China Report

This article seeks to raise some fundamental conceptual issues underlying the trilateral project. Theoretically, big country relationships—especially neighbouring ones—have to be built on common interests, mutual trust and greater interdependence in mutual interests so that it cannot be set aside unilaterally by any one of the parties. This article questions whether trilateral cooperation was sustainable since China, India and Russia were neither strategic allies nor enemies; none of them shared common friends or enemies and it were only potential common interests that underpinned their interaction. The author envisages the basis of their cooperation in terms of a reaction to the post-Cold War, US-dominated world but argues that such a structure was not a pre-determined imperialist scheme which had to be changed through opposition and conflict. This reflected the traditional view of international politics and needed to be modified in a scenario where the US was also promoting a market economy-based system, endorsed by the others. Trilateral cooperation, the author contends, should be seen as a new model of cooperation, seeking common economic benefits but also operating on the basis of a broad consensus about seeking improvement in the imbalanced world order, without challenging the stability of the existing order. A potentially strong bond was their shared critique of the neo-liberal trend in international relations and while it could be seen as a minimum consensus, its significance should not be underestimated. Equally important was that the economic standing of all three in the global economy was fairly high and they were seen as the big emerging markets, even as the West generally remained dominant in the world economy.

This article attempts a comprehensive account of the various actors—including both regional and global powers—their motivations and the intricacies of the interactions between them in Afghanistan. Given that the democratic governments have put particular emphasis on human rights and political freedoms, there would be some implications for the dictatorships or tyrant-regimes in Central Asia. The desire of the US to push the Russians out and minimise the Chinese presence in the region could not be entirely ruled out as a factor in the increasing importance of India in the US strategy, their agreement on nuclear cooperation pointed to some changes in the US’ South Asia strategy. The stand taken by the governments in the Central Asian states, particularly Kazakhstan and also Uzbekistan (which had recently withdrawn from the EU and North Atlantic Treaty Organisation) was especially significant. The author pointed out that the US deployment in Afghanistan was very extensive, with the largest number of troops in the south and east; the US was also the largest aid giver. Pakistan is far from stable and India–Pakistan ties are problematic, as also Pakistan–Afghanistan relations. The Pak–Taliban linkages have been corroborated from various sources but there are some disagreements between the US and the UK on the ways and methods of dealing with the situation, the latter favouring negotiations. All these factors will have to be thoroughly analysed in reconciling the different forces and promoting peace in Afghanistan.

This article comprises two parts: the first in which the author examines the ramifications of the process of stabilising Afghanistan and the second in which he discusses a possible role for the Russia, India and China (RIC) trilateral. The author cites the results of a survey conducted in all thirty-four provinces of Afghanistan, which mainly concerns the attitude of the people and the national mood in 2004 and 2008. The results revealed very low levels of confidence. The crux of the problem was that the war cannot be won, nor the Afghan situation addressed by the military approach. The situation is extremely complex and tense mainly because of the lack of strategic coherence within the West and their attempt to promote a Western set-up in Afghanistan without heed to, or respect for, the Afghan condition. The focus has been only on capturing the Al-Qaeda through Operation Enduring Freedom. The role of Pakistan was also quite complex and the question was whether it should be seen as part of the problem or part of the solution. The American’s Afghan policy was insensitive to the geopolitical complexity in the region. Since all three countries were affected by the situation in Afghanistan, stability in this area was in the interests of all. It was necessary, therefore, to make the trilateral more relevant and the election in September 2009 provided a good occasion to look for a common agenda and adopt a proactive stance. The RIC could encourage the exploration of a new political set-up in Afghanistan by taking into account its national conditions. They could also stress a leading role for the United Nations and explore a regional approach, whereby the various organisations in the region could be interconnected to explore solutions.

This article examines the possible contours of a trilateral initiative for the pursuit of a regional solution to the long-term stability of Afghanistan. Such a solution, in the author’s view, would have to be based on the involvement of Afghanistan’s neighbours—Pakistan, Iran, India, Tajikistan, Uzbekistan, Turkmenistan and Russia, as well as China, along with sustained efforts to support a well-focussed, Afghan-led counterinsurgency campaign. This would have to be strongly supplemented by a coordinated process of political reconciliation and economic rehabilitation based on the speedy integration of Afghanistan into regional energy, transport and trade networks.

Basing itself on a recent International Monetary Fund survey, this comment concludes that the Brazil, Russia, India and China countries are likely to become the locomotive for economic growth in the world. Were the global financial crisis to last out for the next 1.5 year, though reduced, annual growth rates in China, India and Russia would continue to be 8.5, 6.3 and 3.5 per cent, respectively. Together, the three countries would still manage to contribute 2.2 per cent to the world growth. The author does not appear to be very optimistic about the Russia, India and China to formulate countermeasures but China had in addition to forex reserves, considerable foreign direct investment and its measures to boost domestic demand focused on infrastructure building. Russia as well needed to boost domestic demand to curb inflationary pressures. The worrying aspect was the prospect of social instability and all three countries had already faced this in the 1980s. Experts were divided as to whether unemployment was worse than inflation, but some kind of protectionist measures would have to be adopted despite the understanding that trade had to be promoted at any cost. However, the need to insulate the domestic market was critical at this time. Russia in addition had to contend with the decline in the prices of oil and gas and in devising strategies to deal with the crisis; the objective was to protect not the American interests but the Russian interests. The problems stemming from the sub-prime lending in the US was only a simplistic way of analysing the crisis.

The sub-prime crisis that started in 2007 and limited to the US economy has created systemic problem throughout the global financial system following the collapse of a big investment bank. The real economic impact of this financial turmoil is expected to be very large. It has been officially stated that developed economies such as the US and the European Union are entering a recessionary phase. Even the world economic growth has been predicted to decline. The impact of this financial crisis on India is also going to be significant, as India is not decoupled with the global macroeconomic behaviour. The service sector, of which two sectors namely ‘trade, hotels group’ and the ‘financing, insurance group’, growth is strongly linked with the global economy. Hence, any decline in the global economic activity is expected to have adverse impact on the domestic services growth. On inflation front, this crisis indeed brought down the inflationary expectations as it led to decline in the world oil prices to around US$ 70 per barrel after reaching a peak of US$ 142 in July. This would have positive impact on the domestic economy through reduction in overall interest rate structure, which could stimulate domestic demand. On the external sector front, we might see a fall in the foreign exchange reserves due to outflow of short-term capital in the short term. Together with this, predicted fall in exports would result in weak rupee. But, given the strong domestic fundamentals, we do expect that this adverse impact is limited only to the short term and there would be resilience in the economy in the medium term once the demand and investments pick-up. On the reforms side, the significant adverse impact would be the possible shelving of much-awaited financial sector reforms that is expected to enhance financial inclusion.

The slow increase in rural incomes and the widening income gap between rural and urban citizens are important problems for the work on agriculture and in rural areas. To maintain a steady increase in rural income, we should persist in developing the rural–urban economies in a coordinated and harmonious way and constructing a long-term mechanism to promote rural incomes in the coming period. Besides, we should explore the potential of increasing rural incomes through optimising the inner structure of agriculture, and seeking channels outside agriculture for incomes increase. We should also make vigorous efforts to develop non-agricultural industries, and speed up the urbanisation progress and the migration of the redundant labour force.