Major Post-Cold War Trends in India's Neighbourhood

Chintamani Mahapatra,Research Fellow,IDSA


What is India's neighbourhood? When India became independent, its first Prime Minister Pandit Jawaharlal Nehru was not only knowledgeable about world politics but was also aware of certain global events that had direct and indirect bearing on India's security. Indian foreign policy under his stewardship had a global dimension. However, aware of India's limitations at that time, Nehru sought a more direct and immediate role for India in Asia. Even when World War II was ravaging on and India was years away from being independent, Nehru had articulated an Indian role in the Asia-Pacific region. Even before India formally became independent, Nehru convened an Asian Relations Conference in New Delhi. A couple of years after independence, he convened yet another Asian Conference to discuss the Dutch military action against the Indonesian nationalists. And during both these conferences India floated suggestions for forging cooperative arrangements in Asia.

However, a combination of the Cold War, regional and domestic factors gradually limited India's foreign policy and national security preoccupation to a narrow geographical sub-region called "South Asia." The situation seems to have changed once again. A growing number of Indian analysts, commentators and foreign policy pundits appear to be convinced that South Asia is no longer the appropriate frame of reference to understand the national security interests of India.1 India has come a long way since its independence in terms of its political, economic and military achievements.

With a comprehensively written Constitution, sophisticated legal system, free Press, vigilant judiciary, intelligent voters and numerous political parties representing interests of a varied population, Indian democracy today stands as a model for plural societies around the globe. While India has a long way to go before it is able to raise the standard of living of millions of its citizenry, it is no mean achievement for a complex country like India to possess a middle class population which rivals the total population of the United States. While wars with neighbours in the first 25 years of its independent existence circumscribed India's capacity to emerge as an Asian power, India managed its security problems quite well in the next 25 years. There was no country, which could wage war against India. India in the meantime has become a nuclear and missile power of Asia. Many countries of Asia, which had earlier failed to see India as an emerging power, woke up suddenly to take notice of the country in the wake of Pokhran II. According to a Japanese diplomat, the Pokhran II nuclear explosions worked as an alarm bell in Japan, which had not taken India very seriously until then.

In the backdrop of all these developments, it would be appropriate for India to reconstruct its neighbourhood to include whole of Asia where it could play a role for maintenance of peace and stability and promoting economic growth. In this paper, an attempt has been made to highlight certain major strategic trends in Asia. However, in an increasingly globalising environment, it would be appropriate to take note of certain evolving issues before attempting to understand the strategic developments in Asia.

Strategic Landscape

The Global Context

The world is never static. It is always in a state of flux. It would be very difficult to explain things in terms of pre-Cold War and post-Cold War context for the simple reason that the time span of various phenomena and events overlap any kind of boundary line. But it would be worthwhile to explain the kind of world we have been experiencing since the collapse of the Soviet Union. The international system that evolved after World War II through the Cold War years has been understood in terms of bipolarity or multipolarity. The disintegration of the Soviet Union has raised questions about the current structure of the international system. Is it unipolar? Is it multipolar? Is it polycentric? Can China emerge as a superpower and turn the system into a bipolar one once again? Will Russia be able to bring its economic house in order and restore its former position? Are there going to be clearly identifiable poles with their respective spheres of influences?

Questions of this kind are numerous and clear answers are still awaited. But the fact remains that the interactions among nations on the eve of the 21st century have become more complex than ever before to allow any particular pattern or structure to emerge. Was not the immediate aftermath of the World War II period more unipolar with the US accounting for 50 per cent of the global output and the monopoly over the nuclear weapons? Could it prevent other centres of power from rising? Scholars, who argue about a unipolar world in the post-Cold War era, should realise that the same era also saw the emergence of two more nuclear powers. But instead of identifying poles of power, it may be sufficient to suggest that the US, the European Union (EU), Japan, China, India and Russia are the major international actors in the post-Cold War era.

At the same time, one has to understand that these state actors or for that matter nation-states are no longer the major international actors in an increasingly globalising world. The transnational organisations, such as the World Bank, the International Monetary Fund (IMF), the World Trade Organisation (WTO), international regimes like the Nuclear Non-Proliferation Treaty (NPT), the Missile Technology Control Regime (MTCR), the Wassenaar Arrangement, Comprehensive Test Ban Treaty (CTBT) etc; and regional groupings of the kind seen in the EU, North American Free Trade Area (NAFTA), Asia-Pacific Economic Cooperation (APEC), North Atlantic Treaty Organisation (NATO), Association of South East Asian Nations (ASEAN), South Asian Association for Regional Cooperation (SAARC) etc. have also become players in international affairs. While nation-states are members of such groupings, these groupings also have an identity of their own. At another level, non-state entities like the non-governmental organisations (NGOs), terrorist organisations, drug trafficking networks, international crime syndicates and human rights organisations and other groupings have contributed to the growing complexity of international relations.2

In other words, "national sovereignty and national insularities are being subsumed by the process of economic globalisation" and the "strategic equations and chemistry of power which underpinned international relations for half a century since the end of World War II have been replaced by new equations."3 The information technology revolution, rise of narco-terrorism, ethnic and sub-national aspirations, religious extremism and proliferation of light weapons, environmental degradation, movement of population and a whole host of non-military issues have come to be seen as one of the primary threats to existing nation-states and to the international community as a whole. In the backdrop of these developments, it is perhaps important to survey the Asian strategic scene in recent years.

Major Asian Powers


Asia, being one of the most significant grounds of Cold War rivalries, experienced a new strategic landscape with the end of the Cold War and the collapse of the Soviet Union. The United States as a result has emerged as the single most powerful actor in Asian geo-politics and geo-economics. The recession in Japan, the Asian financial crisis, the diminishing revenues of the oil producing countries and the prevailing apprehensions about the uncertainty surrounding the rising power of China have contributed to the relative strength of the United States' role in Asia. When the Cold War ended, the prevailing impression was that the centre of gravity of global economic activities was shifting to the Asia-Pacific. This impression proved incorrect with the onset of the Asian financial crisis. After all, in the late 1980s, there was a sort of "Europhoria", as economic growth in Western Europe accelerated and "dreams of European unity seemed within reach."4 But on the eve of the 21st century, the American economy is claimed to be in a period of robust growth with eighth year of consistent growth, "transcending the German and Japanese miracles."5 With an economy second to none, America is in a better position to realise its interests in Asia today than at any time in the past.

The United States today is a status quo power and there are "no countries that are not great powers today that the United States wishes to see become great powers."6 While the US has been trying to manage international relations by placing itself at the centre of various coalition forces, comprising the great powers, such as Britain, France, Germany, Japan and possibly Russia (all of which are also important members of other powerful institutions, such as World Bank, IMF, UN Security Council and international control regimes, such as NPT, Nuclear Suppliers' Group, MTCR, etc.), it has carefully crafted policies to restrict others from emerging as a rival to supplant its leadership role.

By employing sanctions as a political tool, Washington seeks to contain Japan, China, India, Iran, Iraq, North Korea, and Russia in different ways. The Clinton Administration has imposed sanctions against India and Pakistan in the wake of their nuclear tests and engaged in bargaining to set the pace and extent of their nuclear and missile development programmes. It has adopted a dual containment strategy to circumscribe the powers of Iran and Iraq in the Persian Gulf. It is also seeking to manage the North Korean WMD (weapons of mass destruction) programme by adopting a carrot and stick policy. By indefinitely extending the bilateral security arrangement with Japan, Washington seeks to regulate the emergence of a militarily independent Japan. By employing an engagement strategy, the Clinton White House seeks to regulate Chinese political behaviour and monitor the military modernisation of China.

There are four Asian nuclear powers—China, India, Pakistan and Israel. There are three "suspected" nuclear aspirants—North Korea, Iran and Iraq. And there are three countries with technical capabilities to go nuclear—Japan, Taiwan, and South Korea. The United States has provided security umbrella to Japan, Taiwan and South Korea and has extensive economic ties with them; and thus has little to worry. It has been able to destroy the WMD capability of Iraq with the UN Security Council support. It has adopted a policy of isolating Iran. While this policy has developed cracks, Iran is nowhere near acquiring a nuclear weapons capability. Israel is an American ally and a strong pillar in Washington's Middle Eastern strategy. Located in a hostile environment, Israel appears to be destined to be dependent on the US for its security.

China happens to be the only Asian country with a de jure nuclear status. The United States does not possess adequate leverage to dictate China's nuclear policy behaviour. But Washington's engagement strategy has achieved China's overall concurrence to its non-proliferation crusade. By carefully playing the "export control" card, China in the process has been able to give boost to its military modernisation programme by acquiring US technology. Pakistan has traditionally been a US ally. Its nuclear weapons programme owes a great deal to the US policy towards Afghanistan, military assistance to Pakistan and Pakistan's ability to shop for nuclear material in the US, among other markets. The Pakistani nuclear tests brought no surprise to the Clinton Administration. After all, the US Administration was aware of Pakistan's nuclear status, as indicated by the imposition of the Pressler Amendment in October 1990. Washington subsequently accommodated Islamabad's interests by enacting the Brown Amendment. Before long, one can expect, the US to coopt a nuclear Pakistan and turn it into an ally. Pakistan's economic vulnerability has already induced Islamabad to seek restoration of strategic ties with Washington.

The two countries, which apparently pose a problem for the USA, are North Korea and India. North Korea has already demonstrated its missile capability and it is a suspected nuclear capable country. Pyongyang is suspicious of the American offer of accommodation. It resents its characterisation as a "rogue state" and is unlikely to refrain from developing its WMD capability. But if North Korea overtly goes nuclear, will Japan and South Korea follow suit? It would depend on the level of American commitment to Japan and South Korea and the willingness of Tokyo and Seoul to mortgage their survival to US commitment forever. If there were unification of the Korean Peninsula in future with North Korea's demonstrated WMD capability, it would raise another set of complications in the region. Taiwan poses another nuclear imbroglio. In the absence of peaceful unification with the Chinese mainland and in the absence of American commitment of the type demonstrated during the 1996 tension across the strait, Taiwan may also be tempted to go nuclear. The problem that India poses to the US emanates from the nuclear tangle of Southern Asia. India cannot follow the US position that it should work out a nuclear restraint regime in South Asia. And the US finds it difficult to encourage China to join the restraint regime to suit India's interests.

One may not be surprised if the number of Asian nuclear powers rises to eight by 2020 with North Korea, South Korea, Taiwan and Japan joining the Asian nuclear club. While such a prediction may ring alarm bells in the Western world, it may contribute to Asian stability based on the doctrine of nuclear deterrence. All the nuclear powers and nuclear capable countries in Asia have their historical and potential enemies. Wars involving major Asian powers then may become next to impossible with an expanded nuclear deterrence at work. An Asian balance of power may emerge with its oriental peculiarities. It is unlikely that there would be a nuclear arms race among the Asian nuclear powers. The questions of affordability, the uselessness of acquiring an arsenal other than one necessary for a minimum credible nuclear deterrence and several other international constraints would prevent a nuclear arms race in the Asian continent. It may so happen that the realisation of the cost of war would provide a kind of stability that would make safe ground for more intense economic activities and greater political cooperation.


China's emergence as a significant player in Asian geo-politics and geo-economics is a noteworthy development in India's neighbourhood. It has been a nuclear power since 1964, but its conflict with the former Soviet Union, non-cooperative equation with the United States and a backward economy constrained it from playing a major role in Asia. However, by the time the Soviet Union collapsed and the Cold War ended, the Chinese economic reforms, undertaken since 1978, had brought enormous returns for the country. It had established a cooperative economic relationship with the US, which helped it in neutralising America's political discord on several issues, such as arms sales, export control, human rights, Taiwan and Tibet. The success of the Chinese economic reforms led all the major powers in the world to chart out an engagement policy towards China which has enabled Beijing to make it politically acceptable to those countries which were its rivals or considered it an adversary.

What is going to be the future of the Chinese economy? Speculation on this country's economic future is abounding in view of its strategic implications. The IMF has forecast that China will be the number one economy in the world surpassing the Gross Domestic Product (GDP) of the United States by 2010.7 Daniel Burstein and Arne J. De Keijzer maintain that the Chinese economy will grow at an implausible rate of 8 per cent a year over the next 40 years and will assume a dimension that would allow Beijing to demand a voice in setting international rules.8

The reason why strategic analysts are speculating about the course of the Chinese economy lies in the fact that an economically stronger China will have more resources to expand its military power and an economically weaker China may create domestic instability, which will have regional implications. After all, years of economic growth have already enabled Beijing to allocate substantial amount of funds for weapons acquisition and military R & D efforts. The amount of this allocation cannot be easily determined in view of the fact that funding for weapons research and development is part of the culture and education section in the Chinese budget, and the money for weapons production and procurement comes under economic reconstruction.9 Moreover, with the Chinese decision to accede to the US-inspired international control regimes such as the NPT and the MTCR and the CTBT, China's military acquisitions and modernisation are no longer the target of these regimes. It has enabled the Chinese government to work for the capability expansion of the country's military establishment with only a little or no international noises.

There is no agreement among the analysts on China's military capability or sustained economic prosperity. While there is awareness that China has been able to possess a nuclear arsenal and delivery systems to credibly deter both the US and Russia, the US and Japanese analysts do not give many marks to the quality of the Chinese weapons and other military equipment. Ikuo Kayahara, for instance, says: "The military technology of China is not of the first run. Traditionally, China has attempted to promote domestic development of weaponry on the principle of self-sufficiency, but with the exception of certain isolated areas, including nuclear missiles, military technology remains at a relatively low level. The country's capacity for weaponry R & D production remains weak."10

Scholars and analysts watching China's political economy, while acknowledging that country's tremendous economic progress, have also pointed out the inherent problems. The problems are the following.

The Chinese economic growth has brought about a polarisation of the Chinese society by creating new classes of people, such as the neo-rich, middle and professional classes and poor labourers who had seen better days before the reforms came. Recently, Deng Liqun, a hard-line critic of reforms and former propaganda chief of China, criticised the country's growing income inequality, referring to 48 million people in the countryside living below the poverty line, more than 30 million workers without jobs and more than a million new millionaires in the country.11 Cheng Li, in his book Rediscovering China: Dynamics and Dilemmas of Reform, points out the emergence of a class of "bureaucratic capitalists", widening disparities in wealth, large-scale rural-urban migration, growing urban unrest and lack of a "social safety net" in China.12 In fact, in the backdrop of rising unemployment, labour unrest and a slowdown in domestic economic growth, the Chinese government took precautions and announced a set of administrative regulations in November 1998 that would make another Tiannanmen almost next to impossible. The new regulations stipulate that "any one inciting to subvert state power" (artistes, authors, publishers, musicians and filmmakers, for instance) could face anywhere from three years to life imprisonment.13 The economic development in China has been lopsided and given the long history of shifting internal balance of strong and weak centres, Beijing's control over various parts of the country may begin to face problems sooner or later. While China is far from emerging as a democratic society, urban privatisation has led to a certain kind of decentralisation of power at all levels and more grassroots local elections are taking place.14 As technocrats rose to leadership and entrepreneurial initiatives by regional authorities grew, the central government soon began to adopt policies to strengthen fiscal and monetary centralism. But the "centripetal pull of financial centralism is not strong enough to offset the centrifugal pull of entrepreneurial localism."15 China's industrial growth has not accompanied growth in agricultural productivity. China, of late has become the largest importer of American wheat, although it has achieved substantial trade surplus by exporting largely toys and some other items (labour--intensive products such as textiles, garments, shoes etc.)16 Last but not the least, the increasingly open interaction of the Chinese businesses with the international market, rising number of foreign trained Chinese students, along with the factors mentioned earlier, raise the question as to how long and how far China can manage to deal with its structural pluralism within an authoritarian governing system. There seems to be a lurking fear in the country's neighbourhood that in its efforts towards dealing with its growing vulnerabilities, China could "over-react externally."17


The first Prime Minister of Japan, Shigeru Yeshida, wrote in his memoirs that Japan's destiny "was to be a global power, and the expansion as well as security of the state was best guaranteed by close alliance with the dominant Western power in Asia and the Pacific...just as the United States was once a colony of Great Britain but is now stronger of the two, if Japan becomes a colony of the United States it will eventually become the stronger."18 While Japan did not become a colony of the US after the end of World War II, nor has it become stronger than the US, by the late 1980s, it had acquired a strong, mature and resilient economy and had started showing its interest to become a major player in international affairs. In 1981, Tokyo extended its defence perimeter up to 1,000 nautical miles; in 1987, it managed to overcome the psychological barrier of defence expenditure which was, until then, not to be more than one per cent of the GDP and during the 1991 Gulf War, Japan's contribution to the US-sponsored war efforts against Iraqi occupation of Kuwait was to the tune of $13 billion.

In the meantime, Japan has become the largest donor nation and the leading banker of the world, even as the United States has become the largest debtor nation in the world. Besides, the Diplomatic Blue Book of Japan in 1991 recognised the need for the country to go beyond the traditional "cheque book diplomacy". The first stride in this direction was taken in 1992, when the Japanese government sought parliamentary approval to dispatch the Self-Defence Forces (SDF) overseas to participate in the UN peace-keeping operations. By the autumn of that year, a contingent of 600 SDF logistic and engineering personnel were already there in Cambodia as part of the UN peace-keeping operations. Since then the SDF has participated in UN peace-keeping operations in Mozambique, Kenya, Zaire and Golan Heights.19 Being the second largest contributor to the United Nations budget, among other things, Tokyo has openly staked its claim to enter the UN Security Council as a permanent member.

While Japan began to make modest contributions to UN peace-keeping operations abroad, at the same time, it did not neglect the acquisition of a powerful fighting force at home. In fact, in the perception of the South-East Asian countries Japan has, over the years, acquired one of the most sophisticated military machines in the region. According to a US naval officer, " the late 1980s the SDF had [already] become one of the most powerful maritime forces in the Pacific."20 While Japan has remained tight-lipped about its military preparedness, Prime Minister Hata in June 1994, openly stated that Japan had the technological capability to make nuclear weapons.21 Although Japan's technical capability was not unknown to the international strategic community, it was the first time that a Japanese Prime Minister was speaking about Japan's nuclear capability. In May 1996, the Japanese Prime Minister said that the SDF was equipped with some of the world's most advanced weapons and that Japan would be launching its own military satellite.

The dispatch of a Japanese helicopter carrier to the Gulf of Taiwan during the March 1996 crisis between China and Taiwan; the indefinite extension of the US-Japan security agreement expanding the geographical and functional scope of the treaty, show of military force during the tension over Shenkaku Island in September 1996; suspension of aid to China due to the nuclear tests, and suspension of aid to India and Pakistan on similar grounds more recently are indicative of Japan's activism in international affairs.22 China was undoubtedly perturbed by the indefinite extension of the US-Japan bilateral security treaty with an expanded scope, but the Chinese security analysts also appeared apprehensive about "Japan's renaissance as a world class military power in the early 21st Century." While Chinese analysts did not dismiss the Western assessment of Japan that "cultural pacifism, domestic political constraints and economic interests" would discourage Japan from entertaining military ambitions, they believed that those factors might only delay the process and not negate the eventuality.23 China's military modernisation, and its military cooperation with Russia, which has been ascending consistently for a variety of reasons, may get further consolidated, depending upon the evolution of the US-Japan relations in the Asia-Pacific and the Japanese military modernisation.

In the foreseeable future, the close US-Japan relationship is unlikely to change drastically. Japan is America's largest trading partner in Asia, alone accounting for more than double that of America's trade with ASEAN combined. More significantly, Japan's economic capabilities would allow it to play a substantial role in international affairs, with or without the security ties with the US. Today, Japan accounts for about 16-18 per cent of the global output and trading activities. Japan is not only a leading donor country but has also emerged as a large international investor with its overseas investments reaching almost every corner of the globe. The current recession in Japan is unlikely to damage Japan's economic standing in the world, as it has a large R & D base in the country. Tokyo spends much more than any European country on research and development and as a percentage of the Gross National Product (GNP), it spends even more than the US does.24

Despite impressive economic growth and more impressive economic growth projections, China, like India, would continue to be a marginal player in the global economic affairs compared to Japan. More than anything else, the demographic burden will circumscribe the role of the country in the international political economy. This can be said about India as well. According to one estimate, if India's per capita growth in output rises at an average of 3.5 per cent with a population growth averaging at 1.5 per cent, by 2020 India's per capita level will grow from $1,150 to $3,200 and its GDP will then be about $4,000 billion. India could then have the world's fourth largest economy in the world after the US, China and Japan.25 But India would still have a large domestic burden and may have little opportunity to become an aid donor. Japan, on the other hand, is a substantial contributor to all major international economic organisations, such as the World Bank, IMF, Asian Development Bank (ADB) and others.

East Asian Financial Crisis

When the Cold War was on its last legs, the focus of the world was on the vibrant economic activities of the Asia Pacific. According to analysts, the centre of the global power balance was to shift to the Asia-Pacific in the 21st century. The European leaders at that time were restive that Washington's attention was shifting more towards the Asia-Pacific, away from Europe. There was apprehension that an emerging Asia Pacific community, still undefined, could ultimately weaken the Trans-Atlantic ties. The World Bank's 1993 report, The East Asian Miracle, praised the high performing Asian economies for their strong economic fundamentals, high rates of private investments, considerably high savings rates, and human resource developments. Over a period of 25 years (1965-1990), according to the Bank report, eight Asian countries (Japan, South Korea, Taiwan, Singapore, Hong Kong, Malaysia, Thailand and Indonesia) achieved economic growth which was twice as fast as that of other Asian countries, three times faster than that of Latin American economies and five times faster than that of the sub-Saharan countries.

However, the following year, Paul Krugman argued in his article in Foreign Affairs that Asia's economic miracle was a "myth." He wrote that the Asian high economic growth rates were the result of mobilisation of labour and capital. He pointed out that there were limits to growth in the absence of innovation and technological advancement. He had drawn his inferences from two studies by Alwyn Young and Lawrence Lau who argued that the total factor productivity in Asia was not much different from that of the Latin American countries.26 The following year, China, where labour is much cheaper than, for instance, in Indonesia, Thailand and some other countries, devalued its currency by 35 per cent. This step increased China's share in the American market, led to a decrease in the ASEAN countries' share in the same market and perhaps constituted one of the major factors, which subsequently created the East/South East Asian financial crisis in 1997.

The Asian financial crisis, which started in Thailand in July 1997 and spread to South Korea, Indonesia and some other countries, created concerns not only in Asia but also all over the world. The crisis, along with the bank closures and recession in Japan, set at rest the speculation, at least for the time being, that the centre of gravity of global economic activities was shifting to Asia. While China's economic performance remained satisfactory to the Chinese and attractive to outsiders, there has been a lurking fear that the crisis may sooner or later affect China. Also, there was fear that yet another Chinese devaluation may further worsen the crisis.

The Main Causes of the Crisis

l Internal limitations in the economies of South Korea, Thailand, Indonesia are the main cause of the crisis. Massive amounts of short-term capital flowed into Thailand, South Korea and Indonesia during 1994-95 and ended up in investments in questionable projects.

l The current account deficits of these countries were largely financed through external borrowings and it went on increasing with falling exports.

l Weak financial institutions and "crony capitalism" are prevalent in all these countries.27

l Some find fault with the international financial system, particularly the IMF, and have either blamed the IMF for exacerbating the crisis or have called for reevaluation of the international financial system.28

l Some analysts have sought to discover the reason of the crisis in the so-called "hot money" or the international finance capital, which can criss-cross national boundaries rapidly and freely with the advancement in information technology.29

l There are others who have discovered a "metaphysical culprit" for the financial crisis in the so-called "Asian values." The Confucian ideas seem to be under attack on the ground that they give preference to benevolence over fairness, loyalty over rationality, formality over practicality, and knowledge over creativity.30 Interestingly, in the 1970s and the 1980s, the Confucian tradition (spirit of community, zeal for education and diligence) was thought to be the driving force behind the economic prosperity in the region.31

Consequences of the Asian Financial Crisis are not Insignificant

l It has given a jolt to regional confidence and has certainly delayed the process, which was apparently leading towards the shifting of the centre of economic activities.

l It has led to political upheavals, particularly in Indonesia, and it threatens the political and social stability in the entire region.

l It has led to reduction in defence expenditure, weapons acquisition and defence preparedness. A prolonged crisis would widen the regional military balance in the region.32

l China's clout in the region appears to have been enhanced. While its relative military strength has been increasing, its economic interdependence with the regional countries may constrain it from asserting its power.33

l The region's dependence on the US military presence has been further emphasised by the crisis. By refusing to accept the demand for a regional fund to address the problem, Washington seeks to prevent any erosion of its base.

l Interestingly, the crisis, while providing a basis for enhanced cooperation within the ASEAN, has also led to a reappraisal of the principle of non-interference.

l The Asian financial crisis has not only halted the APEC's ambition of region-wide free trade arrangement but also raised doubts about the model of economic development these countries were following until recently.

l The dominant agenda of regional cooperation has altered, at least for the time being, in the wake of the financial crisis. The search for a new security paradigm for the region through the ARF, APEC and CSCAP has receded in priority, as the search for ways and means to tackle the financial crisis has taken precedence.

Central Asia

The emergence of the five new states in Central Asia in the aftermath of the Soviet collapse has not only altered the Asian political landscape but also has some contribution to make to the emerging geo-economic scenario in the world at large, and Eurasia in particular. The emergence of these countries in less than a year after the Gulf War of 1991 raised expectations around the world about the possibiliy of yet another source of energy supplies from an area, which was hitherto closed to the outside world. Central Asia as a result witnessed an unusual rush for acquiring a foothold in the region by major international actors, such as the USA, France, UK, Italy and China.

While the actual Central Asian oil and gas resources are yet to be completely determined and various estimates are being worked out,34 the potentiality of conflict in the Persian Gulf and probability of energy crisis in the 21st century have attracted the major powers to the Central Asian Republics. If the oil and gas resources of this region are harnessed, there may be an assured supply of energy during any political or social turmoil in the Middle East/Gulf region. Even otherwise, abundant supply of energy resources would complement the existing ones and prevent an energy crisis from erupting.

But at the same time, a complex power game seems to be prevalent in the region. The United States, which always wanted to control the oil rich Persian Gulf and successfully did so during the 20th century, wants a similar presence in the Central Asian region. However, Russia is still in command in this region on account of its economic linkages and its military influences.35 Central Asia is its near-abroad and it would like to preserve and enhance its control in this region.36 The EU, on the other hand, would not like to play second fiddle to the United States at least in the area of ensuring energy security and the entry of some of the powerful members of the EU to this region should be seen in this perspective. The economic and trade friction between the US and the EU, and the EU's response to US sanctions against Iran and others are indicative of the latter's desire to play an independent role in international economic affairs. And to that extent, the EU would like to have its own presence in Central Asia.

Other forces at work in Central Asia further complicate this complex great power motivations and interests in Central Asia. While China has its own agenda based on its growing energy demands, it is also interested in the region in view of its minority problem in Xinjiang province. Turkey, Saudi Arabia, Iran and Pakistan too are seeking a role on the basis of various combinations of historical, cultural, religious or ethno-linguistic ties.

However, the Central Asian states have several potential problems, which could threaten the region's stability and prosperity. First, the population mix in the region contains the seed of ethno-nationalistic tendencies. Out of the 50 million odd population in the region, about 10 million are Russian minorities.37 There exists a Chinese connection in the sense that there are Uighur, Uzbek, and Kazakh minorities in Xinjiang province. Then there are Uzbek and Tajik populations in the strife-torn Afghanistan. Uzbekistan has large Tajik minorities. Secondly, there is some kind of a religious revivalism in the region with thousands of new mosques mushrooming and various denominations of Islam being preached. There is a lurking fear that fundamentalism may take root and spread, unless appropriate steps are taken well in advance. Thirdly, Kyrgyzstan, Kazakhstan and Uzbekistan are becoming a centre of drug production and trafficking. The international nexus between the drug traffickers, small arms traders and criminal syndicates in this region has risen to a level which may lead to emergence of "narcocracies" in the region.38 Central Asia is not only suddenly exposed to several external actors with various motivations but is also located in a neighbourhood which has been witnessing trouble and turmoil of all kinds, as for instance, in Afghanistan, Chechnya, Tajikistan, Armenia, Georgia and Azerbaijan. A stable Central Asia is crucial to a prosperous Asia and an unstable Central Asia could spread troubles across the whole of Asia.

Persian Gulf

One of the most significant strategic developments in Asia on the eve of the end of the Cold War was the Gulf crisis that started with the Iraqi occupation of Kuwait and the eventual Gulf War between Iraq and an international coalition led by the US. Coming close on the heels of the prolonged Iran-Iraq crisis and the so-called tanker war, etc., this crisis raised questions about the uninterrupted supply of oil and gas to the international community and the security of small states in the region.

But the outcome of the war had more far reaching consequences. The demonstration of the US military might in the war, the collapse of the Soviet Union after a few months, and the Bush Administration's desire to shape a New World Order had altered the global balance of power and the regional strategic situation in the Persian Gulf substantially. As far as the regional scene is concerned, the United States came to dominate the Gulf single handedly. Never before in history did a single power have so much military control over this region. The creation of a Fifth Fleet, headquartered in Bahrain; an agreement with Qatar in 1995 to pre-position US military equipment in that country, and the US facilities in Saudi Arabia and Kuwait supposedly provide security against any threat to regional stability.

Had it not been for Iraqi strongman Saddam Hussein's policies, some calculated and some miscalculated, the regional countries perhaps would not have given political support to the US military presence in the region. Even eight years after the end of the Cold War, Saddam Hussein continues in power, takes steps inviting US military strikes and in a way justifies US military presence in the region.39 Secondly, the downturn in the state revenues of most of the oil producing countries no longer enables the leadership in these countries to keep their people happy by providing a very high standard of living. There is a rising trend of anti-establishment sentiments in most of the Gulf countries, including the headquarters of the US Fifth Fleet, Bahrain.40 The regimes' insecurity from within and from outside (potential Saddams) thus enables the US to maintain its dominance in the region.41 While the US role may be extremely limited in the internal upheavals, if any, anti-American sentiments at the popular level have not done much damage to the US, except for occasional terrorist attacks and encounters.

The Gulf is a very volatile region. There are eight states with about 106 million people. There is one regional heavyweight—Iran; two medium-sized countries such as Saudi Arabia and Iraq; and six tiny states, in three of which the citizens are in a minority. But this region contains more than 60 per cent of the world's proven oil reserves.42 The question of peace and stability in such a region is a matter of concern for both the industrialised and industrialising countries. The US has been following a policy of dual containment against Iraq and Iran; and closer ties with the rest. The US has systematically punished Iraq, and the international community has not been able to do much except making not-so-noisy protests. The containment strategy against Iran has not been a great success, but the damage on Iran seems to be substantial. The US is trying to play the role of a balancer. The shape of Iran-US relations, which have been changing since Khatami's election as the President, is still unclear.

While at the moment there has been quiet international support to the US policy in the Gulf, the future of the Gulf region depends on the inflow of oil revenues, management of internal discontent and prospects of political changes.

South Asia: A New Alliance in the Making?

In the post-Cold War era, the immediate neighbourhood of India, that is South Asia, has witnessed political changes in the form of non-democratic countries adopting electoral politics. Today, with the solitary exception of Bhutan, all other South Asian countries are experimenting with some form of democracy or the other. The global trend of economic liberalisation can also be seen as a wave in South Asia with varying degrees of intensity. Wih the solitary exception of Pakistan, the rest of the smaller South Asian states have improved relations with their bigger, common neighbour—India.

The most significant strategic change in South Asia, however, is Pakistan's Chagai nuclear explosions in response to India's Pokhran II. While it may be premature to draw quick conclusions about the strategic implications of this development, one is tempted to ponder over certain likely consequences.

As we enter the next millenium, India will continue to face a series of old security problems and a few new ones. One of the most important new strategic challenges is likely to be the emergence of a new type of US-Pakistan strategic partnership. This could be qualitatively different from that of SEATO(South East Asia Treaty Organisation)-type of alliance structure or the kind of partnership the two countries forged during the years of the Cold War armed conflict in neighbouring Afghanistan. Although Pakistan had joined the SEATO to meet the so-called real or imagined threat from its bigger neighbour—India, that regional collective security alliance was actually aimed against the Communist countries and thus was of little help to Pakistan. No SEATO member country thus fought with Pakistan against India during the Pakistani-initiated wars against India in 1965 and 1971. Even the closer bilateral defence ties between the United States and Pakistan during the Cold War years were primarily aimed against the former Soviet Union from the American perspective. As a result, notwithstanding its alliance relationship with Pakistan, the United States had imposed an arms embargo against Pakistan, as also against India, both during the 1965 and 1971 wars in the Indian subcontinent.

But the emerging strategic ties between the United States and Pakistan in the post-Cold War setting and in the context of post-Chagai nuclear explosions would be unique in the world, as they would involve two nuclear powers—one de jure and the other de facto. While the US-Israel relationship could look similar, Israel has neither declared itself as a nuclear weapon state, nor has it demonstrated its nuclear capability. Moreover, the new American strategic partnership with Pakistan would be more acceptable to the vast Islamic community of countries, unlike the US-Israel one which is shunned by the Arab and Muslim countries around the world.

It is true that the United States has closer strategic ties with other nuclear powers such as Britain and France, but such ties come under a multilateral alliance system called North Atlantic Treaty Organisation (NATO). Before the end of the Cold War, the US-French-British strategic cooperation under the NATO umbrella had a specific logic in countering the threat from the former Soviet Union. But it was not an example of unequal relationship, despite US preponderance in the nuclear field. The Cold War logic of such alliances, moreover, is no longer relevant and ironically, the German position on the first-strike doctrine is leading the road to eventual irrelevance of US-French-British strategic cooperation, particularly in the nuclear field. Russia and China too have been seeking to forge closer strategic ties, but both are aware of the inherent limitations of their bilateral relationship.

The US-Pakistan strategic partnership may overcome all the difficulties faced by the above-mentioned types of alliances involving the nuclear weapon powers. Since Pakistan has a long experience of aligning itself with the United States, the Chagai nuclear explosion and its new nuclear status would subsequently allow it to claim greater relevance as an alliance partner of the US than ever before. It is worth remembering how the United States changed its Asian strategy after the People's Republic of China (PRC) emerged as a nuclear weapon power in 1964. In a span of just seven years, the PRC was allowed by the US and others to enter the United Nations as a permanent member of the Security Council. The US also sought to coopt China as a strategic partner against the former Soviet Union, particularly in the Asian theatre.

Sooner or later, the US policy towards Pakistan would change. The Pressler Amendment, the sanctions, the call for ending that country's nuclear weapons programme all would become a thing of the past. Pakistan would begin to benefit from massive American military and economic assistance, possibly greater in volume than the one during the Afghanistan crisis. The direction towards this kind of relationship is already visible. One day before Pakistani Prime Minister Nawaz Sharif was to meet US President Clinton in Washington, the American sanctions against India and Pakistan, imposed in the wake of the series of nuclear tests in the subcontinent, were relaxed. Such relaxation was made to look like a reward to both India and Pakistan for their declared intentions to sign the Comprehensive Test ban Treaty (CTBT) before 1999. However, unlike India, Pakistan got an additional reward--the US support for the International Monetary Fund's $5.5 billion worth of a bail-out plan for the Pakistani economy. Moreover, Clinton and Sharif have also agreed upon a plan to resolve the dispute over the payment for the F-16 aircraft. Once resolved, Pakistan would get back about $501 million. Return of this money would greatly help Pakistan at a time when the country's foreign exchange reserve is abysmally low.

Why is the United States so keen to bail out the Pakistani economy? It was not considered that important by Washington only a few months earlier when Pakistan had not demonstrated its nuclear capability, although the Pakistani economy was already in a precarious condition. What is the urgency now? The Clinton Administration's argument is that it is dangerous to allow the economy of a nuclear Pakistan slide down beyond a point. But the fact remains that the Pakistani economic vulnerabilities offer the US a greater opportunity to establish strategic ties with Islamabad on American terms. The United States could now turn Pakistan once again into a valuable Asian ally and would seek its assistance in addressing the questions of peace and stability in an area much larger than the Indian subcontinent. Pakistan may join the ranks of Japan, South Korea, Thailand and the Philippines as closest American post-Cold War strategic partners in Asia and the Asia-Pacific region.

Are there indications of such an alliance-in-the-making? Of course, there are several indicators. Recently, Pakistani Foreign Secretary Shamshad Ahmad told reporters at a news briefing: "We seek revival of our strategic partnership on the basis of new realities. We wish to renew our relations with the U.S. on the basis of shared values and goals."43

Soon Prime Minister Nawaz Sharif was ready to make a trip to Washington. On the eve of his departure, he made it clear at Islamabad: "It will be my endeavour to restore the close and cooperative relations that have existed between the countries in economic and defense fields."44 Pakistan hardly says "No" to the United States, if it is a matter of forging closer security ties with that country. For decades, it was Pakistan which was practically begging to establish such ties with Washington. It was Washington's turn to do so during the days of Soviet military invasion of Afghanistan. Now both Washington and Islamabad seem to be interested in forging closer strategic partnership.

Pakistan has several compulsions to do so. A country goes nuclear to develop deterrence and prevent external aggresion. But Pakistan has become more vulnerable to external pressure after going nuclear. It developed a deterrent capability against India—a country which has never attacked Pakistan. But it opened several windows of vulnerability to other external powers. It has no choice but to offer its partnership to the United States. Pakistan's vulnerability would enable Washington to forge a closer strategic partnership with that country on American terms. Such vulnerabilities, moreover, would make Pakistan dependent on the US for decades. In order to take advantage of the situation, the Clinton Administration is playing a very sophisticated game. Clinton's White House is carefully making use of its new authority to flexibly apply sanctions to bolster Pakistan's economy. The goal is not to bring about an economic miracle in Pakistan but to play Santa Claus to convince the Pakistanis that only America is their friend in need.



1. Chintamani Mahapatra, "Emerging Trends in Southern Asia," in Jasjit Singh, ed., Cooperative Peace in Asia (New Delhi, IDSA, 1998), p. 58.

2. Rajen Harshe, "New Pathways," Seminar, no. 472, December 1998.

3. J.N. Dixit, "The Problem," Seminar, no. 472, December 1998, p. 12.

4. Paul Krugman," America the Boastful," Foreign Affairs, vol. 77, no. 3, May/June 1998, p. 32.

5. For details, see Mortimer B. Zuckerman, "A Second American Century," Foreign Affairs, vol. 77, no. 3, May/June 1998.

6. Philip Zelikow, "American Security Policy: Toward a New Etente with Russia," in Securing Peace in the New Era: Politics in the Former Soviet Union and the Challenge to American Security: An ASPEN Strategy Group Report (Queenstown, ASPEN Institute, 1994), p. 41.

7. Ikuo Kayahara, "China as a Military Power in the 21st Century," Japan Review of International Affairs, vol. 12, no. 1, Spring 1998, p. 49.

8. For details, see Daniel Burstein and Arne J. De Keijzer, Big Dragon: China's Future: What It Means for Business, the Economy and the Global Order (New York, Simon and Shuster, 1998).

9. Kayahara, n. 7, p. 65

10. Ibid., pp. 65-66.

11. Mia Turner, "Cracking the Whip," Time, January 11, 1999, p.21.

12. For details, see Cheng Li, Rediscovering China: Dynamics and Dilemmas of Reform (Lanham: Rowman and Littlefield, 1997).

13. Turner, n. 11, p. 21.

14. Li, n. 12.

15. Akio Takahara, "The Outlook for Political Reform in China," Japan Review of International Affairs, vol. 12, no. 1, Spring 1998, p. 15.

16. "Sino-US Trade Balance," Beijing Review, April 7-13, 1997; Strategic Digest, August 1997.

17. Jasjit Singh, "India's Security: The Dynamics of External Challenges," Paper presented at the workshop on "Democracy-Diversity-Stability in the Indian Context: A Review of the 50th Year of Independence," held at Bangalore, June 27-30, 1997. Quoted with permission from the author.

18. William R. Nester, Japan and the Third World: Patterns, Power and Prospects (London: Macmillan, 1992), pp. 9-10.

19. Sadaki Numata, "Japan: Toward a More Active Political and Security Role," RUSI Journal, vol. 141, no. 3, June 1996, p. 12.

20. Peter J. Wolley and Mark S. Wolley, "The Kata of Japan's Naval Forces," Naval War College Review, vol. XLIX, no. 2, Spring 1996, p. 62.

21. Strategic Survey, 1994-95, (London: International Institute for Strategic Studies).

22. Chintamani Mahapatra, "Changing Role of Japan and India in International Relations," in Rajaram Panda and Kazuo Ando, ed., India and Japan: Multi-Dimensional Perspectives (New Delhi, Japan Foundation, 1997), p.133.

23. Ibid., p.132

24. K.V. Kesavan, "India-Japan Relations in Changing Foreign Policy Perspectives," in Rajaram Panda and Kazuo Ando, ed., Ibid., p.150.

25. See, Henry S. Rowen," Russia and Its Future in Asia," in Securing Peace in the New Era: Politics in the Former Soviet Union and the Challenge to American Security, An ASPEN Strategy Group Report (Queenstown, ASEAN Institute, 1994), p. 22.

26. Abn Choon Tong, "East Asia's Economic Growth: Can It Coninue?," Korea Focus, vol. 6, no. 3, May-June 1998, p. 41.

27. Ibid., p.44.

28. Lee Chan-keun, "Structure of the East Asian Currency Crisis," Korea Focus, May-June 1998, p. 118-119.

29. Ibid., p.118.

30. Junn Sung-chull, "Economic Crisis and Asian Values," Korea Focus, May-June 1998, p. 128.

31. Kim Young-hie, "Debate on Asian Values: Truth and Falsehood," Korea Focus, May-June 1998, p.121. Also see, Yeon-ho Lee, "Development, Capitalism and the State in East Asia," Korea Observer, vol. 29, no. 2, Summer 1998, p. 362. Lee writes, "Confucian historical legacies have been enormously conducive to the successful operations of state-led industrialization."

32. IISS Strategic Comments, vol. 4, Issue 6, July 1998.

33. Ibid.

34. According to an estimate, Kazakhstan, Uzbekistan and Turkmenistan, along with the Caspian Basin, have proven oil reserves of 25 billion barrels and proven natural gas reserves of about 7 trillion cubic metres, See Raja Mohan, "Geo-Politics and Energy Security," Strategic Analysis, December 1996, p. 1271.

35. Russia continues to generate about two-thirds of economic activities in the CIS, including Central Asia. See, Michael Kaser, "Economic Transition in Six Central Asian Economies," Central Asian Survey, vol. 16, n. 0.1, March 1997, p. 5.

36. Russia has maintained strong security ties with a host of bilateral and trilateral treaties with all the central Asian Republics. See, Madan Mohan Puri, "Central Asian Geo-Politics: The Indian View," Central Asian Survey, vol. 16, no. 2, June 1997.

37. Rowen, n., pp. 12-13. According to Donald Horowitz, "From the Stalin Regime onward, the Communist Government set boundaries among the non-European autonomous republics according to 'divide and conquer' strategy, and continually encouraged Slavic citizens to migrate to the outllands under a policy of Russification." See, Donald Horowitz, "Democracy in Divided Societies," in Securing Peace in the New Era: Politics in the Former Soviet Union and the Challenge to American Security, An ASPEN Strategy Group Report (Queenstown: ASEAN Institute, 1994).

38. IISS Strategic Comments, vol. 3, no. 5, June 1997.

39. One Arab diplomat said during a private discussion that the US-sponsored coalition against Iraq collapsed soon after the Gulf War. But Saddam's antics in the region has been providing a political relevance to the US which would not have been the case under a different scenario.

40. Strategic Survey, IISS, 1995-96.

41. Besides, Saddam's claim over Kuwait, Qatar has bilateral disputes with Saudi Arabia and Bahrain; and Iran and the UAE have conflicting claims over Abu Musa and Tunbs.

42. For details, see Gacry S. Sick and Lawrence G. Potter, ed., The Persian Gulf at the Millenium: Essays in Politics, Economy, Security, and Religion (New York: St. Martin's Press, 1997).

43. Reuters, Internet Edition, November 30, 1998.

44. Washington Post, December 2, 1998.