Geopolitics without geoeconomics, a fool’s mistake

Over the years, New Delhi has developed a keen desire to be a part of geopolitical developments in the Indo-Pacific and has worked with great enthusiasm about it. It has managed to emerge as a major axis of the global Indo-Pacific grand strategic imagination, avoided the temptation to militarize/protect the Quad (Australia, Japan, India and the United States), and ensured that the South The Association of East Asian Nations (ASEAN) states do not feel uncomfortable with the ever-increasing balance of power expression in the Indo-Pacific.

New Delhi what is missing

And yet, New Delhi’s vision for the Indo-Pacific appears half-hearted and unsustainable in the long term, given the insufficient attention New Delhi is willing to give to the geo-economic development of the Indo-Pacific. Policy makers in New Delhi today do not appreciate the inevitable relationship between geopolitics and geoeconomics. In other words, even though contemporary great power behavior has transcended classical geopolitical notions, emphasizing geoeconomics as the foundation of geopolitics, New Delhi remains stuck in old binaries.

India’s decision to move extensively to the Indo-Pacific and the Quad while reluctant to engage in the region’s two major multilateral trade agreements shows that geoeconomics and geopolitics are envisioned and in New Delhi. Followed in parallel, not as a compliment to each other. The most recent example is India’s refusal to join the trade pillar of the Indo-Pacific Economic Framework (IPEF), while deciding to join the other three pillars of the IPEF – supply chain, anti-tax and anti-corruption, and clean energy.

India’s move to stay out of IPEF, a US-sponsored soft trade regime, comes two years after India pulled out of talks on the Regional Comprehensive Economic Partnership (RCEP), which took effect earlier this year. Both agreements lie at the heart of the Indo-Pacific and could potentially shape the economic character of the wider Indo-Pacific region.

India’s decision to stay out of IPEF is surprising as it does not match with the recent enthusiasm in New Delhi about foreign trade agreements. When the Narendra Modi government took office in 2014, it immediately began reviewing existing trade agreements and halted any new free trade talks, a policy that continued for nearly seven years. Modi 1.0 demonstrated a clear lack of policy interest in promoting external trade and engaging in free trade negotiations.

And then suddenly, in the wake of COVID-19, New Delhi began to show a renewed enthusiasm to rethink the country’s external trade policy. Modi 2.0 started heating up free trade agreements (FTAs). For example, India concluded an FTA with the United Arab Emirates earlier this year, signed early harvest agreements with Australia and the United Kingdom, and many more agreements are being negotiated. However, the recent decision to stay out of the IPEF shows a clear policy direction in New Delhi: by not being a part of IPEF and RCEP and signing FTAs ​​with individual states, New Delhi has made it clear that it will not be able to enter into bilateral agreements. favors, and is not inclined to, multilateral, multilateral and even soft agreements such as the IPEF.

A retrograde move, the China factor

There are several reasons why New Delhi’s decision to stay out of various regional trade agreements is a regressive policy decision. For one, the absence of the world’s fifth largest economy from various regional trading platforms will always fuel China’s geoeconomic hegemony in Asia. Given the growing fear in India about the negative impacts of Sino-India trade, it is important to take a closer look at it. For one, the fear of China dominating the Indian market in India is not entirely unreasonable. To be more precise, there is a fear in India that a deeper Sino-Indian economic partnership could be weaponized by Beijing for geopolitical purposes. And yet, the only viable option to deal with such a challenge is to prepare for and face the challenge, even if it means spending in the short term, to eventually overcome the challenge.

The reality is that despite the military standoff along the Line of Actual Control, India-China trade has only grown in the last one year. Therefore, if it is not possible for India to avoid trade with China; It would be better for India to deal with this issue at the earliest and not later in a more comprehensive manner. Perhaps this is also an opportune time to do so. However, there are attempts by countries such as the US to economically separate from China and create a platform without China, the IPEF being one such example. In other words, India should not shy away from doing business with China as part of multilateral arrangements, while at the same time engaging in arrangements in which there is no Chinese presence.

Another reason why staying out of IPEF is a bad idea is because it will be difficult for India to integrate itself into regional and global supply chains without being part of important regional multilateral trade agreements.

Third, we have no choice but to address some of the deeper challenges of the investment and business environment in India. Consider the fact that even companies that have left China due to the so-called US withdrawal from China, though not many, have not come to India’s doorstep. Most of them went to countries like Vietnam, thereby highlighting the fact that we need to organize our home; Getting into some of these multilateral trading arrangements would force us to do exactly that.

Fourth, if India is really serious about its maritime grand strategy, which may not be purely military in nature, it needs to make the states in the region economic bets in India (something China has cleverly and consistently) and vice versa. Furthermore, without creating an economic stake with the states in the region, India’s ‘Act East’ policy will revert to its earlier incarnation – ‘Look East’. Of course, India has an FTA with ASEAN (which the Modi government objected to), but it is also important for India to be a part of trading arrangements that have major non-territorial states, so that they to be a major part of it. field supply chain.

Another effect of India’s hesitation about joining regional multilateral trading arrangements is its potential regional economic isolation. The less India engages economically with the region, and the more China does so, and given the Sino-Indian rivalry, India may risk being economically isolated in the wider region.

Contrary to conventional logic, it is possible that the more economically ‘isolated’ India is in the region, the more China will be able to weaponize trade against India in times of major bilateral standoffs, should this happen.

Indo-Pacific Moment Missing

Let us go back to the argument about the implicit relationship between geoeconomics and geopolitics. The most important long-term consequence of New Delhi’s decision not to join RCEP or IPEF is that India will largely miss the unfolding moment of the Indo-Pacific. Indo-Pacific and Quad are not military systems; India has been very clear about this. If this is not a military system, then what is? At the risk of over-simplification, they can be portrayed as geo-economic instruments that would allow its key members to pursue their geopolitical interests. If so, by deciding not to be part of the two major Indo-Pacific trade agreements, New Delhi would have effectively undermined the pursuit of its own geopolitical interests in the region.

the door is still open

New Delhi should reconsider its geo-economic options if it is serious about increasing its geopolitical influence in the region. Given that India has not closed the door on the IPEF’s trade pillar, we have an opportunity to reconsider our position. In fact, India should also reconsider its decision not to join the RECP and try to join the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP), from which the US pulled out and China joined. wants. If joining these three is too radical for New Delhi, then India should start with the IPEF and the CPTPP, both of which exclude China. India should also actively lobby to be part of the Minerals Security Partnership, an 11-member US-led group to secure the supply chain of critical minerals.

If indeed, India wants to be a part of the Asian century, and in particular its economic growth story (China’s share of global trade today is 15% and India is 2%), it has to put aside its historical hesitations and fears about multilateralism. should be removed. business arrangement. To that extent, the current policy of pursuing geopolitical goals without geo-economic ballast is not well thought out.

Happyman Jacob is Associate Professor, Center for International Politics, Organization and Disarmament, School of International Studies, Jawaharlal Nehru University, New Delhi.