July 30, 2005

THE ten-year defence pact between the United States and India is an important policy move by the former to materialize its scheme of China’s encirclement. However, it is more than that. It provides a basis for America’s strengthening of India and support to fulfilment of latter’s regional ambitions, in return for its active collaboration in protecting American interests in Asia and the Indian Ocean.

As the announcement after the signing of the pact said; “The United States and India have entered a new era. We are transforming our relationship to reflect our common principles and shared national interests.” We have close links with both the US and China and our contradiction with India basically remains unresolved. So where do we go?

First the United States. However its philosophers may describe its economic system, it is pure capitalism with no pre-capitalist enclaves in it. And it has all the contradictions of the system, in fact, in a more developed form. These include: (a) Its inability to sell all its products at home. Hence the need for cheap money and the resultant inflationary trend at home and the need to sell a part of products abroad. (b) Need for constant production of armaments in order to meet the necessary total demand and prevent a recession. (c) Tendency of the rate of profit to fall. Hence, the need to export capital and the search for cheap foodstuffs and raw materials abroad in order to reduce the cost of production at home.

The exported capital may be breaking loose of the control of the home government, as it forces various Third World economies to open themselves to globalization by deregulating their financial and capital markets, removing customs barriers and dismantling state ownership of industries. But it still needs the backing of the US state power in a world, where even giant transnationals may be thwarted by weak Third World states or blocked by the stronger ones.

But the existence of the state in these countries is a vital need for the globalized capital. They maintain civil order within their territories without which capital cannot reproduce itself. They perform an important function of compartmentalizing world labour power within national frontiers. After the all, the export of capital makes sense only if uniformity in wages is prevented by restricting the movement of labour across the frontiers.

However, the United States suffered from two basic weaknesses in its policy of extending military support to the drive of its transnationals towards globalization:

(a) Since its currency, dollar, is without gold backing, it cannot for long retain its status of an unquestioned international medium of exchange. Once it appears to be losing that status, the US’s ability to undertake foreign military operations will be undermined.

(b) The young Americans are prepared to die for the defence of their country but apparently not for the defence of their country’s interests abroad. This rules out conscription, leaving the armed forces dependent upon voluntary recruitment, which sets a stiff limit on the military strength the US can use overseas. Consequently, it needs allies to help it protect its interests globally.

No doubt, the sphere of operations of Nato has expanded geographically. However, with emerging contradictions, though still of a secondary nature, between the US and the European Union, that alliance cannot be used for purely US objectives. Thus, its exclusion from the invasion of Iraq which was partly aimed against the European interests in the Arab East. This secondary contradiction is more than balanced by the interests that the US shares with the Europe. They may have disagreed on Iraq but a large chunk of US investments goes to Europe and they jointly manage the World Bank-IMF-WTO trio, the main instrument of the West’s financial and trade hegemony over the Third World.

The same cannot be said of China, which the US regards as a potentially strong rival.

Whatever the western propaganda, China does not pose a threat to the US. The reach of its conventional armed forces is not much beyond its frontiers or shores. Its heavy industry is no match for that of other great powers either. Therefore, it cannot compete with them in large-scale production of advanced armaments. True, its nuclear arsenal can reach the US territory. But it restricts its atomic strength strictly to the requirements of deterrence.

In the economic field, surely its exports of textiles and other consumer goods cannot drive the American economy to bankruptcy. In fact, its willingness to sell its products to the US to bolster the latter’s basically weak currency and then convert the balance into US treasury bonds amounts, in effect, to large-scale loans to that country, on which it can conceivably renege.

No, the problem is elsewhere. The Chinese policy combines relatively liberal external economic relations with strict political control of the direction of its development. Foreign investment is welcome but it does not influence the form or direction that China’s development is to take. That was why the South-East Asian economic crisis of 1997 could not touch China or subjugate its economy to the imperatives of globalization. The country is also too strong to be threatened into modifying its policies to suit others’ interests. The danger, therefore, as seen from Washington, is that, if China continues to develop autonomously beyond the reach of WB-IMF dictate, it will become a rival to the US, both militarily and economically, over a period of time. Then, the competition for the world’s natural resources will become acute enough to give an antagonistic character to the rivalry between the two countries.

Therefore, the US, which crushed Germany in the two world wars and suffocated the Soviet Union in a fifty-year cold war, braces itself for a trial of strength with China in not too distant a future.

India is indispensable to the US scheme of a cold war with China and of its encirclement. Its industrial and military strength may lack the great-power status, yet it stands like a giant on the littoral of the Indian Ocean. Thus, the US takes it as an ally just as Britain made an alliance with Japan in 1902, when it found that its military strength was not sufficient enough to let it face the two challenges simultaneously.

India, on its part, appears to be ready to collaborate with the US although its interests may not coincide entirely with those of the latter in the region.

India has made considerable progress in the second stage of industrialization and is now moving to the third stage. However, further growth meets with blockages because of the country’s inability to deepen the internal market further. It is unable to bring its vast pre-capitalist sectors and the huge section of its marginalized population rapidly enough into the capitalist sector, owing to the absence of an effective redistribution. It, therefore, needs foreign markets to remove this internal blockage. These markets are primarily around the Indian Ocean where its principal competitor is China.

A military alliance with America cannot help India in this matter directly. But if it helps it in establishing its pre-eminence or dominance on the Indian Ocean littoral and specially in South Asia, which India regards as its sphere of influence, the economic development of those regions can be effectively influenced by it, making them serve, up to an extent, the needs of its accumulation.

New Delhi may not commit itself fully to American objectives. It may keep its own rivalry with Beijing within manageable limits, while reaping full benefits from the alliance with Washington. However, a military alliance’s own logic may not permit that kind of fine tuning.

An important content of every military alliance is a close contact between the armed forces of the allies. This is of two kinds. In the case of countries having developed civil societies, such as those of western Europe, the military contacts function within the framework of the civilian government’s policies. The Third World countries do not have strong civil societies. Their societies tend to be fragmented, with each sector linked directly to the world market. When such a country enters into a military alliance with a great power, e.g. the US, its armed forces become “privileged interlocutor” of the latter. They, consequently, tend to exercise autonomy vis-a-vis the civil authority, if not an outright putschism.

The Indo-US alliance will affect the situation in Pakistan only in terms of degree, not in kind. Since India regards South Asia as its sphere of influence and since Pakistan is the only obstacle in the region to its ambitious, Islamabad will try to give Washington a free hand in the subcontinent. The decision of the Bush administration to give the F-16s to Pakistan indicates that it would want Pakistan to remain free of Indian hegemony since, in that case, the US could use Pakistan as a means of pressure upon India whenever deemed necessary. However, the US would not permit Pakistan to act in a manner which may hamper India’s role as its ally.

China would similarly want Pakistan to be free of India’s domination. In fact, it could, over the years, have got a favourable border settlement with India, had it accepted latter’s hegemony in South Asia. But it refused to do so. China’s pledge that it would not join any combination against Pakistan means that, while it regarded our country as a “privileged friend”, it would not go to war to protect our security.

New Delhi, taking advantage of its new relationship with Washington and of Beijing’s desire to keep friendly relations with it, may press Islamabad to develop relations with it in a manner that amounts to acceptance of India’s primacy in South Asia. In this connection, it may propose, apart from the MFN status, a free trade regime in which Pakistan confines itself to primary manufacturing but buys sophisticated machinery made in India. It may also seek regular “consultations” with Islamabad on foreign policy matters and a reduction in its armed forces.

We need not agree to such proposals. And India cannot force us to accept them even by using its defence alliance with the US as a lever. However, we must not respond to the new situation by deciding to spend more on defence. Our strength will lie in economic development, which means manufacturing and making machine-making machines. Mass use of cellphones and computers is fine, though they do not add to wealth. They yield value only in the service of material production.

Both the US and China are our friends and will hopefully remain so, even if their bilateral relations suffer stress. However, China is here, while the US is far away. Lastly, while a Pakistan free of Indian hegemony is only of relative importance to the US, it is in China’s own interest that our country remains independent and strong.

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