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India & The New Word Order
by S Gurumurthy
When we analyze the impact of Covid19, we need to juxtapose the state of affairs of the world as of now with that of Spanish flu pandemic era. For instance, trade has grown by 65 times since the Spanish flu. The migrant population then was 72 million; now it is 248 million. The world has become more integrated now; human beings, nations and national policies have got integrated, and so the expected impact —good or bad—is bound to be beyond the expected capacity of any nation.
In an integrated world, any crisis becomes contagious; more so, the Covid pandemic. It is a global crisis that nations are trying to handle. This is the time when all nations must come together to redress the situation, but unfortunately, nations are falling apart.
Globalization, a flawed concept
The root cause of many of the global problems was the self-centered approach of the US and the West that promoted a Marxist economy in a Free Market—an oxymoron—in the form of globalization. Why did they do that? One needs to understand the past errors to think of present solutions. When The Foreign Policy journal interviewed 12 experts, ten of them have said that globalization as it exists now and that was celebrated for over a quarter century, will cease to exist or will retreat. Henry Kissinger has written in detail that the World Order will change forever, but he has not said how it will change, or if it will change for the better or worse, or from which Order it will change. The present state of affairs requires a huge introspection by the US and the West—the latter, even now holds the key. The transatlantic alliance is very critical; it must play a key role in the transition of the world order to a new order, but the alliance is in serious trouble.
The current world order emerged out of the Cold War, an ideological conflict between free market capitalistic and democratic countries on one side and communist and socialist countries on the other. The US emerged as the key decisionmaker, and in the process, they tried to control Asia but got into problem in Vietnam. Its economy got affected and the US dollar could not be protected by its gold. To come out of the Vietnam War situation, the US had to associate with China and for which, the peace deal was brokered by Pakistan, which suddenly became relevant.
China gets a new life The deal helped China immensely, because between 1967 and 70, it had lost 67 million people to hunger. The urge of China to come out of poverty and that of US to come out of Vietnam War gave birth to the current world order. This order was made only for the balance of power and without principles or ideology. China became a preferred destination for the US. At that time itself, China objected to the concept of one nation and two systems and targeted Taiwan, just like it did to HongKong recently. The US had almost given up on Taiwan. You can see what happens when a top nation betrays its own partners to seek personal benefits for itself. Thanks to the intervention of the US Congress in 1983, Taiwan became an independent nation. Today, Taiwan is a very important source of technology for the US.
Soviet collapse & misplaced euphoria
After the Soviet collapse, the West in euphoria declared the ‘victory of the West over the Rest and that it is the best for the rest to follow the West.’ In extreme depression and euphoria, one must never take a decision. But what happened? They constituted the entire WTO without wider consultations—they did not even consult India which represents one-sixth of the humanity. China became part of the rule setting team and India had to accept the rules. They had Marxist policies and market economics. India followed democratic politics with socialist economics. The world did not look at India because it had democracy and thought it was not stable. China had stability because it did not have democracy.
In 2001, China was admitted to the WTO; in 2002, Human Rights Watch came out with a statement that the labour laws passed in China would never have been passed in any other country. The labour in China had no voice. The US and Western multinational factories wanted to enjoy the fruits of the Chinese labour. The US thought that its financial power will help it to control the economic power. Unfortunately, the real economic power shifted to China post 2001 (WTC attack) and even more after 2008, when the financial meltdown happened.
The Trump phenomenon
The 2008 financial crisis proved to the US that mere financial supremacy without economic supremacy, which it had surrendered to China, is not enough; but by that time, things had gone too far. This led to the ‘Trump phenomenon.’ Trump did not evolve as a mere individual. He evolved against all the past misdeeds of the American governments, starting from the unprincipled post-Cold War order. The Trump phenomenon is no more Republican. Even the Democratic Party supports the US move to withdraw from WTO. So, even before Covid, the world order had begun to change. Covid is in fact expediting the changes.
In 2017 itself, the US and EU Trade Representatives filed reports in their respective governments that WTO will become irrelevant unless we are able to force China to be transparent. How can a Marxist nation be made transparent? It has an ideology: to spread Communism throughout the world. China is an autocratic, non-transparent nation run on a model of oligarchy where no single person or entity calls the shots and, therefore, no one is accountable.
China beyond China
In 2014, Chinese Premier Xi Jinping visited India and he had planned to enter into many agreements and strategic defence pacts with India, similar to the defence pact China had with Russia. He landed in India on the 17th September; on the 18th, i.e., the very next day, PLA invaded Ladakh, just like it did now. As a result, he had to drop out of all the planned agreements —the peace treaty, the border solution, etc. He went back and sacked those army people responsible for the fiasco. Thus, we can understand that China cannot be controlled by one government. China is beyond China’s control.
WTO in 2019 declared that China is not a market economy but still it is part of WTO because it is part of the global economy. Again, this is an oxymoron. The mistakes the world powers committed in the past are now hitting back at them. Today, China has real financial power and America, only phony financial power.
The US has now declared that its interests will prevail over WTO. So the very instrument created for increasing trade and prosperity is being killed. This stand may be moderated, if Trump goes out of power. But it is not going to change fundamentally. Covid is thus a context and cause for the huge shift that is taking place in the world order.
US and China—the two huge powers controlled the world for the last 50 years. In the new order, which may see order or disorder, all democratic and liberal democratic nations will be pitched against autocratic nations; globalization will cease to exist. Liberal democracies too may lose steam. The Central and East European countries are willing to walk out of liberal democracy in their own national interest, because of civilisational and historic reasons.
India: The gold lining
The US and the West made a blunder in undermining India’s abilities, perceiving it to be a weak nation and putting all their eggs in the basket of China. India’s stability was always doubted. In liberal democracies, the voting percentage has come down, whereas in India, it is going up. The last elections witnessed 69% voting percentage. We have been moving up from 40% to 69%. A high percentage of minorities, SCs and OBCs vote in India. The educated people vote in lesser number. We have a firm and bottom spread economy. India is therefore a safe bet.
The Foreign Policy journal has said that India is the only silver lining or the gold lining in the world. Look at the contrast. All that was perceived about India has been proved wrong. Similarly, all that was perceived about China has been proved wrong. Marginalisation of India has dominated the postCold War order.
The post‐covid order
Experts have pointed out that the post Covid world will be less open, less prosperous and less free. Businesses will be less profitable but more stable. The global supply chain was an unstable idea. Unless the world shared a common polity, stable supply chain is not feasible. 54% of the world has dictatorship and 46% of the world is under electoral democracy. India is 17% and the West 14% of the electoral democracy.
The West thought that they were highclass democracy, India as a lowclass democracy and ranked other democracies still lower, instead of proclaiming that dictatorship is the worst.
India is the only hope for democracy in the world. The world is now realising the importance of India. India is needed by the world now more than India needs the world. India’s biggest strength is its democracy and it is not its weakness. India is the least integrated of all the nations. We can still survive, in a sense, without the totality of the world.
The world will leap from an unprincipled world order to a principled world order based on democracy on the one hand and autocracy on the other.
Keeping India in check
China is a product of confrontation —within and outside. There is no harmonious philosophy which will link these countries from inside. China’s empire building instinct is still intact and its skirmishes in Ladakh region are more to distract India from focussing on its growth.
For China, India is an impediment to its global ambitions. China’s game is to condition the mind of India. 30 to 40% of the government time, business time and policy makers’ time will be spent on how to handle China. That is how Doklam issue started and now Ladakh is going on.
China will try to exploit the polarized polity in India and try to undermine the present government which is the biggest hope for India and the democratic world.
If the world thinks it is India’s responsibility to handle China, they are wrong. India can well align with China and that will be more profitable for India. In its own interest and that of the world, the West must work for an alliance of democracy.
There cannot be a common philosophy for the whole world
The future supply chains will not depend on whether it is cheap to buy; rather, it will depend on whether it is safe to buy. From cheapness to safety, there will be a paradigm shift. Cooperation will be between countries that trust each other.
India’s Atmanirbhar is a step in theright direction. It is not autarky. Everynation has to work with a set of nations,if not the whole world. India was onceleading the economic and trade enginesof the world.
In 2005, G20 nations met in Beijing and declared that each nation must have its own economic policies and there is no one size fit all model. In 2008, the World Bank echoed the same and went back on its earlier policy of recommending the same approach for all nations. There cannot be a common philosophy for the whole world. But what is important is that there has to be a common understanding based on certain essential values, which only a democracy can provide. The West and India must align to take on the might of China. Covid has delivered a powerful message that there cannot be unmeasured integration in the world. It will be chosen, perhaps region-wise.
S Gurumurthy, is a chartered accountant, columnist, political and economic analyst, and editor, Thuglak.
