Vasudhaiva kutumbakam’ for the 21st century

‘Vasudhaiva kutumbakam’ is a dysfunctional construct, with different power centres vying to secure their interests even at the risk of trampling over common values

From Jawaharlal Nehru to Narendra Modi, India’s leaders have often evoked the phrase vasudhaiva kutumbakam (the world is one family), taken from the Maha Upanishad, to elucidate the country’s global outlook. While the term has become a mantra of India’s diplomatic lexicon, it has remained ambiguous and rarely elaborated.

Indeed, despite their differing political and religious hues, almost every leader has used the phrase to convey varying concepts and address different issues at different times. For instance, in 1989, Rajiv Gandhi cited vasudhaiva kutumbakam to challenge the concept of first, second and third worlds, revive the idea of “One World”, and put forward the vague notion of an “Earth Citizen”. In 2002, Atal Bihari Vajpayee employed the phrase at a meeting on the national human rights institutions of the Asia Pacific Forum to assert that “India’s understanding and advocacy of human rights are as universal as they are ancient”. In 2007 ,Manmohan Singh deployed the term to defend India’s approach to climate change and global warming while accepting its global responsibility at the Heiligendamm G8 summit. Finally, in his maiden speech at the United Nations in 2014, Narendra Modi used the locution to reassert India’s fading case for reform of the Security Council and lament on the inability of the world body to effectively deal with cross-border terrorism.

Clearly, vasudhaiva kutumbakam has become a catch-all notion for India’s diplomatic orthodoxy to be deployed in numerous scenarios. Although it might be open to myriad interpretations, it has been used to broadly convey India’s ideal and liberal concept of global norms, themes of globalization, or global commons. In doing so, it suggests that this is an ideal world worth achieving and it can be created through negotiations alone.

In reality, however, the overly benign and idealist presentation of the concept, which appears to promote values more than interests, has done very little to actually advance India’s cause in any of the issues where it has been quoted. And it is unlikely to do so unless the concept is deconstructed and better understood.

Indeed, the concept needs to be looked at threadbare and regarded through a hard-nosed realist prism. Consider the following:

First, the “family” is regarded as an ideal and highly functional unit with equal rights among all individuals. Nothing could be further from reality; most families tend to be dysfunctional. One need look no further than the two most familiar Indian family sagas—the Ramayan and the Mahabharat—to comprehend just how problematic they can be.

In the former, the idealist interpretation notwithstanding, the chief protagonist was exiled after losing his throne to palace intrigue, banishes his wife after regaining the throne, and faces a challenge from his sons. In the latter epic, again the popular notion notwithstanding, a family is torn apart over a property dispute, which leads to a bitter and brutal fratricidal war that decimates the clan. Moreover, in both instances, interests invariably overshadow values which are compromised to achieve realpolitik goals.

Second, assuming for a moment that the one world family might be less dysfunctional than a normal family, there is still the question of who is the head of the family and how power is shared? More importantly, how will disputes be resolved and decisions enforced? Given the patriarchal nature of most Indian families, who does India consider as the leader of the one world family? Alternatively given the emerging multipolar world how will power be shared among the various leaders and centres? Or is the expectation that vasudhaiva kutumbakam can thrive even if it is headless?

Clearly, if India wants to regard the world as one family, then it needs to examine the concept through a realist perspective as well. According to this viewpoint, vasudhaiva kutumbakam is not a peaceful construct but a dysfunctional one with different power centres vying to secure their interests even at the risk of trampling over common values.

Dealing with such a world would require not only the ability to develop common norms to address contentious issues ranging from climate change to cross-border terrorism but also the political, economic, and military prowess to enforce these agreed upon norms. India is developing reasonable skills in norm setting but is still woefully inadequate in contributing to building, supporting and enforcing them.

It could be argued that until Donald Trump’s presidency the US had accepted this realist interpretation of vasudhaiva kutumbakam and had been adhering to it by both setting norms and implementing them. However, it now appears to be relinquishing its role as the upholder of these global norms.

In contrast, China, which has done very little to create global norms until now, is building institutions and infrastructure that will serve its interests the best without binding it down to common norms. In this context, the recent Belt and Road Forum will make the “one world” concept more beholden to a China-first policy.

The concept of vasudhaiva kutumbakam has stood India in good stead. However, New Delhi needs to reinterpret it for the 21st century. That will be the easy part. Developing the political, economic and military wherewithal to implement and enforce the concept will be the real challenge.

Turning down China

But India’s staying away from the OBOR mega show will not affect bilateral relations adversely

Belt and Road is China’s most ambitious initiative in history. Popularly known as One Belt One Road (OBOR), this infrastructure project of gigantic proportions attempts to bring under its sway more than 60 countries, from the Scandinavian world to the South Pacific Islands, in its land and maritime versions. The ancient Silk Route is said to be the inspiration for this initiative launched in 2013.
For President Xi Jinping, Belt and Road is a project of personal ambition and honour. His government has not left any stone unturned to make it a reality in a span of less than four years. In the first three years, various projects have seen the signing of contracts worth more than a trillion US dollars.
In a world of competing economic and trade alliances, OBOR has overtaken many others active in the region and beyond. The European Union has some 27 member countries; the Organisation of Petroleum Exporting Countries (OPEC) has 13 countries; the East Asia Summit has 18 countries; even a religious grouping like the Organisation of Islamic Cooperation (OIC) has only 57 countries as members. APEC, TTP, SCO — none comes anywhere near the Belt and Road initiative which boasts of the involvement of more than 60 countries.
By all means, this is singularly the biggest constellation of nations in the 21st century. One prominent nation missing in this mega show is India. Like other countries, India too was invited to the Beijing conclave, with invitations reaching six different ministries for participation in various forums during the summit. The Chinese were hopeful till the last moment about Indian participation. But the government of India decided not to send its representatives to the summit.
Belt and Road is essentially a Chinese project. Two major Chinese financial institutions are supposedly taking responsibility for arranging the necessary finances for participant nations. When completed, the rail, road and maritime routes of this project are expected to boost bilateral and multilateral trade in a big way.
Where the project is a matter of pride for the Chinese leadership, it is also mired in controversy over sovereignty questions and fears about debt servicing obligations. Projects like this one, involving multiple countries, are launched only after proper deliberations among the beneficiary countries and after addressing their concerns.
In the case of Belt and Road, however, the Chinese have opted for a different course. They first announced the project and then initiated the dialogue process with various stakeholder nations. It suited some; for some, like Nepal, it is too big a proposal to be rejected. India is probably the only country that didn’t find it virtuous or beneficial to join this mega alliance.
India’s reservations need to be looked at from the sovereignty perspective. China routinely threatens countries when it finds issues even remotely connected to its own sovereignty question being “violated”. Not just China, no country compromises with its sovereignty for the sake of some trade and commerce interests.
India’s Achilles’ heel is the China Pakistan Economic Corridor, popularly known as CPEC. The CPEC is seen as a part of the Belt and Road initiative although it started much earlier. In fact, when the Chinese entered into an agreement with Pakistan in 1963 to build the Karakoram Highway in the Pakistan occupied Kashmir (PoK) region, India had vociferously objected to it on the very question of sovereignty. The region through which the highway was to pass belonged to India and has been under the illegal occupation of Pakistan. The Chinese side, thus, has full knowledge of India’s concerns about the region.
The CPEC today passes through the same region of PoK called Gilgit Baltistan (GB). India has time and again raised its concerns over Chinese activity in the region, the latest being in 2011 when information came out about the presence of thousands of Chinese troops in the region. Adding insult to injury for India is the very name of the project, CPEC, although the region through which it passes doesn’t belong either to Pakistan or to China. In such a scenario, for India to participate in the summit would have meant acceptance of the CPEC proposition.
There is no reason to assume that India’s decision will affect bilateral relations with China adversely. Both India and China have a mature leadership under Modi and Xi. Both work together on many other multilateral forums like the Shanghai Cooperation Organisation (SCO), Asian Infrastructure and Investment Bank (AIIB), BRICS Forum, etc. In bilateral relations, there are certain irritants that have either been inherited over time or are a result of realpolitik. That includes China’s position on Pakistan and terrorism sponsored by it on Indian soil. India hopes that China appreciates its concerns and takes mutually satisfactory and reassuring measures.
However, being not just a nation but a civilisation in itself, China has time and again betrayed its own style in diplomacy. In his book The Hundred Year Marathon, Michael Pillsbury suggested that Chinese strategists have a definite road map for their country to overtake all other world powers, including America, by the time their Maoist Revolution completes a hundred years in 2049, becoming the sole super power. But President Jinping seems to be a man in a hurry. He wants to achieve it much earlier.
As pointed out by The Economist magazine, China today talks not in terms of the China Model or the Beijing Consensus as it used to. The terminology used these days is “China solution” and “guiding globalisation”. Its initiatives, including OBOR, need to be viewed from the perspective of these newly coined phrases.

 

Off the road: India cannot sit out B&RI

Off the road: India cannot sit out B&RI

Don’t shut the door on diplomacy over China’s Belt and Road Initiative

Three years after the plan for the Belt and Road Initiative (B&RI, formerly called the Silk Road Economic Belt or One Belt One Road) was announced, China has concluded the first Belt and Road Forum. While 130 countries participated, of which at least 68 are now part of the $900-billion infrastructure corridor project, India boycotted the event, making its concerns public hours before the forum commenced in Beijing. India's reservations, according to the carefully worded statement issued by the Ministry of External Affairs, are threefold. One, the B&RI’s flagship project is the China-Pakistan Economic Corridor, which includes projects in the Gilgit-Baltistan region, ignoring India’s “sovereignty and territorial integrity”. Two, the B&RI infrastructure project structure smacks of Chinese neo-colonialism, and could cause an “unsustainable debt burden for communities” with an adverse impact on the environment in the partner countries. And three, there is a lack of transparency in China’s agenda, indicating that New Delhi believes the B&RI is not just an economic project but one that China is promoting for political control. These concerns are no doubt valid, and the refusal to join the B&RI till China addresses the objection over Gilgit-Baltistan is understandable. The decision to not attend even as an observer, however, effectively closes the door for diplomacy. It stands in contrast to countries such as the U.S. and Japan, which are not a part of the B&RI but sent official delegations.

Each of India’s neighbours, with the exception of Bhutan, has signed up for the B&RI, expecting to see billions of dollars in loans for projects including roads, rail, gas pipelines, oil pipelines, electricity and telecommunications connectivity. India’s anxiety about the possible debt trap may be well-founded, but it ignores the benefits these countries believe will accrue from the project. Simply put, India cannot appear to be more worried about these countries than their own governments are, or to determine their stance. As a friend and neighbour, India can at best alert them to the perils of the B&RI, and offer assistance should they choose another path. India may also face some difficult choices in the road ahead, because as a co-founder of the Asian Infrastructure Investment Bank and as a member of the Shanghai Cooperation Organisation (from June 2017) it will be asked to support many of the projects under the B&RI. At such a point, especially given the endorsement from the UN Secretary General, who said the B&RI is rooted in a shared vision for global development, India should not simply sit out the project. It must actively engage with China to have its particular grievances addressed, articulate its concerns to other partner countries in a more productive manner, and take a position as an Asian leader, not an outlier in the quest for more connectivity.

The politics of territory

China’s Belt and Road Initiative is a wake-up call for India: Geography is tied to economics and strategy

f Delhi was conspicuous by its absence at China’s Belt and Road Forum this week in Beijing, it cited a number of reasons for staying away. None of them was more important than the question of India’s sovereignty over Pakistan occupied Kashmir (PoK), through which an important part of China’s Silk Road Industrial Belt runs. In a statement late on Saturday, hours before President Xi Jinping opened the forum in Beijing, the foreign office in Delhi referred to the China-Pakistan Economic Corridor (CPEC) and affirmed that “no country can accept a project that ignores its core concerns on sovereignty and territorial integrity.”

Contrary to the warnings of some in Beijing and the fears of many in Delhi, international isolation is not India’s biggest problem as China’s connectivity projects under Xi’s Belt and Road Initiative gather momentum. India is too large an economic and political entity to be isolated by another power. Occupying a critical geographic location, India can contribute to the success of China’s Belt and Road Initiative or create needless complications. India’s real challenge is to match its claims on territorial sovereignty with effective action on the ground.

India’s arguments with China on the BRI have had one important effect. It has helped bring the triangular dynamic between India, Pakistan and China in Jammu and Kashmir into sharp focus. Although the popular discourse in India sees Kashmir as a bilateral issue with Pakistan, China has always made it a three-body problem. Unlike the Anglo-Americans who fancied mediation between India and Pakistan in the past, and the Hurriyat separatists who now pretend to be the third party, it is China that is the real third force in Kashmir.

Beijing is in occupation of a large part of Ladakh in the north-eastern part of J&K. To the west, Pakistan had ceded part of the territory controlled by it to Beijing after the Sino-Indian border conflict of 1962. China’s first trans-border infrastructure project in Kashmir — the Karakoram Highway — dates back to the late 1960s. Since then, China’s presence in Pak-occupied Kashmir has steadily grown. As the CPEC deepens the integration between Pakistan occupied Kashmir and China, Beijing looms larger than ever before over J&K.

Although Delhi did often object at the bureaucratic level to China’s role in PoK, India was continually tempted to sweep the problem under the carpet in the name of larger political solidarity with China. Thanks to Xi’s huge political investment in the BRI, the special importance that Beijing attaches to the China-Pakistan Economic Corridor, and the intensity of India’s opposition to the CPEC, the triangular nature of the Kashmir question can no longer be masked.

In the last few days, Beijing seemed eager to address India’s sovereignty concerns about CPEC. Delhi was not impressed though, for the pickings seemed meagre. Nevertheless, the effort by the two countries to address the tricky issue of territorial sovereignty in Kashmir are welcome and must continue. While it may be prepared to talk, Beijing is unlikely to suspend work on its economic and strategic projects in Pakistan occupied Kashmir.

Even as it engages in a necessary and patient dialogue with China, Delhi needs to take a number of steps of its own. For one, Delhi must step up the effort to modernise and deepen J&K’s connectivity with the rest of India. Second, Delhi must test the sincerity of the Pakistani and Chinese statements that CPEC is open for Indian participation. Delhi has not been averse to cross-border infrastructure cooperation in Kashmir and it has made specific proposals to both Pakistan and China in the past. Delhi must now articulate a political framework for economic and commercial cooperation across the contested frontiers of Kashmir in all directions.

Third, the Sino-Indian argument on CPEC in Kashmir is deeply connected to the question of Arunachal Pradesh. While China asks India to downplay the sovereignty argument in Pakistan occupied Kashmir, Beijing objects to all Indian activity, political or economic, in Arunachal Pradesh. The state is part of the Indian Union, but is claimed in entirety by China. In Arunachal, Delhi needs to raise its game on accelerating the state’s economic development and its connectivity to the rest of India.

Fourth, Delhi must devote high-level political attention to the long-neglected Andaman and Nicobar islands that sit across China’s planned maritime silk routes in the eastern Indian Ocean. It is only by realising the full strategic potential of the island chain that Delhi can cope with the maritime dimension of China’s Belt and Road Initiative.

Fifth, in opting out of the Belt and Road Initiative for now, Delhi has renewed its strong commitment to promoting connectivity with neighbours in the Subcontinent, South East Asia and the Gulf. On Saturday, the foreign office identified a number of projects currently under implementation. There is no doubt that the Modi government has imparted new energy to these projects, some of which date back to the Vajpayee era. Completing these projects quickly is critical for lending credibility to Delhi’s tough posture on the BRI.

Whether it is in Kashmir, Arunachal, the Andamans or the neighbourhood, India’s neglect of its frontier regions has weakened its regional position. Beijing’s Belt and Road Initiative promises to worsen that disadvantage, unless Delhi presses ahead with its own connectivity initiatives within and across its frontiers. While the geographic imperative has driven modern China’s strategic policies, it has not been one of independent India’s strengths. But President Xi appears to have shaken India out of its geopolitical stupor.

India’s belated rediscovery of the relationship between geography, economics and strategy is probably one of the more interesting but unintended consequences of China’s Belt and Road Initiative.

India will skip China’s high profile Belt and Road summit

India will skip China’s high profile Belt and Road summit beginning here on Sunday in view of sovereignty concerns related to the China-Pakistan Economic Corridor (CPEC), a flagship project of the initiative that is expected to play a dominant role in the two-day meet.

While there is no official word, informed sources told PTI that India will not take part in the meet, contrary to Chinese Foreign Minister Wang Yi’s announcement that India will have a representative at the Belt and Road Forum (BRF), a prestigious initiative of Chinese President Xi Jinping.

“Although Indian leader is not here, India will have a representative,” Mr. Wang told journalists here on April 17 without specifying who would be representing India.

It was a tough call for India to take as China, in the last few days, has managed to rope in a number of western countries, including the United States. Washington on Friday agreed to send a top official after it clinched a lucrative trade deal.

Playing down India’s absence at the meeting, Chinese Foreign Ministry spokesman Geng Shuang told the media on Friday that Indian scholars would attend the meeting.

Japan, at the receiving end of strong criticism from China in the last few years particularly over the disputed islands in the East China Sea, has also agreed to send a high level political delegation that includes a vice minister.

The May 14-15 summit, which is expected to strengthen Mr. Xi’s power base as he gets set to begin his second five-year tenure later this year, will be attended by 29 heads of state and government, including Russian President Vladimir Putin.

A number of other countries, including South Korea, France, Germany and UK, have deputed either ministerial or official delegations.

While this is the outcome of hectic diplomatic lobbying by China, unlike India, none of the other countries have sovereignty related issues with the One Belt and One Road initiative.

Considering the CPEC’s importance in the plan — it is the only project at present with prospects of delivering early results — Pakistan Prime Minister Nawaz Sharif is expected to take centrestage to highlight its significance as a “game changer” for his country. He is leading perhaps the largest delegation — four chief ministers and five federal ministers.

China-Pakistan Friendship Association President Sha Zukang has told the official media that China has already committed USD 46 billion Chinese investments for various energy and infrastructure related projects in Pakistan.

Besides Mr. Sharif, the only head of government to be represented at the summit will be Sri Lankan Prime Minister Ranil Wickramasinghe. He is attending the meeting after hosting his Indian counterpart Narendra Modi at home.

Sri Lanka has over $8 billion Chinese investments.

From Nepal, Deputy Prime Minister and Minister of Finance Krishna Bahadur Mahara will lead the delegation. Bangladesh and the Maldives will also have official representations.

Bhutan has no diplomatic relations with China.

India’s decision to skip the meeting came after a year of bilateral discord over China’s stubborn opposition to India’s entry into the NSG and a UN ban against Pakistan-based terrorist group Jaish-e-Muhammad leader Masood Azhar.

China, too, protested India’s decision to permit the Dalai Lama last month to visit Arunachal Pradesh, which Beijing claims as South Tibet.

In the last few days, China has tried to assuage India’s feelings by asserting that the commercial corridor will not have any impact on its stand that the Kashmir issue should be settled by India and Pakistan through dialogue.

About Belt and Road, Indian officials maintain that New Delhi has objections related only to the CPEC traversing through Gilgit and Baltistan of Pakistan-occupied Kashmir (PoK) though the project is of strategic concern.

India’s worries over a 3,000 km long project connecting Pakistan’s deep-water port Gwadar and China’s Xinjiang stem from the fact Gwadar, which was taken over by the Chinese, will become a future naval base.

The Gwadar port opposite the Mumbai’s port housing the Indian Navy’s western naval command provides a berth for China in the Arabian Sea and to the Indian Ocean.

China has already announced plans to station its marines there as well in Djibouti in Horn of Africa in the Indian Ocean.

indo china

Includes aligning its OBOR project with India’s ‘Act East Policy’ and prioritising early solution to border row.

Amid increasing strain in Sino-India ties, China has proposed a four-point initiative to overcome differences and deepen relations which includes aligning its ‘One Belt One Road’ project with India’s ‘Act East Policy’ and restarting negotiations on a free trade pact.

The proposal put forward by Chinese envoy Luo Zhaohui also includes starting negotiations on a ‘China-India Treaty of Good Neighbourliness and Friendly Cooperation’ and prioritising finding an early solution to the border dispute between the two countries.

“Firstly, start negotiation on a China-India Treaty of Good Neighbourliness and Friendly Cooperation. Secondly, restart negotiation of China-India Free Trade Agreement.

Thirdly, strive for an early harvest on the border issue. Fourthly, actively explore the feasibility of aligning China’s ‘One Belt One Road Initiative’ (OBOR) and India’s ‘Act East Policy’,” he said.

The Chinese envoy made the remarks while speaking at defence think-tank United Service Institution on Friday but the text of his closed-door address was released by the Chinese Embassy on Monday.

Indo-Pak tensions

Referring to Indo-Pak ties, Mr. Luo has said China is willing to mediate to resolve differences between the two countries if both sides accept it.

He said good ties between the two countries were conducive to regional stability and in China’s interests.

The development of China, India, Pakistan and the stability of the whole region call for a stable and friendly environment, he said.

“Otherwise, how could we open up and develop? That’s why we say, we are willing to mediate when India and Pakistan have problems. But the precondition is that both India and Pakistan accept it. We do this only out of goodwill. We do hope that there is no problem at all,” Mr. Luo said.

During 26/11 attacks

“When the Mumbai terrorist Attack on November 26, 2008, took place, I was Chinese Ambassador to Pakistan, and I did a lot of mediation at that time,” he said.

On the China Pakistan Economic Corridor (CPEC) which passes through Pakistan-occupied Kashmir, Mr. Luo said China had no intention to get involved in the sovereignty and territorial disputes between India and Pakistan.

“China supports the solution of the disputes through bilateral negotiations between the two countries. The CPEC is for promoting economic cooperation and connectivity. It has no connections to or impact on sovereignty issues,” he said.

“China sincere in intent”

“Even we can think about renaming the CPEC. China and India have had successful experience of de-linking sovereignty disputes with bilateral relations before. In history, we have had close cooperation along the ancient Silk Road. Why shouldn’t we support this kind of cooperation today? In a word, China is sincere in its intention to cooperate with India on the OBOR, as it is good for both of us,” he said.

The Chinese envoy said the OBOR and regional connectivity could provide China and India with fresh opportunities, calling the project a major public product China has offered to the world.

“It is a strategic initiative aimed at promoting globalisation and economic integration,” he said.

‘China first, not Pak first’

Referring to the views in India that China always puts Pakistan first when handling its relations with South Asian countries, he has said the government always follows ‘China first’ policy and that “problems” are dealt with based on merit.

“I want to tell you this is not true. Simply put, we always put China first and we deal with problems based on their own merits. Take Kashmir issue for example, we supported the relevant UN resolutions before 1990s. Then we supported a settlement through bilateral negotiation in line with the Simla Agreement. This is an example of China taking care of India’s concern,” he said.

On India’s bid for the membership of the Nuclear Suppliers Group (NSG), he said: “We do not oppose any country’s membership, believing that a standard for admission should be agreed upon first.”

The envoy’s four-point suggestion to overcome differences comes at a time when the relationship between the two Asian powers has been going through a rough patch due to differences on a range of issues, including China blocking India’s move to get Jaish-e-Mohammed (JeM) chief Masood Azhar banned by the U.N. and its opposition to India’s bid for NSG membership.

Trade relations

On trade ties between the two countries, Mr. Luo said he was happy to see that China has contributed its share to India’s development.

“Today, China is the second largest economy in the world, with a GDP of 11 trillion US dollars. China’s development also benefited from India’s participation.

“We sincerely hope that India can become more developed, as it not only benefits Indian people but also creates more opportunities for China’s development. Some people in the West misread China and tend to think that the ‘Dragon’ and the ‘Elephant’ are inevitable rivals, and that China would not like to see India developing. This conception is wrong. We hope to see India develop well and we are more than happy to help India develop to achieve common development,” Mr. Luo said.

We are victims of terror

On combating terrorism, he said China has been a victim of terrorism.

“China strongly opposes terrorism; second, China is ready to work with India, Pakistan, Afghanistan and the international community in fighting terrorism, and believes that terrorism knows no borders; third, countries need to have compatible policies, consensus and actions in fighting terrorism,” he said.

India must oppose surging protectionism

It should aggressively voice its concern about increasing restrictions on the movement of professionals at both bilateral and multilateral forums

India’s second largest information technology company Infosys Ltd has announced that it will hire 10,000 Americans over the next two years. This comes after the US administration’s criticism that Indian technology companies are taking jobs away from Americans. Last month, US President Donald Trump signed an executive order to review the H-1B visa programme. Indian IT companies earn the bulk of their revenue from the US market and are big beneficiaries of the work visa programme. Legislation has also been introduced in the US House of Representatives, aiming to double the minimum salary of H-1B visa holders to $130,000 per annum. According to analyst estimates, this could affect the operating margins of Indian technology companies by up to 300 basis points. One basis point is one-hundredth of a percentage point.

The H-1B work-visa programme has been a fiercely debated issue in the US. Critics argue that the programme has been used by Indian outsourcing companies to bring in cheap labour, which hurts American workers both in terms of employment and income. Supporters, on the other hand, are of the view that the programme attracts required skills and helps US firms remain competitive. For instance, The Economist reported in December that in the US, “vacancies in computing and information technology could easily top a million by 2020”. The bigger question that US policymakers should address is this: will increasing the cost of hiring foreign workers and raising wages make American firms more competitive?

The overhaul of the visa programme is part of a wider protectionist agenda of the Trump administration, which has withdrawn from the Trans-Pacific Partnership and intends to renegotiate existing trade deals.

However, the US is not the only country which is taking protectionist measures. Australia and New Zealand have also made movement of professionals difficult, and the UK has tightened visa norms. The chief economist of the International Monetary Fund, Maurice Obstfeld, has fittingly described the evolving situation in his foreword to the latest “World Economic Outlook”: “Mainly in advanced economies, several factors—lower growth since the 2010-11 recovery from the global financial crisis, even slower growth of median incomes, and structural labour market disruptions—have generated political support for zero-sum policy approaches that could undermine international trading relationships, along with multilateral cooperation more generally.”

India will have to tread carefully, given this situation. Union commerce minister Nirmala Sitharaman recently hinted at counter moves against US companies operating in India. Indian policymakers should avoid taking such measures for multiple reasons. First, Indian IT services companies have themselves to blame in part at least for not realizing in time that the labour-cost arbitrage model has limitations. Second, the US is not the only country which is making movement of professionals difficult.

Third, India needs foreign direct investment (FDI) to fund its growth. The Narendra Modi government has done well to liberalize FDI rules in various sectors, which has resulted in a significant surge in foreign investments. Any retaliatory action against companies from the US—or any other country, for that matter—will affect the confidence of international investors and will bode ill for the economy in the medium-to-long run. FDI not only creates jobs but also has a spillover impact in terms of knowledge transfer, which helps increase productivity in general. A 2015 working paper, Impact Of American Investment In India, published by the Indian Council for Research on International Economic Relations had highlighted how investment from US companies has benefited India in various sectors. India has gained significantly after opening up its economy in 1991 and there is no reason why it should not take the process forward.

Thus, rather than replying in kind, India should aggressively voice its concern against increasing restrictions on the movement of professionals at both bilateral and multilateral forums. Global leaders did well to avoid protectionist policies in the aftermath of the 2008 financial crisis. India should play an active role in reviving a similar global consensus through multilateral forums as rising protectionism will have implications for global trade and growth.

At a broader level, even as some of the advanced economies are facing difficulties and are growing at a slower pace, the basics of economics have not changed. This is the reason why the work of early writers in modern economics remains relevant even today. In his classic work, An Inquiry Into The Nature And Causes Of Wealth Of Nations, the father of modern economics, Adam Smith, noted: “…nations have been taught that their interest consisted in beggaring all their neighbours. Each nation has been made to look with an invidious eye upon the prosperity of all the nations with which it trades, and to consider their gain as its own loss. Commerce, which ought naturally to be, among nations, as among individuals, a bond of union and friendship, has become the most fertile source of discord and animosity.”

Wise words given the current situation—and as worth heeding now as they were when he wrote them.

How can India deal with rising protectionism? 

Soft power, harder choices To extend its global appeal, China is accommodating religion today. India, which invested early in diverse freedoms, should highlight inclusion now

Soft power, harder choices

To extend its global appeal, China is accommodating religion today. India, which invested early in diverse freedoms, should highlight inclusion now

Never before in China have I seen as much interest in India as I did last month, when I attended the China Development Forum in Beijing. The Forum, founded in 2000, is now recognised as one of the most important international meetings on global economics. The conference was held in the Diaoyutai State Guest House, built in 1959 to celebrate ten years of the founding of the People’s Republic of China, with Mao Zedong’s famous proclamation atop Tiananmen Square. With its gardens, lakes and ornate buildings, the place is a cultural icon of China and served as headquarters for the Central Cultural Revolution Group.

With China eager to step into the caveat being created by the rise in protectionism in the United States, this was a special year for the Forum: There were hints of China’s soft power ambition everywhere, from the décor, the fluent English conversation with the students chaperoning us, to the topics chosen for the various panels and lectures. China’s Premier Li Keqiang gave an eloquent speech in Chinese, talking about his country’s role in today’s troubled world, occasionally pausing to correct the translator’s English; at one point, when the translator said “passions”, he turned to her and she quickly corrected herself, “emotions.” There were lectures by global corporate leaders and prominent economists. Amartya Sen had a special “Nobel conversation” with a charming Chinese journalist.

A sign of China’s effort to project soft power is its changing attitude to religion. Under attack during the Cultural Revolution, Buddhism is no longer anathema. China now has nearly 250 million Buddhists, constituting 18 per cent of China’s population — and 50 per cent of the world’s Buddhists. During a coffee break, a Chinese student accosted me to chat about Sadhguru, from whom he derived “spiritual inspiration”, quite unthinkable a few years ago. He assumed that, as an Indian, I would know all about Sadhguru.

I did not want to disappoint him and so, deciding not to be too fussy about facts, managed a decent conversation about Sadhguru Jaggi Vasudev’s life and teachings.

I spoke in two India-specific sessions, one with the former Chinese Finance Minister Lou Jiwei on “The Future of India and China in the New Stage of the World Economy” and the other, organised by China Finance 40 Forum, at a beautiful, quaint restaurant in Fuchengmen Inner Street. The group’s stylish title derives from the fact that it was formed by 40 finance and economics experts, all roughly 40 years old.

It is an open, argumentative forum, the kind one encounters in America and India. I told them what I believe, that the two countries in the world best poised to grow and become global leaders are China and India. China is ahead of India, having invested in health and education early, and having grown rapidly, between 9 and 11 per cent, since 1980. India’s growth picked up later, in 1994, and breached the 9 per cent mark only in 2005.

There are risks for both nations. China is trying to transition to what was known to be India’s strength — soft power — to connect to the world through the arts, films, literature and science. In the long-run, soft power is more resilient than hard power. That is why Athens, and not Sparta, a more formidable military state, is known as the cradle of western civilisation. That is why the US nurtured its universities to become global centres of learning and outreach. It is encouraging to see China recognise this: But such a switch will not be easy. With its powerful government, totalitarian control and lack of civic freedom, China will have to negotiate some risky turns to get there.

It is for this reason that, I believe, in the long-run, India is the safer bet. India made the difficult investments — in democracy, secularism, freedom of speech, higher education — early. The recent demonetisation was a big mistake. Without it, India would have been growing at over 8 per cent by now. Luckily, the country made decisions that were good, such as the adoption of the GST and the effort to cut down bureaucratic costs.

But India also has risks — they come from the resurgence of the country’s nationalistic right wing, which suffers from a sense of shame about India and an envy of other militaristic countries and chauvinistic cultures. There have been sporadic actions by this group across the country that can destroy the investment India made in soft power, which, once undone, can do immense long-run damage. I hope that the leaders interested in India’s welfare will act to stall these regressive elements.

What needs to be appreciated is that, while economic policy is important, and profits and finance undoubtedly matter, a country’s long-run strength depends disproportionately on culture, social norms, the level of trust among people, the sense of inclusion and pride people have in their society. (And it is worth adding, pride cannot be built by beating up people who do not have it). For this reason, the first World Development Report that I initiated after joining the World Bank in 2012 was called Mind, Society, and Behavior. The Report is a trove of how the mind-set matters — if you repeatedly tell certain groups that they are backward and less intelligent, they begin to perform worse, even when there are no innate differences.

Some of the most compelling studies on this are from India involving caste. How you present the option to get educated can make a big difference in people choosing to get educated. Different cultural backgrounds lead to different choices. And so on. There are serious examples enough in the Report. So, let me close by recounting a facetious tale from my college days, summing up the role of mind-sets. The Catholic Church announced a contest in which people had to name the most important person who ever trod the earth. The winner would get $20.

A Muslim man raised his hand and said, “Mohammad”. “Good try”, was the response of the jury. A Jewish lady offered, “Moses”. No. And this went on. Then an Indian, a Hindu, stood up and said, “Jesus.” The jury broke into a clap, while there was a gasp of anguish from the Hindus in the audience, who rushed to ask why he felt that way.

Tucking the 20-dollar bill into his pocket, the man answered, “Business is business, and must not be mixed with religion.”