Saturday, March 22, 2014

Today's Editorial 22 March 2014

                    The curious case of diplomacy deficit

Source: By Amitendu Palit: The Financial Express
Many things in the world changed with the advent of globalisation. One of these was diplomacy. As commerce became the mantra of connecting to the rest of the world, diplomacies of major powers changed accordingly. With Cold War, strategic isolation and non-alignment gradually becoming passé, the focus of diplomacy shifted to trade and economics. The birth of the World Trade Organisation (WTO) hastened the process, as did other plurilateral initiatives like the European Union and the G20 that were primarily based on economic objectives. The redirection of national diplomacies towards earning strategic benefits through economic dividends also manifested through the large numbers of regional and bilateral trade agreements signed across the world.

India’s tryst with globalisation has been furtive and impetuous. Many things that have changed significantly elsewhere post-globalisation have remained unchanged in India. Diplomacy is a relevant example. Indian diplomacy has hardly reoriented to focus prominently on economics, trade and commerce.

Nothing symbolises the lack of ‘economic’ perspective in Indian diplomacy than the several facile trade agreements signed by India. Economic rationale would dictate a country to sign a bilateral or a regional trade deal, if the markets had considerable possibilities for its exporters and importers that, at least partially, were blocked by barriers removable through preferential market access. For an economy like India, such possibilities are expected to be highest with large and globally integrated economies, most of which are its large trade partners. It is, therefore, rather difficult to explain the economic rationale behind India’s agreements with Afghanistan, Bhutan, Chile, Nepal, Sri Lanka as well as the Mercosur group of countries in South America. The only logic behind these agreements appears to be the strategic political benefits and winning ‘diplomatic’ allies. Whether the agreements have actually succeeded in cementing all-weather friendships with these countries is a debatable issue, but given their low economic rationales and shallow coverages, the agreements have hardly produced significant economic benefits for India.

If Indian diplomacy had indeed worked for achieving strategic benefits through economic gains, then by now India should have had bilateral agreements with more than only four countries, as it currently has, among its top 25 trade partners. Except Singapore, Japan, Korea and Malaysia, India does not have bilateral agreements with any of the rest. Ongoing negotiations at the RCEP (Regional Comprehensive Economic Partnership) and with the EU, and also with Australia and Indonesia, would increase the tally. But these negotiations have a long way to go. While difficulties of concluding bilateral deals with China and the US are well known, it is difficult to figure out why India has not been able to enter into formal trade tie-ups with countries in the Gulf, Latin America and Africa with whom it has strong trade links.

The problem behind Indian diplomacy not assuming a prominent economic dimension for expanding India’s strategic interest is partly structural. Several countries, particularly the OECD ones, have merged the foreign affairs and the trade arms of their governments. India has not only not done so, but its external affairs and commerce ministries hardly act in a synchronised fashion. The external affairs ministry often proposes institutional trade engagement with specific countries from a politically strategic perspective that then come on to the commerce ministry for brass tacks. Economic rationale hardly seems to figure anywhere in the process, except for stray inputs provided by domestic industry. Negotiations become easier and productive if they are with partners identified with economic rationale. If not, they become inefficient, searching almost non-existent room for obtaining market access while granting practically none.

Trade agreements are only a part of overall bilateral economic engagements. Such engagement is significantly influenced by industry and business lobbies. It is important for host country diplomats resident in other countries to sense the pressures exerted by business lobbies on their governments. In a world where production is fragmented across locations, businesses controlling and participating in production networks visualise the quality of economic engagement with a particular country in the context of their costs and benefits from other locations. This cannot be understood without familiarity with the intricately specialised language of global business and commerce, particularly for diplomats with non-specialised backgrounds. Indian diplomats enter Foreign Service after qualifying the rigorous and demanding civil service examination, which does not award additional credits for any particular specialisations. As a result, the complex and technical parlance of industry groups and the specific aspects of their lobbying efforts (for example, intellectual property, rules of origin, e-commerce) often remain undeciphered. Clearer inputs on these are of great help in strategising future economic engagement and trade negotiations.

Matters would have improved considerably if Indian think tanks had contributed effectively to the cause of economic diplomacy. Unfortunately, analysis of foreign affairs and diplomacy in these think tanks is overloaded with the traditional security agenda and hardly active on how commercial engagement can, or should become, an integral part of India’s contemporary diplomacy.

The sum total of all these aberrations—structural asymmetry, lack of technical business specialisation among the diplomatic cadre and the unwillingness of think tanks to pick up the commercial diplomacy agenda—is Indian diplomacy remaining stuck in the era of non-alignment. The rest of the world, unfortunately, has moved on to new alignments and priorities.

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