Modi’s trap

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THE recent skirmish between India and China has been reported with different underlying assumptions and implications in the press across the globe. While mainstream opinion makers are keeping a cautious eye on the conflict, a limited number of hawks in the local media have exaggerated this conflict to epic proportions, terming it as perhaps the emergence of Chinese dominance and supremacy over the region. To be specific, it is being portrayed as a swift, glaring victory of China over a largely subdued Indian army.

While a lot of intellects are euphoric over this recent Chinese victory over India, the truth of the matter is that, as a result of this conflict, Prime Minister Modi has laid a trap for the emergence of India as a new global power.

Comprising almost one-third of the world’s population, both China and India are competing for global respect. Over the last few decades, with an immense amount of investment in education of their masses, developing emerging markets, and global branding of their nations, both have finally developed a stable middle class — the backbone of the global financial system that primarily acts as a catalyst for the global economy.

While this competition is intense in its search for new markets and raw materials, a few areas such as global warming and the World Trade Organisation show an unprecedented cooperation and union between the two countries, to the point where the West (the US in particular) seems to be the common enemy. Staunch, organised objections and reservations to WTO and Kyoto/Paris accords are a few trademarks of the Sino-Indian friendship.

What was Modi thinking when he decided to take on China?

Trade between the two is estimated to be at a historic high of $84 billion. Both countries, more so than the West, have a monopoly over commodity markets (ranging from oil and gas to lentils and canola oil) across the globe. As a matter of fact, to avoid bidding in search of new assets, the National Oil Company of India has forged an informal consultation alliance with the Chinese Petroleum Company. With similar rich histories, traditions, and multiculturalism of over 3,000 years, both countries thus face similar challenges as well. Both countries have difficulty in the UN when it comes to their unimpressive record on human rights.

The above points noting the similarities between the two nations lead to an important question: What was going through Modi’s mind when he decided to take on China? The Indian prime minister has based his limited but high-profile conflict strategy on the assumption that under current circumstances, China will not escalate any conflict in the region due to the following:

(a) It would raise uncertainty in the already in turmoil capital markets of mainland China, which may impact the much needed liquidity that the regime requires to come out of this economic crisis.

(b) The Chinese regime currently faces perhaps its biggest challenges in the last 50 years, which include (i) accusations put forward by several countries, including the US, Australia and France of a Covid-19 cover-up, (ii) the future of Hong Kong protests and its amalgamation in mainland China, and (iii) the future of Chinese firms after the international blockade of Huawei. The downfall of Huawei, while orchestrated by the US, is an absolute delight for the European, South Korean and Japanese tech sectors, as it brings a long-sought fair and competitive balance to the global tech market.

With these limitations to a Chinese response, Modi has finally set the stage to preserve his legacy as the man who will bring about India’s emergence as an international giant. The climax of this conflict would result in a sombre and permanent solution, which would demonstrate to the world that India could not only stand against a global giant but also resolve complex democratic conflicts in a reasonable manner.

The current Indian regime has various audiences to this conflict. Firstly, there’s Vietnam and Cambodia, which are some of the fastest-growing economies in the world and in need of a reliable defence partner against China, making India a likely future ally. The recent rift between the US and Sou­­th Korea over the purchase of an $8bn defe­n­ce system, coupled with the constant mano­euvring of US/North Korea relationship, South Korea, along with Japan, is looking for a fellow Asian power to confront China.

The grand prize that Modi wants to deliver to his nation is a permanent member, non-veto seat in the UN Security Council, something which his arch rival Pandit Nehru could only dream of, which would be a delight for its newfound allies, including Israel.

The trap has been set by the Indian prime minister, and it is now time to observe the Chinese response, which is generally long term and routed through its allies.

The writer is an international banker based in Toronto.

Published in Dawn, July 4th, 2020