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14 February 2017,

GOIGD 2017: Opening Conversation with S. Jaishankar

Dr. S. Jaishankar, Foreign Secretary of India was in the Opening Conversation on "Political Changes, Economic Uncertainties" at The Gateway of India Geoeconomic Dialogue 2017. He was in conversation with C Raja Mohan, Director, Carnegie India

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Dr. S. Jaishankar, Foreign Secretary of India, opened the second day of the Gateway of India Geoeconomics Dialogue, co-hosted by Gateway House: Indian Council on Global Relations, and the Ministry of External Affairs. He gave his perspective on recent political changes and economic uncertainties, elaborating on India’s optimistic view of the opportunities of increased multilateralism, India’s geoeconomic potential with Japan and the Gulf and the threat of growing terrorism.

Key Remarks:

“Don’t demonise Trump, analyse Trump.”

“What we are seeing is stress in the global system so people are falling back on the basics, like jobs and security.”

“Today, we have seven million plus Indians in the Gulf whose remittances are roughly of the order of our IT exports to the United States. So we need to step forward and strengthen our political ties with the Gulf countries”.

“Geoeconomics will be more important with Japan than perhaps geopolitics at this time”.

Full Transcript*

Dr. C. Raja Mohan (CRM): Thank you, Manjeet. Let me join her in welcoming all of you to Day Two of this geoeconomic dialogue. I thank Gateway House for giving me the opportunity to have this conversation with Dr. Jaishankar, the Foreign Secretary of India.

I also want to thank you, Foreign Secretary, for expanding the engagement between the foreign office and the various stakeholders. I don’t want to say foreign policy is so important that it be left to diplomats alone, but the kind of consequences today to the business and scientific community begin to affect the whole range of stakeholders in the country. This is because India’s own integration with the world has changed. So therefore, we welcome the opportunity to engage more with the foreign office.

To start with one question: in the last 25 years, much of the foreign office’s work has been to deal with the big disruption that took place in 1989—91. There was geopolitical disruption in terms of the collapse of the Soviet Union, the end of the Cold War and the range of consequences that followed.

Probably more significant was the geoeconomic shift that took place in terms of the dominance of the Washington Consensus and the new imperative on all of us to reform, to liberalise, to globalise. So much of your work in the last 25 years has been really to cope with these two big shifts that have taken place.

How well do you think we have done and how do we deal with the new disruption, now that the Washington Consensus has quite clearly broken down? There are whole new sets of imperatives before us. So how do you see the general situation? Is our system prepared to deal with the second disruption that is beginning to unfold?

Dr. S. Jaishankar (SJ): Thank you, Raj. First of all, let me also add my words of welcome. It’s good to be here. Raj said what he had to after saying he didn’t want to say it: that foreign policy is something we need to take beyond diplomats. Part of the purpose of partnering with Gateway House is really to take the conversation out of Delhi into larger circles, into larger subjects. Considering we define it partly as ‘geoeconomic’ is itself an indication that we are prepared to view it very differently.

Let me respond to your first issue. It’s interesting: I started my career in what was then the Soviet Union. What happened in 1991 was, in many ways, unimaginable for those who went through it. Ever since, we were made to assume that while other countries waxed and waned, there was an immutability about American power. That proposition today is under test, to some extent.

There is still a view that it is that American power that was over-extended or that the United States has a unique ability to reinvent itself—all of which may be true. But when we look today at the global scenario, we shouldn’t look at it just in terms of what happened last year, Brexit or the election of Donald Trump. I think it’s an accumulation of a series of developments, whether it is the 2008—09 crisis and its consequences, the rise of China, the growth of India—to some extent, the shift to Asia.

Till now, as Asians, we have been very proud of that shift. I don’t know how much thought we have given what was happening at the other end of that shift. How did the western world perceive that shift?

So today, those are the issues that are staring us in the face, and the challenge for us is more radical than 2008—09. Again, in India, we shouldn’t view it purely as a diplomatic challenge or even as a government challenge. Responding to the world today is, in many ways, a national challenge, in which, suddenly the economic stakeholders of India have a very important role to play.

CRM: The principal agent of the current disruption, shall we say, is Mr. Trump, who, through the course of last year, was overwhelming and better known as the Republican candidate (in the Presidential race). There was a temptation in India, like among the liberals in the West, to merely snigger at him, not take him seriously. And even today, we are too involved with the U.S. process to see this objectively as a phenomenon, as a real consequence of real politics in the U.S. Therefore, how do we begin analysing Trump rather than taking positions, whether good or bad. We don’t have a vote in the U.S. elections. We deal with whoever gets elected in the U.S.

SJ: I think that’s a good point. Don’t demonise Trump, analyse him—because he is a reality. We need to perhaps appreciate that there is a thought process that Trump represents—it is not caprice or a momentary expression of feelings—and a lot of people, even in Washington, are (seeing this).

There was a paper that Wilbur Ross, the commerce secretary designate, and Peter Navarro, who heads the Foreign Trade Council at the White House, wrote. It was called the Trump Economic Platform, in my recollection. These are people looking out of the window, not liking what they see and then doing the American thing: how did we get here and what do we do to fix it? That’s the thought process reflected in that paper. It attacks the off-shoring by American companies as a reason for the decline of the American economy. To some extent, it attributes this to bad trade negotiations, which is why they pick on the North American Free Trade Agreement (NAFTA), and World Trade Organization, to some extent, and the Trans-Pacific Partnership.

Some of it is also seen as over-regulation, issues to do with too much control. But there is a strong view—and policy prescriptions that come out of that view—on how to fix America and how to fix the world.

This will have consequences for everybody, including us. How do we respond to those sets of policies? If memory serves me right, India merits one mention in the context of a trade issue, but we are not seen as a part of the problem.

Merely because we are not seen as part of the problem doesn’t mean we won’t get affected. There will be downstream impacts of decisions made. Today, how do we engage? Some of it will be damage control, some of it risk mitigation. But there could be opportunities in this for us too—because America looks at the world differently and tries to create new terms of engagement with it, and this might actually offer us possibilities that a more orthodox America might have been timid about.

CRM: To boil down Mr. Trump’s policies, I think there are three aspects. One, the American borders are going to be less open, certainly more regulated. Second, (it will go) from free trade to fair trade. Third, American allies and friends must do more in the security domain.

While we have not been, shall we say, in the firing line in the U.S., the steps that the administration will take on these three areas—on how and who it will admit through its borders, what the nature of its trading arrangements will be and how it will deal with its global security—will all affect us in some form or other. Are we beginning to think about how to respond to these three challenges?

SJ: Yes. Before I come to that, let me make one point: what we are seeing is actually the entire international system under stress. And when under stress, people fall back to basics. And the basics today, for most polities, are jobs and security. Every major pronouncement made today in the politics of every major country actually boils down to this.

In our case, on the security side, we are seen as a very credible partner for the U.S., and the American experience with us has been very positive since the past few years. The general sense has been that this relationship has grown. When General James Mattis, U.S. defense secretary, called up Rakshamantri, such appreciation was clearly expressed.

On the jobs side, what is important is, we need to differentiate our services and trade with the U.S. from their problem of off-shoring, of which we are not a part. American companies don’t come to India to escape their taxes: they go to other countries. Our issue today is what is loosely called outsourcing. We have to somehow get across the message to the U.S. that outsourcing helps one be competitive; off-shoring damages one’s tax base. If we can distinguish ourselves from the basic problem that Trump is attacking, we could be very differently perceived. And that is the challenge before us.

CRM: One consequence of Mr. Trump’s (election) has been that the West has never been so divided as it is today. Take the open public disagreement between western leaders, like in Canada—the Canadian PM is in the U.S. right now saying, ‘I will take more refugees the moment Mr. Trump says he won’t’. There is also the to and fro between Berlin and Washington. We have never really seen this kind of situation before. Part of the problem seems also to be: how to deal with Russia? This is a divided West, arguing over Russia, which they historically agreed was a threat. How do we cope with two important developments that are taking place?

SJ: The closest that we have seen of this—probably still a pale shadow of what we are seeing today—was probably during George Bush’s time, and the Iraq war, when people like German Chancellor Gerhard Schröeder and French President Jacques Chirac pulled in different directions. Today, I think the fissures are much deeper, and in many ways, the fissures within the American polity are also becoming apparent in the larger western camp.

What it does tell us is that the direction in which the international order is moving, and the homogeneity, the sense of unity that the western camp, even the NATO camp had, has been eroding over a period of time.

We have, for many years, advocated multipolarity, almost longed for it. I think we are approaching that moment of multipolarity—and we are looking at an international order where a lot of the fixed relationships, the assumptions, can no longer be taken for granted. I won’t say everybody is in it by themselves, but clearly, there is a loosening up. Many of the major powers will tend to be more national, rather than collective, in their approach—and that is not such a bad thing for a country like India, in the medium term. International politics, where everybody is playing everybody else, offers more possibilities.

RM: Since independence, a whole generation in India has grown up, (being told of) the dangers of western domination. But we are looking at a West having problems, one that is beginning to weaken within itself, and the rise of non- western powers like China, to which, in many ways, you were actually drawing closer to deal with the western powers in the name of creating a multipolar structure. But what we’ve seen happen is the rise of China and the prospects of the emergence of a unipolar Asia. Now, the renewed conflict between the U.S. and China, the whole framework of how to deal with major powers, especially in Asia, between China and the U.S., has become the central issue, hasn’t it?

SJ: After the 2008 crisis, and the very sharp sense of China’s political strategic emergence in the world, there was a temptation, even among Indians, to think that somewhere this was a new bipolar construct. In fact, there was even a school of thought that said that (just) the way we tried to create a space between the Soviet Union and the U.S., we should similarly try to do so between China and the U.S. Of course, China is not the Soviet Union, which is the flaw of that construct. But the fact is that the rise of China was only portended in light of what is happening now, that is, further changes in the international order.

There is a tendency on the part of the West itself to look at its global commitments, and then fall back on the basics: jobs and security. Much of the changing sentiment in Europe, for example—as we heard yesterday from the former PM of Belgium—is the impact of migration on Europe and how it has actually changed mindsets.

Trump himself, does, in a way, speak of this when he mentions the wall. It’s partly social, it’s partly political, its partly to do with security. But the fact is, the broad trend in the world today is towards a much more national perspective.

Here, again, we are not in a bad position at all vis-à-vis our relations with the U.S.–if we can stabilise any economic or business consequences of Trump’s coming in. With the Europeans, we are on a good wicket. As for the Russians, an improvement in U.S.-Russia relations is actually good for us, because, as a country, we have had good relations with both of them. And their division sometimes puts pressure on us, which, frankly, we’d rather not have. And again, Japan’s been very good.

If I look around the world and say, how do I get into the best possible positions– which means, I must have the most productive relationship with the major players—then I think the China account is the one in which we need to invest more energy.

CRM: You served as Ambassador to China for four years; much of our expectations were about how the bilateral differences could be kept aside or managed by expanding economic cooperation, by working in the multilateral arenas. But we now find many of Trump’s problems with China look very similar to our own: An expanding trade deficit, increasing inflexibility when it comes to your border, and on multilateral issues, like the Nuclear Suppliers Group. The dramatic expansion of the gap between China and India has even limited the possibilities for real multilateral cooperation, of keeping something going with them.

SJ: Look, I can give you the ‘glass-is-full’ part of the explanation—because if I did not have a broader relationship with China, I wouldn’t have some of the arguments I have today. It’s because today, I aspire to do something bigger, like the Nuclear Suppliers Group membership, that we have that issue. It is because today, I have a stronger position on terrorism and I’m taking it into the UN forums and trying to mobilise world opinion, that I have a difference out there.

It’s not like we have fewer arguments and so our relationship is better. I think it’s natural that as the Chinese grow, as we grow, we will have, and there will be, issues where things work for both of us; and there will be issues where they don’t. And where they don’t, I don’t believe ducking the issue is the answer to dealing with China. I think if there are issues, it’s good to put them on the table and have an honest conversation.

CRM: When you look towards Asia and uncertainty with China, China’s rise and then doubts about American persistence in the region, one bright spot at this point has been a more assertive Japanese policy and a greater warmth between Japan and India that has developed over the last few years. Does Japan become a critical anchor, both for the modernisation of your infrastructure, expansion of your international engagement? And is that going to be a linchpin of your strategy as you deal with the global uncertainties that the conference is focused on?

SJ: Before we come to Japan, I know there is a lot of talk about uncertainties in the American posture and withdrawal, but again, if you look at what is happening on the ground and even the considered policy statement, I am not sure that the Trump administration is actually preparing to withdraw certainly from Asia. In fact, the little that we can see from American Defense Secretary James Mattis’s visit to Korea and Japan, and Japanese Prime Minister Shinzo Abe’s visit to the U.S. is, actually, a strengthening of bonds—but on different terms. I think the key to Trump is not ‘advance’ or ‘retreat’. I think it is ‘new terms of business’. So, we may get the old policy, we may even get more than the old policy, but on different terms. Japan possibly has a big role.

In the past, our own view of Japan—I’ve served in Japan—has been relatively narrow. A lot of work has gone into broadening out that relationship, in changing Indian thinking of Japan and Japanese thinking of India, including by ambassadors, like H.K. Singh, who is sitting in front of me.

Today, my sense is that we see each other more strategically: this means that the Japanese, for example, do accept that a bigger Indian economy is in Japanese strategic interests. We are seeing much larger Japanese commitments, both in business and Official Development Assistance. You already have the Delhi- Mumbai industrial corridors; you have initiatives, like the Chennai–Bengaluru corridors, Japan industrial townships, the bullet train project.

I am not sure if I would go as far as you are going from there because…How much is Japan ready to do in terms of international security issues? That is a work in progress and we have to see where that goes. I would still say that the strategic geoeconomic would be more important with Japan than perhaps the geopolitic at this time.

CRM: So you already see some signs of expanding India-Japan cooperation in the region, not merely inside India. But can we work more in the subcontinent as we look towards developing regional cooperation? Your government has spoken much about neighbourhood first, and the importance of devoting more resources not merely on the political side, but on the geoeconomic.

SJ: I think there is today an evolution in Indian thinking on the neighbourhood, which is, that we cannot expect these countries to be denied developmental choices. They will do whatever is best for themselves. And when they look for international partners, which they have every right to do, it’s better that we have a set of partners with whom we are also comfortable. So many of the neighbourhood choices are, in a way, really reflective of the larger geopolitics that is playing out in our neighbourhood—and who works with whom, I think, is partly going to be an outcome. It’s still very much early days yet, because essentially, the bulk of what we do and what everybody else does in our neighbourhood, is still very bilateral.

CRM: With the South Asian Association for Regional Coperation (SAARC) going nowhere, is there a way of looking at sub-regional cooperation? You already had leaders from the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) come to the BRICS summit in Goa. Is that going to be an important feature—that we move wherever there is an opportunity rather than get stuck, lately with the SAARC itself?

SJ: I agree with that. I wouldn’t say we have given up on SAARC. We can’t—and we shouldn’t. But the fact is that there are fundamental obstacles with proceeding down the path of regional cooperation, particularly issues like connectivity and trade, which is really what regional cooperation is about. So if you can’t get into a bus, then you find a train; if you can’t get into a train, you find a scooter: you find some vehicle or other that takes you forward. Today, because SAARC itself got stuck, we look partly towards BBIN or Bangladesh, Bhutan, India and Nepal. We are now also in BIMSTEC: there is every expectation this year that there will be a ramping up of BIMSTEC. We are also looking at very loose bilateral, trilateral, multilateral arrangements.

I think the Indian system today is much more focused on finding the outcome than being fixated about the mechanism that gets you there. I think that openness is a change for the good in our own system.

CRM: So what you are saying is that the product is more important than the process?

SJ: Or, at least, get the balance.

CRM: No conversation on Indian foreign policy is complete without mention of our cousin, Pakistan. You have had this government started with great expectations; we’ve gone through some difficulties. One of our main problems has been U.S. relations with Pakistan and the question of terrorism: all this gets lumped up in the question with Pakistan. Where do you see this going in terms of a changing Washington? What is the thinking in Delhi at this point on Pakistan and Pakistan’s relationship with the U.S.?

SJ: The thinking around Pakistan is necessarily security-centric. The fact is, we can live with a situation of very little trade, but we can’t live with the terrorism tap being turned on and off, which will be, so long as the factory keeps running. So the issue boils down to whether the Pakistanis are willing to make a fundamental break with habits that they have practised for so many years.

In the past, it was seen as our problem, because it was largely, we who were affected, and to some extent, Afghanistan. (But now) in the neighbourhood itself, there is recognition that it’s a broader problem. More than that, I think some of the western countries may not be so open about what they say.

In the government, our sense is that there is today international concern about the fact that a lot of the terrorist incidents that happen get traced back to Pakistan: which part of the polity (is involved) is a different subject. But the fact is that you have an administration in power that has put so much emphasis on security and is, in fact, justifying the early measures in the name of security: I would imagine that their assessment of the threat should be fairly predictable.

CRM: I wanted to ask you one question—before we open it up to the floor—on multilateralism, both political and economic. There was a period when India was the most idealistic champion of the multilateralism of the UN. And then came the period when we were the ‘Mr. Nyet’ at all international bodies, the active opponents of what was being done. But in the last few years, we have seen under this government, that India is moving from the problem of climate change mitigation to actually coming up with innovative ideas to resolve the issue. So, on one critical issue at least, India has become one that is trying to organise multilateralism.

Similarly, on the political side: now, when Trump says ‘Look, the UN is a talking shop, we don’t really need these multilateral institutions’. So where do we stand on multilateral issues? Or is it that China is going to take over from the U.S.—we saw President Xi in Davos. So what are our prospects in multilateralism? Can we come up with a strategy that retains the essential core of India’s interests in a multilateral world without being too doctrinaire about it, and whether we can demonstrate leadership?

SJ: If we are to be multilateral, the first issue to settle is whether you are multilateral not because you want to be a good guy, but because it serves your interest. You may also be a good guy–that’s a sort of bonus. But the fact is, today, we need to make people understand that multilateralism is not idealism alone. There is a sense of realism about how you engage with the world.

When we went and helped reach the Paris Agreement, it was done because we had made our own assessment of the threat that climate change poses to a society like India, and believed that under the circumstances, that was the best agreement you could get—and it met our bottomlines.

We are going be confronted with such situations on a whole range of other issues. In fact, even last year, or the year before, it wasn’t just Paris. It was also something like the Sustainable Development Goals, or even peacekeeping operations. So these are issues where we have a stake, and where we are in a position to make a difference, make a contribution, to find a solution. I think it improves your branding, for sure, but it also advances your interest.

At a time when the horizons of a lot of other major countries are getting narrower, if I were to look at it like a market, if the majors are pulling back, there is a space out there. Now, is it in our interests to use that space? Is it in our capability to use that space? Will the space give us the return on the investments we make? Possibly.

I would actually argue that in the coming years, we should be looking for more forward positions on international forums. Anybody can make a good speech. The question is: the world will test you on whether your behaviour matches what you say. It’s not just a matter of diplomacy: if we are to carry credibility, say, with the Africans, we need to be doing more, economically, in Africa. If, today, we say that we have a larger responsibility, when things go wrong—as they did in Yemen, Nepal, Fiji or Sri Lanka—you need to go and do something in that situation to actually show that you can live up to what you are professing.

In my view, it would be good to do more. But to do that much more, we need to also commit more of the country’s resources and capabilities.

Dr. S. Jaishankar is Foreign Secretary of India. 

C. Raja Mohan is Director of Carnegie India.

This was the Opening Conversation on Political Changes, Economic Uncertainties” at The Gateway of India Geoeconomic Dialogue 2017. The conference was co-hosted by the Ministry of External Affairs and Gateway House.

Learn more about The Gateway of India Geoeconomic Dialogue here.

You can read more exclusive features here.

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*This transcript has been developed by Gateway House and has not been affirmed by the Ministry of External Affairs.