest of the world. The Gulf War showed that when Washington and Moscow find common ground, New Delhi must either go along or risk being isolated. That war suggested two policy lessons for India: that Russian support for friends and allies can no longer be taken for granted, and that America can mobilize impressive diplomatic resources as well as being an unchallengeable economic and military power. Prudence suggests therefore that countries with strong ties to Russia would be well advised to undertake discreet bridge?building with the United States.
Discretion has not always been a strong suit of those in charge of Indian foreign policy. The sacrosanct status of nonalignment, with an attendant dose of anti?Americanism, was apparent during the Gulf War. The Shekhar government initially permitted refueling of U.S. aircraft in Bombay on their way to the gulf, provoking a storm of protest about violating India’s nonaligned credentials, and the permission was rescinded. After the 1991 general election the Rao government took note of India’s own economic woes, of even worse Soviet economic ills, the dissolution of the Soviet grip on eastern Europe, the Soviet Union’s breakup and America’s enhanced global importance—and concluded that a major improvement in Indo?American relations was required.
The end of the Cold War means an end to rival client regimes by the two superpowers in various parts of the world. This should induce greater caution in both India and Pakistan, and encourage bilateral conflict management. It also puts both countries under greater international scrutiny in regard to their nuclear programs. Simultaneously, both countries will become competitors in the search for infusions of foreign capital and technology. The emergence of a number of impoverished Commonwealth and east European states has meant that there are more and more countries competing for a finite pool of foreign aid. The enhanced leverage of aid donors in the post?Cold War era should produce reductions in Indian and Pakistani defense budgets, greater attention to market?driven economic programs and hopefully even wider appreciation of complementary interests.
The late 1980s had already witnessed an improvement of the political climate between India and the United States. The reinterpretation of India’s role in south Asia was helped by U.S. perceptions of Rajiv Gandhi as being more liberal in his economic policy, and by a reassessment of India as an independent power that could be a force for stability in a troubled region. Thus the United States openly approved India’s role in Sri Lanka and the Maldives, and Washington’s approval was noted with satisfaction in Delhi. A Defense Department official was quoted as saying that the United States had advised Pakistan on the inadvisability of supporting Kashmiri militants. Indeed U.S. and Soviet interests in Kashmir merged on two crucial points in the 1990 crisis: both agreed on the need to preserve the peace and on the wisdom of a bilateral settlement of problems between India and Pakistan.
The end of the Cold War will have another odd impact on the foundations of Indo?U.S. relations. Analysts as well as officials underestimated the extent to which there was a doctrinal underpinning to the cool relations between Delhi and Washington. For more than four decades, a policy of containment helped to sustain an unprecedented interventionist approach to world affairs by the United States. The end of the Cold War may not necessarily see America return to its traditional isolationism, but containment will no longer provide the ideological underpinning for its global policy. Active involvement in international relations will need to be pursued on some other basis. On the other side, nonalignment in India’s foreign policy was the doctrinal antidote to the U.S. policy of containment. The end of the Cold War means that nonalignment joins containment in fading into obsolescence.
Thus, whatever new principle underpins Indian foreign policy, the prospect of America and India being at odds over doctrine are considerably diminished. If India turns toward regionalism, the other major international trend in recent times, it would also bring Indian foreign policy into harmony with the new principles of U.S. foreign policy.
The process of an emerging new political alignment was evident when Washington dropped its objections to the sale of a Cray supercomputer to India. The United States also helped India to get $1.8 billion in credits, going out of its way to smooth things over with the IMF. To help meet increased costs of importing oil in the wake of the Iraqi invasion of Kuwait, India was hoping to receive about $400 million from the IMF’S Contingency and Compensatory Financing Facility. With a good word from Washington, Delhi in fact received $1 billion, and was the first developing country to get a loan from this source. India was given another $777 million as standby credit, negotiated in the remarkably short time of six weeks. In November 1991 the IMF approved another $2.2 billion standby loan arrangement, and in December the World Bank cleared a $900 million credit and loan package.
U.S. reluctance to transfer sensitive technology may fade, as commercial calculations will replace security considerations as the chief criterion in deciding each case. The one area in which this will not happen without a clarification of Indian intentions is nuclear technology.
Both India and Pakistan are assumed to have nuclear weapons capacity. India has militantly refused to sign the Nuclear Nonproliferation Treaty (NPT) and has plans to install 10,000 megawatts of nuclear power generating capacity. Its space and rocket technology can be converted to ballistic missile delivery capabilities, and a series of pronouncements and exhortations from authoritative and nonofficial sources on the advisability of proceeding with the nuclear option seem to indicate that the political climate is being created for nuclear weapons acquisition.
That nuclearization would enhance India’s security with regard to China and Pakistan remains a contested proposition domestically. The acquisition of nuclear weapons by India would also seriously aggravate its relations with virtually all the other states of the south Asian region, which are suspicious enough of the motives and policies of a nonnuclear India. The regional security environment would deteriorate greatly, accompanied by a rise in the levels of fear and distrust. In the meantime there have been two sets of international developments that should moderate India’s historical suspicion of the NPT. In 1991 France and China agreed to join the NPT regime, thereby bringing all known nuclear weapons powers within the fold. Second, the superpowers have at long last begun to fulfill their part of the NPT bargain in the Intermediate?range Nuclear Forces treaties and the Strategic Arms Reductions Talks, and more recently in the reciprocal cycle of unilateral nuclear cuts announced by President Bush and former President Gorbachev.
Nonalignment, like the policy of containment, is in a state of terminal fatigue and irrelevance. The alternative, however, does not force India into the role of supplicant. The Gulf War demonstrated America’s dominance in international affairs, but it also showed the limits to the exercise of unilateral power by America. Political and economic realities have brought about strategic retrenchments all around the world, a call for greater burden?sharing and the promotion of regional management of regional conflicts. What Washington seeks is not global hegemony but global and regional stability resting on interlocking balances of power. In a new world order there could be a reciprocal underpinning of a global order centered on America and a south Asian balance based on India.
In a memorable speech ushering in India’s independence, Jawaharlal Nehru said: "A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends." The age of the Cold War has ended. Will India remain a prisoner of the past? Or will the times bring forth a leader bold and visionary enough to break the ideological straitjacket insulating Indian domestic and foreign policy from the freshness and vitality flowing across Europe?
Perhaps only a sense of shock can infuse India with the necessary urgency to change to a radically more productive domestic policy and a dramatically more cooperative policy in its bilateral, regional and international relations. The socialist legacies of the Nehru era are anachronistic impediments to India’s realizing its full potential as a major and dynamic economic power. The conflict with Pakistan is an unnecessary nuisance, that with China a major handicap. Friendship with Russia is a wasting asset if not backed by corrective economic and diplomatic surgery. Claims to leadership of the Third World and the nonaligned movement substituted the mesmerism of numbers at the United Nations for the real world of political, military and economic clout. It was a status bereft of a useful network of operational relationships.
Nothing better illustrated the bankruptcy of Indian foreign policy than its confused responses to the gulf crisis. It could hardly have been in the country’s interest to find itself bracketed with Cuba and Yemen in the Security Council. In allowing sympathy for Saddam Hussein and antipathy toward America to guide policy, Delhi adopted a course of action that was blind and self?defeating. Had Iraq succeeded, the consequences for India and other Third World countries would have been far more calamitous than for America and the industrialized world. Instead of helping to shape the new world order, India risked being shunned as an outcast.
India has generally seen itself as a world power in the making, and conducted its regional and international relations on this basis. The result has been insignificance abroad, suspicion in the region and turbulence at home. It would be better advised to reverse the process. Stability and prosperity at home and in the region will enhance its international status and give credibility to its claims to global leadership.
India needs American capital and technology; the United States could exploit the vast Indian market potential with a consumer ethic and infrastructure well poised to take off at speed. Given its size and resources an India firmly integrated into the world financial markets would be a major boost to international capitalism. And for too long have India and America allowed transient irritants to undermine an underlying harmony of interests between the two pluralist and federal democracies. The world’s most powerful and most populous democracies should be allies, not antagonists.