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The Chinese will blink

Part I: Dancing with wolves: India and the rogue states

It is true that American businesses have invested a great deal in China in the hope of making a few bucks in that supposedly vast market. "What if a billion Chinese were to buy my soft drinks, cell phones, or whatever else I am selling?" has been the mantra. But somewhere along the way, they are beginning to ask, "So where are the profits?" The answer is: "Siphoned away by my Chinese partner." Or, "The billion Chinese aren't buying my stuff, as my partner has stolen and reverse-engineered it and is undercutting me on the sly." Or, "The government is bullying me to give them my proprietary technology or else they will kick me out of here."

Nobody is making any money in China apart from Chinese middlemen. Wisely, General Electric has made the bold decision to stop investing in China because they see no prospect of ever making a profit. Thus, American businesses are slowly souring on China, and may not be so inclined to continue to lobby for them. Thus, the business constituency in the US, which has become China's fifth column, may not have much use for them in future.

Then there is the question of huge Chinese holdings of US dollars. There have been implicit threats that they might dump these dollars in the market and cause a run on the currency. But this is actually a double-edged sword: a weaker dollar, if that is the result, will increase the ability of big US businesses to export; and the cost to the US consumer is not likely to be that pronounced as the domestic market is still predominantly supplied by domestic manufacturers. In fact, it will make Chinese products uncompetitive in their low-price niche!

Furthermore, if the Chinese dump dollars, and this causes the dollar to drop in value, this will mean they are cutting their own nose to spite their face: for the value of their large holdings will be proportionally affected by this fire-sale of dollars as well. So it is unlikely they will do it.

Therefore, I am certain the Chinese will blink -- they cannot afford a trade war with the Americans. Nor can they afford an arms race: just as the Americans beggared and destroyed the Soviet Union, they will be able to, with superior technology and sheer financial muscle, destroy and fragment China. It is a specious argument that China will get into an arms race, which will in turn beggar India by forcing it to follow suit. For, this is a game of Russian roulette, and the Chinese know full well that they are vulnerable economically and militarily. They will back off.

I will admit that I am assuming that the Chinese are rational; which I do believe they are unlike, say, Pakistanis.

So the net result of all this is that the Chinese made a strategic mistake owing to hubris: by winning a battle, that is, forcing the Americans to apologize for their spy plane missions, they have annoyed the right-wing in the US so much that they are likely to lose the war. The likes of the formidable Jesse Helms have been looking at them rather askance anyway.

It is absolutely appropriate for India to fish in these troubled waters by positioning ourselves as the stable, non-proliferating, non-aggressive nuclear power and potential partner for the US in the Indian Ocean. There will be a small quid pro quo, of course, to be discussed in detail later. Say, in regards to Pakistan? Or technology transfers? Or nuclear power? Or defence pacts? I am sure Uncle Sam has lots of goodies he can distribute. Spy pictures, maybe? Who knows, let's be imaginative and ask for the moon.

Or other useful stuff, not that meaningless Security Council seat. By the way, it turns out that the UN once offered India a permanent seat in the Security Council, and the omniscient and magnanimous Nehru turned that offer down saying, "Oh no, India need have a seat only when China has a seat in the Security Council." Now China is returning the favour, saying, "Oh no, India need have a seat only when Pakistan has a seat." Seems fair, doesn't it? How come the 'secular' 'progressives' never mention this as part of their Hindi-Chini spiel?

But making friends with the Americans, I reiterate, does not by any means imply becoming a client state of the US. India is simply too large -- an incipient superpower -- to become a banana republic for the Americans. I also believe -- maybe it is more hope than belief -- that India does or will have strategic planners who can see this. The US is very much a rogue state, which only does what it wants to do, the rest of the world be damned: they are not a permanent ally, only a tactical partner, to be discarded when our need for them diminishes.

On Jallianwalla Bagh Day, I was in a country inn in the rural UK, reading the book Rogue States (South End Press) by Noam Chomsky. Naturally, I was thinking of the UK, the rogue state that gave us so much trouble in the past (see my earlier column, Remember Jallianwalla Bagh). Then there is China, another rogue state that is such a brutal colonizer in Tibet, and such an imperial threat to the rest of Asia.

Then there is, of course, the US: Chomsky provides, in his usual exhaustive manner, substantial evidence that the US should be considered the greatest rogue state in the world by its own standards: interfering in Latin America, Southeast Asia, the Indian subcontinent, West Asia, Africa, the Pacific, in fact wherever it pleases, for ideological and economic reasons.

I found it quite risible that the US tried to take the moral high ground against China in the spy plane case by talking about the Law of the Seas, which provides a twelve-mile exclusive zone to the littoral state. It is true that the spy plane was outside this limit, and thus in international waters, but the problem is that the US has not signed the Law of the Seas! Just as they are about the only major power to have consistently declined to sign the Landmine Treaty; just as they have rescinded their treaty obligations on emissions under the Kyoto Accord; and just as they have declined to ratify the CTBT.

Americans simply do not like constraining themselves with global multilateral agreements. And though they frequently run to the UN to get 'approval' when it suits them, they ignored the World Court's explicit order to stop mining Nicaragua's harbours; they persist with an illegal blockade of Cuba; they exceed their mandate in Iraq; and refuse to sign an international treaty on war crimes, worried that a lot of their own people may get caught up in it. And with good reason too: there was My Lai in Vietnam; the horrific bombardment of non-combatant Laos and non-combatant Cambodia, for which Henry Kissinger and Richard Nixon deserve(d) to have been hanged; the bombing of 'friendly' civilians in South Korea.

So what is the point in India's allying with the Americans? What is the worth of a treaty with them? Very little, sometimes -- as India found out when the Americans unilaterally abrogated the treaty obliging them to supply heavy water for the Tarapur reactor. Of course, they had plenty of weasel-word rationalizations to offer, but the bottom line is that they just didn't feel like living up to their treaty obligations.

Nevertheless, the US is the lesser of the two evils. China, alas, is on our borders (thank you, yet again, Jawaharlal Nehru, for having allowed the buffer state, Tibet, to be swallowed up). And they are by far the more dangerous of the two to India. I have said time and again (see my column The Danger from China) that they remind me strongly of Germany between the two World Wars: jingoistic to the extreme, and full of resentment and hatred for others, with memories of great humiliation and mythologies of great imperial hauteur. Unless contained harshly and disciplined, they are a threat.

I predict, if unchecked, a Chinese attack on Taiwan in 2002, an unconventional attack -- an electroMagnetic pulse -- in the atmosphere against Japan in 2005, and a conventional attack on Siberia in 2003. And of course there is the 'Dragonfire' scenario of a nuclear bombardment of Delhi and Bombay -- this is not fiction, it is highly plausible if the Chinese are not hemmed in. Do see the Hindustan Times article, 'Crouching Dragon's hidden armoury' on May 22, 2001.

No, rogue states are not dependable, and they only pursue their own interests. And what can India do in dancing with these wolves? Tread very gently, I suppose, and be crystal clear about pursuing our interests and playing the wolves off against each other.

Postscript:

In a previous column I mentioned that the gopuram for the Srirangam temple, near Thanjavur, had been built by M G Ramachandran's Tamil Nadu government. Several readers, including Lakshmi and Srinivasan, informed me that the pontiff of the Vaishnavite Sri Ahobila Math, Srimad 44th Azhagiyasingar, was responsible for the entire effort, including the fund-raising. I am told that the Andhra Pradesh and Karnataka governments pitched in before the Tamil Nadu government did. I am not surprised -- after all, the DMK has had no great love lost for Hindu institutions. I stand corrected.

I feel vindicated in my assessment of the Chinese interest in controlling energy shipments based on their very recent tie-up to have permanent naval facilities at Gwadar, a deep-water port the Pakistanis are building at the mouth of the Persian Gulf. They could attempt to blockade oil tankers there as well as in the South China Sea. This of course shows how servile and helpless Pakistan really is: talk of the loss of 'strategic autonomy' -- this is the equivalent of BOGU (bend over and grease up), in the colourful speech of Microsoft's CEO Steve Ballmer.

Incidentally, this will also help China to encircle India with a presence in the Arabian Sea to complement their existing investments in the Coco Islands in the Andaman Sea. We do have a strategic riposte: allowing the Americans port facilities at Visakhapatnam or Kochi. I am certainly not suggesting this as a desirable arrangement, but wouldn't Kerala's Marxists have an absolute fit at the possibility of US warships steaming into Kochi? The look on their faces would be worth the price! Seriously, we do not want the Yanks in our backyard, but the threat of allowing them in would be quite useful to brandish.

Fortunately, even with the aggressive plans put in place by the People's Liberation Army Navy, China is a puny naval power. They, at least at the moment, cannot conjure up a decent battleship, much less an aircraft carrier fleet. But they do have some submarines and are building more.

Rajeev Srinivasan