Rex Tillerson Takes On South Asia

The agenda of Secretary of State Rex Tillerson in New Delhi this week has been succinctly framed: addressing the ascent of China, seeking more Indian influence in Afghanistan, and stressing the need for Pakistan to clean out the terrorist camps and networks on its soil, a charge that Pakistan denies.

Over the years, many fine minds have looked at the architecture of South Asia. Above all, Secretary Tillerson needs to figure out what incremental influence and value the U.S. can project at this time.

In view of the preceding meetings with Afghan president Ashraf Ghani and Pakistani prime minister Shahid Khaqan Abbasi, Secretary Tillerson should have obtained a keen perspective on the continuum of U.S. foreign policy issues relating to South Asia: 1) viewing so-called Af-Pak effectively as one, in view of the over 40 million Pashtun on both sides of a fictitious border; 2) seeking Indian strategic depth in Afghanistan to strengthen stability in the eventual absence of U.S. and NATO forces; 3) recognizing Pakistan’s affinity for Islamist insurgents and terrorist networks as an asymmetric challenge to India in Indian-controlled Kashmir; and 4) understanding India’s vulnerability to Islamist jihad, in view of its Muslim minority of over 182 million who are nonetheless principally secular.

With regard to China and its vast foreign exchange reserves of over $3 trillion, the principal question is how to offset growing Chinese aspirations and influence — the declared One Belt One Road Initiative, which envisions economic collaboration under the aegis of China from the East Asia region to the Silk Road to East Africa, including the sea lanes of the Indian Ocean.

As with massive global problems, diagnostics are relatively easy, yet action is not. Tillerson’s visit has produced more exhortation than well-defined initiatives to solve what seems to be the intractable. Nonetheless, a visit that was albeit symbolic still projects a sense of American concern and interests in the region, which has cost blood and treasure for three U.S. administrations. It would be wise that Secretary Tillerson and President Trump accept the following:

First, the U.S. should not expect much cooperation from Pakistan in suppressing Islamist elements in Af-Pak. The Pakistan Army and ISI (the intelligence service) have their careers rooted in developing such partners, originally for the purpose of ousting the Soviet Union from Afghanistan. In view of the U.S.-India economic and military partnership, Pakistan has for sponsorship necessarily turned to China, which has committed $46 billion to an economic corridor with Pakistan. With U.S. aid to Pakistan cut to less than $1 billion last year, the U.S. barely has a seat at the table. Thinking that Pakistan will capitulate to U.S. diplomatic pressure and shut down terrorist camps is a naïve expectation, as this asymmetric force is Pakistan’s principal low cost means of keeping India off balance.

Second, seeking more Indian influence in Afghanistan, i.e. continued economic aid and training of the Afghan National Security Forces, will only cause more intransigence on the part of Pakistan, which has ethnic and linguistic affinity for Afghanistan. The Pashtun are an ancient people believed to have Persian antecedents, and Urdu, the lingua franca of Pakistan bears much Farsi influence.

Unfortunately, the long-term outlook for Af-Pak can only be damage control, marginalizing the Taliban so that it cannot threaten western interests or the authority in Kabul. Further, it is highly questionable that a solution of national determination for Kashmir, even if favorable to Pakistan, would moderate the proxy competition between India and Pakistan in Afghanistan.

With regard to the rise of China, India tends to be viewed in policy forums as an offset or potential countervailing influence, but the meaning of this has never been clear. Both India and China have similar maritime interests in the Indian Ocean, where an estimated 40% of daily world oil traffic passes, based on a Brookings assessment of 2016. By another estimate, over 80% of the world’s seaborne oil transits the Indian Ocean, from the Strait of Hormuz to the Strait of Malacca.

Certainly the deployment of the PLA navy to protect those sea lanes dilutes Chinese assets from the Pacific. Similarly, the Peoples Liberation Army presence in the disputed Aksai Chin adjacent to Indian Ladakh, and near the border of the Indian state of Arunachal, reduces the force that China could commit elsewhere. While the Indian military, which ranks in the world’s top five across the three services in terms of size, is not a match for a conventional conflict with China, it can raise the cost of Chinese aggression, and as such, it may serve to discourage Chinese adventurism.

As I have written in these pages, spanning three U.S. administrations the U.S. and India are strategically aligned with regard to fears over China and Islamist jihad — and India is also seen by some U.S. multinationals as a major trade and direct investment opportunity. While there are some disputes, presently U.S.-India relations have never been better, presently encompassing regional security, scientific collaboration, and private enterprise, for example.

The question therefore arises: what should the U.S. and India do that they are not doing now? India is an attractive target market for the defense and aerospace and industrial sectors, as evidenced by commitments of Boeing, Lockheed Martin, GE, and Westinghouse, to name a few of the majors.

However, a more broad-based approach to foreign direct investment (FDI) would benefit both the U.S. and India, which for years has been viewed very unfavorably due to massive red tape and equivocation. Although some recent relaxation of FDI rules has been noted, the reality is that the protocol for approving FDI is still excruciatingly complicated, requiring immense corporate patience and local knowledge. FDI in India is estimated at $319 billion at 2016 year end, while the figure for China is $1.4 trillion. While the Indian economy is about 2.5 times the size of Mexico in nominal terms, Mexico has about 1.5 times more FDI (Source: CIA World Factbook).

Accordingly, a U.S.-India blue chip FDI task force, chaired by the prime minister, could be named to identify business sectors and opportunities — and how to remedy existing constraints and roadblocks. With vestiges of socialism and a Soviet-era centrally planned economy, there continues to be much resistance to deregulation and development of a market economy.

Nonetheless, if there is one thing the U.S. can do to boost Indian GDP and create corporate jobs, and to foster the “Make In India” manufacturing initiative of the Modi government, it is to enhance the prospects for foreign direct investment in India in the eyes of the world.

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