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SEPTEMBER 22, 2017

Solving the Afghan riddle

  • Afghanistan, counterterrorism and defence ties are expected to be the prime issues on the table during James Mattis’s visit to India next week.
  • It is for the first time that a U.S. President has been publicly so critical of Pakistan.They were also codified in the form of conditions in various assistance laws, including the Kerry-Lugar-Berman Bill. The important issue today is how the U.S. strategy differs from the past in terms of addressing concerns regarding Pakistan’s role in Afghanistan, particularly in view of a shift in Pakistan’s strategic priority towards China.
  • The situation in Afghanistan continues to be fragile. Though the Taliban has made some gains, it is not a cohesive movement and has divisions within it. At the same time it has to be understood that since 1747, Afghanistan’s territorial borders have remained unchanged unlike its neighbours Pakistan and the Central Asian Republics.

India-Afghanistan ties

  • Indo-Afghan relations are unique. Just after Independence, on January 4, 1950, India signed a Treaty of Friendship with Afghanistan which also permitted opening of consulates in each other’s country. More recently, in October 2011, India was the first country Afghanistan signed a strategic partnership agreement with.India has always wanted a democratic, stable and strong Afghanistan able to decide its own future.
  • India has a close strategic partnership with Afghanistan covering a broad spectrum of areas which include political, security, trade and economic cooperation as well as capacity development.
  • India’s assistance in the defence sector has been modest and based on specific requests by the government of Afghanistan. The cumulative level of committed Indian assistance to Afghanistan amounts to $2 billion.
  • Surveys conducted by various Afghan and foreign news agencies over the years show that the Afghan people ranked Indian assistance as the most suitable because of the positive role India played in the development programme of Afghanistan.
  • Furthermore India is considered as non-threatening with its democratic traditions upheld as a model. The Afghans also appreciate that India had never interfered in their internal affairs.
  • Speedy augmentation, training and supply of equipment for the Afghan National Security Forces is important to enable Afghanistan to protect its interests and maintain peace in the country. The Afghans want more help, for instance, at present for their air force. India could assist Afghanistan in training as per their requirement and supplying much-needed spare parts and such equipment as is possible without deployment of Indian troops in Afghanistan.
  • Asia is a region of energy and resources stretching from the Persian Gulf to the Caspian Sea and Central Asia to Siberia and Russia’s Far East. The energy basket needs to be exploited for the benefit of Afghanistan and the surrounding region.
  • The Turkmenistan-Afghanistan-Pakistan-India pipeline is one example.
  • SAARC (South Asian Association for Regional Cooperation) and SCO (Shanghai Cooperation Organisation) should help in encouraging regional economic cooperation between Afghanistan and its neighbours.
  • Expeditious action on completion of the Chabahar port will help in increasing Afghanistan’s contacts with India and the outside world.

No outside interference

  • It is essential that there is no outside interference in Afghanistan. To enable this, the infrastructure of terrorism has to be dismantled.For any effective counterterrorism policy, all major terrorist groups operating in the area should be considered a single group. The elimination of terror outfits will bring peace to Afghanistan.
  • Simultaneously, it is also imperative to redouble counter-narcotics efforts as Afghanistan remains the world’s largest producer of opium accounting for 90% of the world’s supply. Success in this field will have a positive effect on its neighbours.
  • India is in favour of a reconciliation process which has overall Afghan support and is based on internationally accepted redlines. India supports the Afghan quest for peace and reconciliation. Indeed peace and reconciliation were embedded in the very first international compact on Afghanistan, in the text of the Bonn Agreement of December 2001. Renunciation of violence will help this process.
  • For regional security there must be closer involvement of regional powers in international efforts to ensure non-interference and a stable Afghanistan; this also requires involvement of the Central Asian Republics, which border Afghanistan. It is important for India to coordinate its efforts with those of Russia and Iran to ensure success. The U.S. will benefit in helping this to happen.

India-Pakistan relations

  • India and Afghanistan have never exploited their friendly bilateral relations to harm Pakistan. This is clear from three things: (a) In both the 1965 and 1971 wars, Afghanistan was non-committal and did not support India; (b) On the Kashmir issue, Afghanistan has not publicly supported India; (c) Similarly, India has not entered the debate on the Durand Line.
  • Neither India nor India-Pakistan relations were responsible for the situation which prevailed in Afghanistan following the departure of the Soviet troops which threw the country back to medieval times and brought the Taliban to power and Al Qaeda/Osama bin Laden in the region. No extremist group — the Taliban, Haqqani network, Lashkar-e-Taiba — is based in India or has any Indian connection. The U.S. operation to kill Osama bin Laden and the recourse to drone attacks in Afghanistan were due to the situation prevailing there, which had nothing to do with India or India-Pakistan relations. Again when Pakistan decided to shift over 100,000 of its security forces from its eastern border with India to its western border with Afghanistan in 2010, India did not exploit the situation. India, in fact, has always been a part of the solution.
  • To blame India-Pakistan relations for the situation in Afghanistan is neither fair nor just. The root cause of the Afghan problem has been clearly stated in President Trump’s policy statement of August 21 and also mentioned in his address to the UN General Assembly on September 19. Now Afghanistan, and the region, await to see how it is implemented.

Turn the page to a new chapter

  • In September, Xiamen city of China not only hosted the BRICS Summit, but also witnessed an especially important meeting between Chinese President Xi Jinping and Indian Prime Minister Narendra Modi. This was the first after the Dong Lang (Doklam) stand-off.

Surpassing expectations

  • The outcomes were beyond expectations. Both leaders agreed to start a new chapter. An important consensus has been reached to enhance mutual trust, focus on cooperation, and manage differences. Both leaders also agreed to conduct closer high-level exchanges, revitalise a series of dialogues and mechanisms, as well as promote youth and educational cooperation.
  • President Xi said that Dangal’s success has increased the affinity of the Chinese to the people of India, while PM Modi also highly praised the great success of Where Has the Time Gone, a film named after a speech by President Xi and which was co-produced by artists from the five BRICS member states.

Common aspirations

  • Economic and trade cooperation are gaining momentum. Last year, the trade volume between China and India exceeded $70 billion. China has been for many years the largest trading partner of India. More than 500 Chinese companies have invested and started business in India with a total investment of over $5 billion. Many Indian enterprises of IT, pharmacy and consultancy have entered the Chinese market. For instance, there are more than a hundred Indian software engineers living in the Sino-India Software Industry Park in Linyi city, Shandong province.
  • People-to-people exchanges are thriving. Mutual visits between our two countries have exceeded one million. Practising yoga, drinking Darjeeling black tea, and watching Bollywood movies have become fashionable among the Chinese youth. Yunnan Minzu University has established the India-China Yoga College. We are also working to hold the Annual Indian Tourism Conference in Yunnan province.
  • Local exchanges are booming. China and India have established 14 pairs of sister cities and provinces.
  • Two countries have maintained close high-level communications. Home town diplomacy initiated by President Xi and PM Modi has become a much-told story. Both leaders have met more than a dozen times on bilateral and multilateral occasions.
  • Now, China’s economy is stable and our reform has entered a crucial stage. India is also accelerating its reform. Make in India, Digital India, Startup India and other initiatives have yielded outcomes. Significant measures like the GST Act have been implemented. Faced with similar development objectives and common challenges such as “anti-globalisation” and trade protectionism, China and India should work together.
  • Both sides should set long-term goals for the development of our bilateral relations. We can consider negotiating the Treaty of Good-Neighbourliness and Friendly Cooperation between China and India, restarting the negotiations of China-India Free Trade Agreement, striving for early harvests on boundary issues, and actively exploring the strategic synergy between China’s Belt and Road Initiative and India’s ‘Act East Policy’.
  • Both sides should appropriately manage differences, get under control the problems left over by history such as issues related to boundary and the Dalai Lama, while finding solutions to new problems.

Taper timetable

  • Quantitative easing has concluded in the world’s largest economy — at least for now. Almost nine years after the U.S. Federal Reserve started its unprecedented programme of liquidity infusion through the purchase of asset-backed and Treasury securities in the wake of the global financial crisis, Fed Chair Janet Yellen announced on Wednesday that starting next month the central bank would begin the normalisation of its balance sheet. To their credit, Ms. Yellen and her colleagues on the Federal Open Market Committee have walked the talk on their June decision to unwind the mammoth $4.5 trillion balance sheet. Most crucially, they have done it in a manner that precludes the risk of a ‘taper tantrum’ similar to that in 2013 — when Chairman Ben Bernanke had hinted at starting to turn off the tap — by setting out a slow, long-drawn and well-calibrated timetable to shrink the Fed’s holdings. The asset wind-down will begin with monthly reductions of a modest $10 billion in the three months through December. That amount will gradually increase in quarterly increments of $10 billion so as to reach, in October 2018, a monthly cap of $50 billion. It will continue at this level till such time the Committee concludes that the size of the central bank’s asset holdings is optimal for the effective conduct of monetary policy. Interestingly, Ms. Yellen, who asserted that the balance sheet was not intended to be an “active” policy tool in normal times, especially now that economic activity had strengthened, also placed a caveat. The Fed, she said, “would be prepared to resume reinvestments” if the economic outlook were to deteriorate so significantly as to warrant “sizeable” interest rate cuts.
  • Not that Ms. Yellen sees the healthy expansion undergirded by household spending weakening, the damage from the recent hurricanes that have battered coastal regions in the U.S. south notwithstanding. The FOMC has, in fact, marginally raised its median projection for U.S. real GDP growth in 2017 to 2.4%, from the 2.2% estimated in June, and signalled that it is on course to raise the federal funds rate one more time this year after leaving interest rates unchanged for now. However, the one element in the Fed’s policy calculus that eludes, in Ms. Yellen’s words, a more perfect “understanding” is the lower-than-anticipated trajectory of inflation. Given that monetary authorities in the U.S. are focussed on reflating the economy by supporting “further strengthening” in the labour market through an accommodative stance, the central bank has to remain vigilant in warding off any let-up in expansionary momentum. For Indian policymakers, there are both positive and not-so-welcome cues. While the ongoing moderate expansion in the U.S. bodes well for the country’s struggling exporters, the end of easy money conditions could augur a slowdown in investment inflows from abroad and resultant pressure on the current account deficit. The Reserve Bank of India, though, should welcome the clarity in messaging from its U.S. counterpart.