| | | Asia's burning issues, a monthly newsletter. |
| | Is India's Multi-Alignment Working? |
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If there is any winner in the global rebalancing process that emerged from the Russian invasion of Ukraine, that is India. In an increasingly polarized international scenario, Prime Minister Narendra Modi has mastered a “multi-aligned” foreign policy that is strengthening India’s role as a cornerstone of two major trends: the institutionalization of the Indo-Pacific (IPEF, QUAD), and the relaunch of the BRICS as the vanguard of the Global South. In this context, Modi has recently traveled to the US (June 20-23), Egypt (June 24-25) and France (July 13-15). |
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1. In Washington: a reliable partner. In June, Narendra Modi was received in Washington with the greatest honors. China loomed in the background: Joe Biden aims to limit tech cooperation with Beijing, while boosting the US-India partnership in technology and defense. Human rights concerns in Modi’s India notwithstanding, the two leaders defined the bilateral relationship “a partnership of democracies looking into the 21st century with hope, ambition, and confidence”. For the US, India is the main alternative to China’s economy: Washington is not only betting on India’s potential growth; it also looks forward to gaining a political advantage by diversifying strategic value chains towards a friendly country in Asia. |
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2. In Cairo: inspiring the Global South. The Ukraine war did not only inflame great power competition between the US and China. It also created a new political space for developing countries from the Global South. Their economic size is now remarkable and can be leveraged politically. But who will lead the Global South? India, of course, does not want to give up on China. Modi’s visit to Egypt, just after he visited Washington, was important to establish New Delhi’s role within the BRICS. President Al-Sisi values Modi’s help to support Egypt’s application, while Modi needs friends to balance China’s power within the BRICS and to contain a possible Pakistan access. |
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3. In Paris: defense and the Indo-Pacific. France and India can trace back their strategic partnership to 1998. Paris is second only to Washington as Modi’s top destination with seven trips since 2014. This visit is a great result for the foreign policies of both countries: France aims to increase its Indian defense market share - even if it already is India’s second arms supplier after Russia -, strengthen its role as a resident power in the Indo-Pacific, and pursue Europe’s strategic autonomy out of the China-US dualism. New Delhi, on the other hand, hopes to reduce its dependence on Russia’s defense supply, to be recognized as an emerging great power, and to consolidate Modi’s domestic political position towards the general elections in 2024. |
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India is one of the winners amidst the global chaos Russia’s invasion of Ukraine has engendered. Now, India needs to consolidate its new role vis a vis the current global power, as well as vis a vis increasingly ambitious middle powers, and regional powers that are eager to rewrite international rules. Modi’s visits to the US, France, and Egypt came with a reason: the next challenge for India will be to hold the balance, while continuing to “multi-pivot” towards both towards the Indo-Pacific and the Global South, especially through the expected enlargement of the BRICS in August. China is India’s main competitor within the grouping, but from India’s point of view competing with China should not undermine the rise of a new balance of power between the Global North and the Global South. |
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Spotlight | NATO in East Asia
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The Indo-Pacific seems ever closer to the North Atlantic Treaty Organization (NATO). Japanese PM Kishida, South Korean PM Yoon, as well as New Zealand’s and Australia’s leaders Hipkins and Albanese, all attended the NATO summit in Vilnius, Lithuania, on 11-12 July. This is only the most recent step in Secretary General Stoltenberg’s attempt to engage like-minded countries in Asia more actively. As international power plays have gradually been shifting towards the Indo-Pacific, finding reliable partners in Asia has become a strategic mission for NATO, which aims to build a strong security network that can counter China’s rising military power. The Asian leaders who attended the Summit have made the case for increased engagement, too, stressing that a conflict in the region will certainly have severe repercussions in Europe and North America: Taiwan was not mentioned explicitly, but heavily implied in the discussions. A stronger NATO presence in the Indo-Pacific region is certainly seen as a security guarantee for Japan and South Korea, countries that are particularly exposed to China’s economic and military coercion. Japan’s has been most recently publicized with the proposal to host a NATO office in Tokyo, a possibility that is strongly opposed by China, but favored by the Kishida government. As tensions between the US and China are on the rise, both superpowers are doubling down on efforts to secure strategic allies, and NATO is playing its cards with Japan and South Korea. |
| | | THE IMPORTANCE OF INDIA INTERNATIONAL ENGAGEMENT |
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The Indian Prime Minister Narendra Modi was on state visits to the US and France. The visits underlined India’s deep strategic ties with major global powers across the Atlantic. The US-India joint statement described both as ‘closest partners’ with the partnership spanning from ‘seas to the stars’. Long-term collaboration in technology and defence were the high points of the visit, including launch of new initiatives in semiconductors, AI, Quantum coordination, defence industry and clean energy. Defence was also prominent in Modi’s visit to France marking 25 years of strategic ties. Modi was guest of honour in Bastille Day celebrations that included the Indian Air Force. Climate collaboration and digital finance were other key issues. The visits confirmed India’s strong ties with the US and France in spite of differences with the West and G7 on several issues (e.g. Ukraine conflict, climate change, reform of multilateral institutions). They also affirm India’s emergence as a major global strategic actor and close partner of the West. Armitendu Palit, National University of Singapore
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| MODI'S VISIT TO FRANCE AND ITS SIGNIFICANCE |
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On 14 July, Prime Minister Modi was in Paris to attend the Bastille Day parade as Guest of Honor and to celebrate the 25th anniversary of the strategic partnership between India and France. His visit also allowed the two countries to chart an ambitious road map for the next 25 years. From the start, the Franco-Indian partnership has been driven by the highest levels of the states and has thrived in three main sectors – defense, space and nuclear energy. Paris has also supported India’s interests at the United Nation Security Council, including on the critical issues of terrorism and Kashmir. As a result, France has carved out a special place for itself in India’s strategic landscape as a close, trustworthy partner. As he was anxious to maintain France’s privileged place among India’s partners, President Macron spared no effort to allure PM Modi. The visit led to a series of agreements to enhance cooperation in the Indo-Pacific, space, sustainable development and people-to-people exchanges. Major arms deals were announced, including the transfer of 26 Rafale jets and 3 Scorpene submarines, but found no mention in the final documents released by the two sides. Moreover, various sections of the French media and civil society voiced their uneasiness with the visit: while they understood the importance of engaging India, they questioned the decision to associate Bastille Day and its values of “liberté-égalité-fraternité” with a leader who has eroded democratic freedoms in his own country. Isabelle Saint-Mézard, University of Paris VIII
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| | HOW INDIA IS DEALING WITH A MULTIPOLAR WORLD |
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Narendra Modi’s visits to Washington, Cairo, and Paris are yet one more proof that – for the time being – India’s multi-alignment strategy is working. In Washington, the Biden administration rolled out the red carpet for the once-banned Indian Prime minister who is now courted by Western countries hoping to consolidate their partnership with a key Asian ally amidst US-China tensions, global value chain disruptions and the hope to isolate warring Russia. In Paris, Modi – a Hindu nationalist – signed defence contracts and was the guest of honour in the celebrations marking the anniversary of events that lay the cornerstone of French democracy in the name of freedom, equality and fraternity. In between, Modi visited Cairo, where he and President Al Sisi made it clear that both India and Egypt are entering an age where their worldviews are starting to align again, more than half a century after the golden years of the Non-Aligned Movement. In the age of multipolarism, multi-alignment is “India’s way” to set the new rules of engagement among countries who need to build safe spaces in an uncertain, changing, and war-torn global order. Interestingly enough, everyone – including the West – is behaving as if, on balance, this were the best option for the world to move forward. Is it? |
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THAILAND: MAJORITY PARTY MOVE FORWARD WON'T FORM THE GOVERNMENT
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Pita Limjaroenrat has been denied the chance to become the next Prime Minister of Thailand despite winning the general election on May 14th. The 750 members of the bicameral Parliament of Thailand gathered for the first time to select the nation’s Prime Minister on July 13th. After the first roll call, Pita did not manage to obtain the majority needed to lead the country: with 324 votes in his favor – only 13 of which from senators – Pita fell short of reaching the 376 votes needed for the majority in the bicameral Parliament. A new vote was scheduled on July 19th, but the Thai constitutional court – an institution strongly linked to the monarchy and the military – suspended Pita from his duties as a lawmaker, due to his shareholding in a broadcasting firm. The verdict notwithstanding, he could still have run for PM, but the Parliament voted a motion to stop his candidature. The road ahead for Thailand remains uncertain, as Move Forward supporters have taken to the streets in protest. It is likely that the country’s second party Pheu Thai will take the reins and propose its own candidate, but will there be any space left for the progressive Move Forward party if Pheu Thai manages to form a government? |
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PAKISTAN RECEIVES THE IMF BAILOUT
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Pakistan has received a long-awaited $3 billion bailout from the International Monetary Fund to stabilize its economy. The country will receive $1.2 billion now, while the rest of the relief package will be delivered over the next 9 months. Pakistan has had to face many challenges during the past year. After floods have devastated the country in summer 2022, with rising living costs and an unstable domestic political environment – including the ousting of former PM Khan – Pakistan had almost run out of foreign currency reserves and was close to defaulting. The IMF loan is an “important step” for the stabilization of the country, as stated by Prime Minister Shehbaz Sharif. Indeed, regional allies had pledged to support the country as well, but their money was delivered to Islamabad only after the negotiation with the IMF had ended positively. Saudi Arabia delivered around $2 billion to the country’s central bank, while the United Arab Emirates have reportedly given $1 billion. However, the road toward economic stability is still steep. The government needs to cut its spending if it wants to meet the conditions required by the IMF. Meanwhile, inflation is soaring – at a record 37.97% in May – and new elections are looming. |
| | SRI LANKA, ONE YEAR LATER
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More than one year has passed since Sri Lanka was shaken by popular unrest. In 2022, the country fell into its worst economic crisis: misguided economic policies, the incapacity to manage its foreign debt, and a lack of foreign currency reserves made the country unable to pay for imports, causing power outages and scarcity of basic commodities such as fuel. The economic crisis brought on widespread popular unrest which forced the previous leader, Gotabaya Rajapaksa, to flee the country. However, despite a change in leadership and the IMF relief package of $2.9 billion, not much has changed in the country: in the first quarter of the year, Sri Lanka’s economy shrank by 11.5%. Thus, the financial crisis in the South Asian country continues to be driven by high interest rates and inflation. Sri Lanka still needs tax reforms and better planned economic policies before the first IMF review will be held in September.
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| | JAPAN-CHINA: OKINAWAN GOVERNOR VISITS CHINA |
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Danny Tamaki, the Governor of the southernmost Japanese province of Okinawa, visited China with a large business delegation this month. Tamaki met with high-ranking Chinese officials, like Prime Minister Li Qinag. Relations between Okinawa (the successor entity of the late Ryukyu Kingdom annexed by Japan in 1879) and China itself have deep historical roots: for over 500 years, Ryukyu was a tributary of the Chinese empire and the cultural and commercial relation with southern Chinese provinces were deep. During his visit to China, Tamaki highlighted the importance of developing such long-standing relations. Yet Tamaki’s trip has stirred controversy. Early in June, Chinese President Xi Jinping made remarks on the close ties enjoyed by Imperial China with the Ryukyu Kingdom which have been interpreted as a veiled threat to Japan for its involvement in Taiwan. To diffuse the increased tension around Taiwan – just over 110 km from Okinawa – Tamaki in an interview to a Chinese newspaper has called on the US and Japan to engage in “peaceful diplomacy and dialogue” to avoid a conflict in the area that would have devastating consequences for Okinawa. The relations between Tokyo and Okinawa have long been strained due to US military bases in the prefecture, which host 70% of all US military bases in the country, and China is increasingly feeding into that discord. |
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GDP growth has slowed down for everyone during this year. Yet not everyone is expected to be affected the same way. Some countries have seen their expectations on economic growth revised but not as much as others. Emerging markets for instance, appear to have less to be concerned about than developed economies. According to the projections published by Goldman Sachs, by mid-century China will have already taken the top spot as the world largest economy in real GDP terms given its larger growth potential vis-à-vis the US (estimated to be at 4% against 1.9% for 2024-2029); whereas India may follow as the new runner-up a couple of decades later. According to these estimates, with $41.9 trillion against $37.2 trillion the Chinese economy will be firmly in the lead over the US by 2050. In 2075, instead the Chinese economy is projected to be at $57 trillion, India’s at $52.5 trillion (significantly closing the existing gap with Beijing) and the US will be third at $51.5 trillion. As emerging markets increase their share of world GDP, their income level will keep the convergence trend established over the last two decades. Yet, despite the double surpass by China and India, by 2027 the US will continue to be much richer than the two Asian giants. Precisely: more than twice as much as rich, with a real per capita GDP over $132.000 against China’s $55.400 and India’s even lower $31.300.
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ISPI - Italian Institute for International Political Studies |
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