October 02, 2011

Japan a gauge of India's 'Look East' policy

By Chietigj Bajpaee

India's relations with Japan can be seen as a microcosm of New Delhi's much-vaunted "Look East" policy that was launched two decades ago.

Improved ties between Tokyo and New Delhi could be seen in the United States-Japan-India trilateral dialogue in October 2011, the India-Japan Global Partnership Summit in September, the implementation of the India-Japan Comprehensive Economic Partnership Agreement (CEPA) in August and the Malabar 2011 naval exercises between Japan, India and the US in April.

India's relationship with Japan is a unique barometer of its presence in East Asia and the challenges it faces in cultivating its

role in the region. Both countries have traditionally punched below their weight in the evolution of the regional security architecture due to historical and geopolitical constraints.

It has been left to extra-regional powers, such as the US, an amalgamation of smaller countries led by the Association of Southeast Asian Nations (ASEAN) and increasingly China to determine the trajectory of the regional order. However, both countries have "rediscovered" the region in recent years: Japan through gradually unshackling itself from its post-Second World War pacifist constitution and India through its economic liberalization process and the abandonment of its foreign policy ideology of Nehruvian non-alignment.

Economic and strategic interdependence
On the economic front, the conclusion of the India-Japan CEPA in February 2011 has served to deepen interdependence between both economies by facilitating trade in goods and services and cross-border movement of skilled service sector professionals and investments.

Japan is currently India's sixth-largest source of foreign investment, which includes such high-profile projects as the Delhi-Mumbai industrial corridor that received a third of its funding from Japan in the form of $100 billion in soft loans. The pharmaceutical sector in particular stands to benefit from the CEPA given that Japan is the world's second-largest pharmaceutical market while India is a leading producer of generic drugs, which has been granted accelerated registration under the CEPA.

On the security front, the maritime domain has emerged as the primary sphere of cooperation between India and Japan given a shared interest in securing sea-lines of communication to protect their economic dependence on maritime trade. There is also the need for a joint approach in addressing humanitarian disasters, such as the 2004 Indian Ocean tsunami that devastated the southern coast of India and the 2011 Pacific Ocean tsunami that struck the east coast of Japan.

Other mutual concerns include combating maritime piracy, illicit trafficking, and the latent threat of maritime terrorism. India maintains a "global partnership" with Japan driven by a wider convergence of interests and values, which has facilitated far-ranging strategic cooperation in such areas as climate change, counter-terrorism, high-technology, biodiversity, regional integration and cooperation, as well as in international economic stability, free trade and in United Nations Security Council reform.
Nuclear dilemma
Nonetheless, India's relations with Japan have not been without controversy. Notably, India's conclusion of a proposed civilian nuclear power agreement with Japan remains in limbo given fallout from the damage to the Fukishima Daiichi nuclear power plant following the earthquake and tsunami that struck the country in March.

On one hand, the disaster has hardened the position of the Japanese government and public regarding the dangers of nuclear power and renewed concerns over the need for more stringent compliance with international norms and rules on the proliferation of civilian nuclear technology. This has led to the persistence of restrictions on the supply of enrichment technology to India.

On the other, Japan's nuclear power companies are also likely to face an increasingly urgent need to expand their overseas operations as domestic pressure prompts a slowdown of nuclear power development within Japan. This could offer opportunities for increased Japanese investment in India's civilian nuclear power sector.

The conclusion of a civil nuclear agreement with South Korea in July 2011 - bringing to nine the number of countries that have concluded such agreements with India - could also act as a catalyst for Japan to reassess its position amid concerns that it could be left out of accessing India's lucrative nuclear power market. India's participation in the nuclear security initiative conference in South Korea in 2012 will reaffirm the country's transition from a pariah to a status quo nuclear power, which could further soften Japan's position.

Rhetoric exceeds reality
The sensitivity associated with the issue of civil nuclear cooperation is indicative of the often fickle and precarious nature of New Delhi's relations with Tokyo and more broadly the East Asia region. The rhetoric of India's interdependence should not be exaggerated given the low base from which economic integration and strategic interaction is proceeding.

For instance, while the India-Japan CEPA aims to double bilateral trade to $25 billion by 2014, India presently accounts for less than 1% of Japan's total trade while Japan is only India's 11th largest trading partner.

A similar lack of depth can be seen at the strategic level. The fragility of India's strategic role in the region is illustrated by the fact that the rhetoric of India forging an "arc of democracies" in Asia, which emerged under the administration of Shinzo Abe, has since lost momentum.

This has come amid a shift in priorities of the countries in the so-called "arc", which included the US and Australia, as well as Japan and India. Instead, Japan has voiced a preference for a more inclusive regional architecture, as highlighted by former prime minister Yukio Hatoyama's proposal for an "East Asian Community".

Tokyo has opted for a lower profile bilateral security arrangement with New Delhi rather than the multilateral process proposed by the former Quadrilateral Initiative. These shifts in policy toward India, which is reflective of changes in government, party ideology and knee-jerk reactions to perceived changes in the strategic environment in Tokyo, illustrate that India's engagement with Japan is still not sufficiently institutionalized to warrant claims that India maintains an undisputed presence in East Asia.

Reinforcing India's superficial engagement with the region is the fact that while India has got a seat at the table, it has yet to shape the rules of the regional architecture of which it is a member. Underlying New Delhi's inability to be a proactive shaper of regional security is the fact that it lacks a strategic vision of its role in the region.

This has fueled its inability to exploit shifts in the regional environment. For instance, China has demonstrated a growing proclivity toward abandoning its self-professed mantra of maintaining a low profile by adopting increasingly confrontational and aggressive posturing with neighbors, including Japan, on maritime territorial disputes. However, India has failed to exploit the opportunity to expand its influence in the East Asia region by deepening relations with countries along China's periphery.

New Delhi has so far remained on the sidelines of maritime territorial disputes in the East and South China Seas, despite the fact that it has both the interest and resources to offer assistance in ensuring freedom of navigation along vital sea lanes in the region.

More than 50% of India's trade traverses the Strait of Malacca, India maintains the world's fifth-largest navy and a Far Eastern Naval Command off Port Blair on the Andaman Islands that straddles the South China Sea. The navy also has an established record of acting in the region as noted by its humanitarian assistance following the Asian tsunami of 2004 and Cyclone Nargis that struck Myanmar in 2008.

This has been supplemented by recent reports that Indian navy vessels have been offered permanent berthing rights at Na Thrang port in Vietnam, which could play a significant role in India establishing a sustainable maritime presence in the South China Sea.

On the economic front, China has been a major recipient of outbound investment by Japan. However, underlying geopolitical and historical tensions in the Sino-Japanese relationship, coupled with long-term concerns over the sustainability of China's economic and political model, may offer India as a safer bet for the future.

However, New Delhi has failed to fully exploit this advantage by offering a more attractive investment environment. Despite the appeal of India's stellar growth, growing middle class, high savings rate and dynamic private sector, Asian companies continue to adopt a cautious approach toward investing in India as political, regulatory and infrastructure bottlenecks continue to make the country a complex and difficult investment and operating environment. Meanwhile, China has emerged as a hub of regional production networks and supply chains.

India's concerted reorientation, rediscovery and reaffirmation of relations with East Asia has moved the country beyond the realm of an aspiring East Asian player by strengthening substantive linkages with the region that have traditionally been embedded in the rhetoric of shared cultural, religious and historical bonds.

Nonetheless, India's role in the region still remains superficial from a strategic perspective as it remains a mere participant rather than a pro-active shaper of Asian regionalism while its role in the region is still not sufficiently institutionalized. India's relations with Japan are evidence of New Delhi's uncertain role in the East Asia region.

India must revitalize its "Look East" policy to ensure that it remains a relevant player in this region of growing strategic importance given its burgeoning resource requirements and the need to sustain its development and growth targets through attracting foreign investment and accessing the rapidly growing markets of East Asia.

To do so, New Delhi needs to develop a more clear vision of its role in East Asia, which will allow it to exploit shifts in the regional environment while taking its engagement with East Asia beyond mere interaction and confidence-building toward agenda-setting, conflict resolution and integration.

Chietigj Bajpaee is an associate fellow at the Vivekananda International Foundation (VIF), a New Delhi-based public policy think-tank and a doctoral candidate at King's College London. He has worked with several public policy think-tanks and political risk consultancies, including the Center for Strategic and International Studies (CSIS) in Washington, DC, and the London-based International Institute for Strategic Studies (IISS). The views expressed here are his own. He can be contacted at cbajpaee@hotmail.com.

(Copyright 2011 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

No comments: