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03/10/2010 | Looking Southeast, India Offers an Alternative to China

Trefor Moss

For almost 20 years, Indian development has been guided by the "Look East" policy, based on the premise that Asia holds the key to India's economic and strategic future. The recent state visits by Indian President Pratibha Devisingh Patil to Laos and Cambodia, which yielded Indian offers of trade initiatives and cash loans, have demonstrated that, for New Delhi, an eastern orientation is still promising.


Shifting its gaze northward, however, tends to leave India blinking uncomfortably in China's reflected light. Admired but also feared, emulated but also repudiated, China can spoil the appeal of Asia's opportunities for India. Economic ties between the two countries are strengthening -- bilateral trade will surpass $60 billion this year, a twentyfold increase in the span of a decade -- yet China's strategic activities continue to ruffle New Delhi. Chinese military projects near the countries' disputed border leave the Indians questioning Beijing's motives, as do China's overtures to countries like Bangladesh and Sri Lanka, long considered part of India's backyard. As a result, it has become commonplace to hear Indian charges of encroachment and encirclement -- sometimes fair, sometimes overblown -- directed China's way. 

In this context, India's courtship of Laos and Cambodia, two countries usually regarded as China's turf, challenges the prevailing view of the Sino-Indian rivalry as one-sided, withBeijing cast as the bully. In Southeast Asia, India is pushing back. Arriving in Laos with a large entourage, Patil proffered a $75 million loan for energy infrastructure projects -- not the first such activity that India has bankrolled there -- as well as expressions of intent from Indian companies, such as Tata, which are keen to take advantage of Laos's cheap labor and abundant resources. The direct result of the Cambodian visit was a small $15 million loan for a rural water project. But at a time when New Delhi and Phnom Penh are poised to ratify a free trade agreement, the presidential escort of 70 Indian business leaders demonstrated India's interest in Cambodia as a future partner. 

These economic ties are still tiny in comparison with China's high-impact, big-money interventions. According to the World Bank, Beijing has invested more than $3.5 billion in Laos in the past decade, while sinking three times as much into Cambodia in the last four years alone. In September, a Chinese firm, Inner Mongolia Erdos Hongjun, outlined plans for a new $3 billion investment in Cambodia's energy, metals and real estate sectors. 

India simply cannot compete on the same scale. The question is whether New Delhi offers a qualitative alternative that Beijing cannot easily match in supersized form. 

"India is attempting to make a distinction between its approach and the Chinese approach," says Rahul Roy-Chaudhury, senior fellow for South Asia at the International Institute for Strategic Studies. "India's approach is low-profile, long-term; China's is high-profile, short-term." 

China employs developmental shock and awe: Dazzled by the numbers and by the lack of political conditionality, small economies take the money on offer without giving too much thought to the ramifications. As Southeast Asian countries are gradually coming to understand, however, long-term benefits for the host country is not a guaranteed outcome of Chinese involvement. Too many of the jobs that China creates, as the gathering criticism goes, are handed to imported Chinese workers, even as resources and profits are expatriated back to China, and sectors of the economy are ceded wholesale to Beijing. 

"India's way of working is very different," says Roy-Chaudhury. "It focuses on building leadership and capacity -- not infrastructure, like China. These countries are aware that India will be an economic powerhouse not now but in the future, so India is working in a low-profile way to build up long-term relationships, showcasing its pluralistic nature and, in places like Laos and Cambodia, playing on its Buddhist cultural ties." 

Indian companies could also have a comparative advantage over China's clunky state-owned firms when it comes to partnering with and mentoring Southeast Asian businesses, suggests Joshua Kurlantzick, fellow for Southeast Asia at the Council for Foreign Relations. "I think India has to offer real, well-governed large companies that are not dependent on the state sector, like Chinese companies, and can teach companies in other developing countries how to operate with decent governance [and how to] raise money," he says. "The Chinese firms can bring infrastructure investment . . . but often they are not real private firms and not that good an example."

China is not India's only competitor in Southeast Asia. Vietnam and Thailand will remain heavily engaged in Laos and Cambodia, both economically and politically. Yet India has already made inroads into the Association of Southeast Asian Nations (ASEAN). Ties with Singapore and Myanmar are strong, while a deeper relationship with Vietnam has long been identified as both desirable and workable. "India still needs to understand ASEAN more," says Roy-Chaudhury, "and what India is finding is that, while the Southeast Asians often say that they are worried about China, they are also very sensitive to China's concerns." 

The 8th India-ASEAN summit, to be held in Hanoi in late October, will give India an opportunity to articulate its go-slow approach to a Southeast Asian audience that instinctively likes the idea of an Indian counterweight to Chinese power. India-China comparisons tend to rely on the familiar emblems of tigers and dragons, but New Delhi will be hoping that, as it continues to look east, tortoises and hares ultimately prove more a propos.

**Trefor Moss is a freelance journalist who covers Asian politics, in particular defense, security and economic issues. He is a former Asia-Pacific editor of Jane's Defence Weekly.

World Politics Review (Estados Unidos)


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